Can a lawyer who is also a licensed insurance agent and a criminal trial commissioner execute surety bonds as attorney-in-fact for the insurer?

Plain-English summary

The committee addressed an attorney who was also a licensed insurance agent and asked whether he could execute surety bonds as attorney-in-fact for an insurance company in three situations: cases in which he had an interest, cases coming before him in his capacity as criminal trial commissioner in quarterly court, and cases in which he had no involvement. The committee answered no to the first two and a qualified yes to the third.

For cases in which the attorney represented the party (the first inquiry), the committee concluded that issuing a bond on behalf of his own client violated the duty of independent professional judgment. Under Canon 5 and DR 5-101 a lawyer must refuse employment when his professional judgment may be affected by his own business interests, and former Canon 35 (then DR 2-103, 2-104, and 5-107) bars a lawyer's services from being controlled or exploited by a lay intermediary. The committee reasoned that an attorney issuing the bond would be in the employ of both his client and the issuing company, and a claim under the bond would put him in a position of divided loyalty.

For cases before him as trial commissioner (the second inquiry), the committee reached the same conclusion and added a judicial-ethics ground. Executing a bond for a defendant appearing before him could lead to bond-forfeiture questions and would violate the Canons of Judicial Ethics, including Canon 2 (avoiding impropriety and its appearance) and Canon 5C(I) (refraining from business dealings that reflect on impartiality or involve frequent transactions with persons likely to come before the court).

For cases in which the attorney did not represent the party (the third inquiry), the committee found no necessary ethical prohibition: the inconsistency of employment would not exist, and the risk of using an outside business as a feeder for his law practice would be avoided if he did not accept employment from those for whom he executed bonds. The committee added that it could not answer whether KRS 387.070(4), KRS 395.140, or RCr 4.10 would prohibit the conduct, because those are legal questions outside its province.

Currency note

This opinion was issued in 1974 under Kentucky's former Code of Professional Responsibility (in effect 1971 to 1990), before the Kentucky Bar Association's 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer execute a surety bond as attorney-in-fact for his own client?

A: No. The committee held that issuing a bond for a client put the lawyer in the employ of both the client and the insurer, creating divided loyalty and impairing the independent professional judgment required by Canon 5 and DR 5-101.

Q: Can the lawyer execute bonds for parties appearing before him as a criminal trial commissioner?

A: No. The committee held this could raise bond-forfeiture questions and would violate the Canons of Judicial Ethics, including Canon 2 and Canon 5C(I), by creating at least the appearance of impropriety and frequent business dealings with persons before his court.

Q: Can the lawyer execute bonds for parties he does not represent?

A: A qualified yes. The committee found no necessary ethical bar, provided he does not accept legal employment from those for whom he executes bonds, so the business does not become a feeder for his practice.

Q: Did the committee resolve the statutory bonding restrictions?

A: No. The committee declined to opine on whether KRS 387.070(4), KRS 395.140, or RCr 4.10 prohibit the conduct, treating those as legal questions outside the Ethics Committee's authority.

Background and rules framework

The opinion applied the former Code of Professional Responsibility: Canon 5 and DR 5-101 (independent professional judgment affected by the lawyer's own interests) and former Canon 35, carried into DR 2-103, 2-104, and 5-107 (a lawyer's services not controlled or exploited by a lay intermediary). For the trial-commissioner branch it applied the Canons of Judicial Ethics, Canon 2 and Canon 5C(I). The modern analogs are Model Rule 1.7 (conflicts of interest) and Model Rule 5.4(c) (a lawyer's professional judgment not directed by one who recommends, employs, or pays him).

Citations and references

Rules of Professional Conduct:

• DR 5-101 (refusing employment when the lawyer's own interests may affect his judgment); modern analog Model Rule 1.7
• DR 2-103, DR 2-104, DR 5-107 (services not controlled by a lay intermediary); modern analog Model Rule 5.4(c)
• Canons of Judicial Ethics, Canon 2 and Canon 5C(I)

Statutes:

• KRS 387.070(4), KRS 395.140, RCr 4.10 (surety/bonding restrictions; the committee declined to interpret these)

Other authorities cited:

• Wise, Legal Ethics, 2d ed., p. 208 (lay intermediaries in the lawyer-client relationship)

See also

• KBA Ethics Op. E-80: City Attorney vs Renewal Agency
• KBA Ethics Op. E-96: Public Defender Office Sharing
• KBA Ethics Op. E-115: County Attorney at the Bench

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-082.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-82
Issued: January 1974

This opinion was decided under the Code of Professional Responsibility, which was in effect from 1971 to 1990. Lawyers should consult the current version of the Rules of Professional Conduct and Comments, SCR 3.130 (available at http://www.kybar.org), before relying on this opinion.

