Can a dually licensed lawyer advise a client to buy life insurance and then sell that insurance to the client?

Plain-English summary

The inquiry concerned multidisciplinary practice: specifically, whether a dually licensed lawyer could ethically advise a client to purchase life insurance and then sell that insurance to the client. The committee opined that a lawyer is not precluded from owning or having an interest in another business independent of the practice of law, but that on these facts the businesses had to be separate, with the separation being physical, financial, substantive, and practical. A lawyer may not hold himself or herself out as a lawyer to the customers of the independent business, and referrals to or from the independent business must not be made; the committee cited Formal Opinion 187.

The committee then drew a firm line: a lawyer may not under any circumstances both advise the client about the need for insurance and sell the client that insurance, nor may the lawyer have a financial interest in the client's purchase of insurance, including the receipt of any portion of a commission. The committee characterized this as a conflict under RPC 1.7 and 1.8 that cannot be overcome with any amount of disclosure, because of the lawyer's financial interest.

The committee directed the inquirer to Formal Opinion 87 regarding advertising when an individual is dually credentialed, and observed that because the Rules of Professional Conduct may apply to conduct in an unrelated business owned by a lawyer, the inquirer should review the rules in the context of that business as well as the law practice.

Currency note

This opinion was issued in 2000, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. The conflict-of-interest rules the opinion applies, RPC 1.7 and 1.8, were restructured in that revision. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer sell insurance to a client the lawyer advised to buy it?

A: No. The committee said a lawyer may not under any circumstances both advise the client about the need for insurance and sell that client the insurance, calling it a conflict under RPC 1.7 and 1.8 that no disclosure can cure.

Q: Can the lawyer take a commission on the client's insurance purchase?

A: No. The committee said the lawyer may not have a financial interest in the client's purchase, including receiving any portion of a commission, for the same reason.

Q: Can a lawyer own a separate insurance business at all?

A: Yes, but the committee said the businesses must be separate physically, financially, substantively, and practically; the lawyer may not hold out as a lawyer to the independent business's customers, and referrals between the two must not be made. It cited Formal Opinion 187.

Background and rules framework

The opinion applies Washington RPC 1.7 (conflicts of interest, corresponding to Model Rule 1.7) and RPC 1.8 (specific conflict and business-transaction rules, corresponding to Model Rule 1.8) to a dually licensed lawyer's proposal to advise on and sell insurance. It treats the lawyer's financial interest in the client's purchase as a nonconsentable conflict, and points to Formal Opinions 87 and 187 for the related advertising and separate-business questions.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 / Washington RPC 1.7 (conflict of interest; general rule)
• Model Rule 1.8 / Washington RPC 1.8 (specific conflicts; business transactions with clients)

Other opinions cited:

• WSBA Formal Opinion 187: separate-business separation and referrals
• WSBA Formal Opinion 87: advertising when dually credentialed

See also

• WSBA Ethics Op. 1874: Selling Investments While Practicing Law
• WSBA Ethics Op. 1488: A Law Practice and a Separate Business
• WSBA Ethics Op. 1918: Lawyer Also a Police Officer

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1166

Original opinion text

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

Advisory Opinion: 1926
Year Issued: 2000
RPC(s): RPC 1.7; 1.8; Formal Opinion 87 and 187
Subject: Multidisciplinary practice and the RPCs

[Editor's Note: Ethics inquiry #1926 concerns multidisciplinary practice and the RPCs.]

The Committee has reviewed your inquiry and determined the following:

The inquiry concerns whether a dually licensed lawyer may ethically advise a client to purchase life insurance and then sell it to the client. The committee opined that a lawyer is not precluded from owning or having an interest in another business independent of the practice of law. Under the facts presented, multiple businesses must be separate and the separation must be physical, financial, substantive and practical. A lawyer may not hold himself or herself out to be a lawyer to customers of the independent business and referrals to or from the independent business must not be made. See Formal Opinion 187.

A lawyer may not under any circumstances both advise the client as to the need for insurance and sell the client that insurance. Nor may the lawyer have a financial interest in the purchase of insurance by the client which includes the receipt of any portion of a commission from the purchase of insurance by the client. This would constitute a conflict under RPC 1.7 and 1.8, which cannot be overcome with any amount of disclosure due to the financial interest of the lawyer.

The committee directs the inquirer to Formal Opinion 87 for information regarding advertising when an individual is dually credentialed. Also, the committee recommends to the inquirer that, since the Rules of Professional Conduct may apply to conduct in an unrelated business owned by a lawyer, the inquirer should review these rules in the context of that business as well as his law practice.