May an attorney also licensed as an insurance agent execute bonds as attorney-in-fact for an insurance company:

Question 1:

In cases in which he has an interest?

Answer 1:

No.

Question 2:

In cases coming before him in his capacity as criminal trial commissioner in quarterly court?

Answer 2:

No.

Question 3:

In cases in which he does not have an interest?

Answer 3:

Qualified Yes.

References:

Canon 5; DR 2-103, 2-104, 5-101, 5-107; Canon 2, 5C(I), Canons of Judicial Ethics

OPINION

An attorney also licensed as an insurance agent has been asked to execute bonds as attorney-in-fact for an insurance company. This would be done largely as a matter of convenience because of the attorney's proximity to the courthouse and would include cases in which the attorney had an interest, as well as those coming before him in his capacity as criminal trial commissioner in quarterly court and cases in which the attorney was in no way involved. He inquires whether this may ethically be done.

Canon 5 of the Code of Professional Responsibility provides that a lawyer should exercise independent professional judgment on behalf of a client. DR 5-101, adopted in conjunction with this Canon, requires that an attorney refuse employment if the exercise of his professional judgment reasonably may be affected by his own business interests. Former Canon 35 (now DR 2-103, 2-104 and 5-107) further provides that the services of an attorney should not be controlled or exploited by a lay intermediary. Commenting on intermediaries, Wise has noted in Legal Ethics, Second Edition, page 208, that:

Into this personal, direct and confidential relationship the lawyer should not permit intrusion of an intermediary, especially one whose very existence may induce violation of the canons prohibiting solicitation, advertising and representation of conflicting interests.

Issuance of a bond by an attorney on behalf of his own client violates each of these provisions. An attorney obtaining a bond in such circumstances would be in the employ not only of his client, but of the issuing company as well. It is not uncommon for a claim to arise under a bond. In that situation the attorney would necessarily be torn between a divided loyalty to his two employers and would face an untenable position. His ability to exercise independent professional judgment on behalf of his client would be impaired and the duty of absolute fidelity to his client would become impossible.

A similar conclusion must be reached in regard to the second inquiry. In the event an attorney executed a bond on behalf of a defendant appearing before him in his capacity as a trial commissioner in a criminal court, the question of bond forfeiture could and in all probability would frequently arise. Again, the attorney would be confronted with an inconsistency that cannot be tolerated. Such conduct would, in addition, violate the letter and spirit of the Canons of Judicial Ethics. Canon 2 provides that a judge should avoid impropriety and the appearance of impropriety in all his activities. Canon 5C(I) imposes upon a judge this additional responsibility:

A judge should refrain from financial and business dealings that tend to reflect adversely on his impartiality, interfere with the proper performance of his judicial duties, exploit his judicial position, or involve him in frequent transactions with lawyers or persons likely to come before the court on which he serves.

Clearly, in executing bonds in his own court a judge would at the very least create the appearance of impropriety and would certainly involve himself in frequent business transactions with those appearing before his court. If for no other reason, such conduct would fail to meet the standards of our profession.

Somewhat different considerations are involved where the attorney does not represent the party for whom he executes the bond. From what we have previously said, it is clear that an attorney could not accept employment from those for whom he executed bonds. The potential problem of indirect solicitation or utilizing an outside business as a feeder for his law practice would thus be avoided. At the same time, the undesirable inconsistency of employment previously referred to would not exist. The Committee has accordingly concluded that there would not necessarily be any ethical prohibition against execution of bonds as attorney-in-fact when confined to those not represented by the attorney.

However, there is an additional question raised by this inquiry which the Ethics Committee may not properly answer. KRS 387.070(4) prohibits acceptance of a practicing attorney or judge as surety on the bond of a guardian. KRS 395.140 enjoins a county court from acceptance of any judge of a county court or practicing attorney of that court as surety on the bond of a personal representative. Finally, by the provisions of RCr 4.10 no attorney may act as surety on any bail bond, nor engage directly or indirectly in the business of bonding in any of the courts of this state. Whether, or to what extent, the actions presented by the present inquiry would be violative of these provisions raises legal questions which this Committee cannot, and properly should not, attempt to answer.

Note to Reader

This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.