FLORIDA BAR ETHICS OPINION
December 15, 1964
Advisory ethics opinions are not binding.
It would be improper for a law firm to draft necessary instruments and present a pension and
profit-sharing plan to the Internal Revenue Service under an arrangement whereby the law firm,
though employed by a bank, will be required to represent the interests of the corporate client
before the Internal Revenue Service.
6, 27, 35
Chairman Smith stated the opinion of the committee:
Our opinion is sought in connection with the following factual situation.
The trust department of a bank has entered into an arrangement with an
insurance company which has agents located throughout the state. The agents are
engaged in selling pension and profit-sharing plans to corporate employers. The
plan is standardized as much as possible, and the bank will act as investment and
administrative trustee under the plans which are sold. A portion of the
contributions made to the plans will be used to purchase life insurance, sold by
the agents mentioned, which will cover employees who are covered by the plans.
The bank wishes to retain a law firm to perform certain legal services. Thus,
a member of The Florida Bar is asked to draft the instruments necessary in each
instance for adoption and implementation of a plan. Included would be the
pension plan, a trust agreement, a form of minutes to be used by the corporate
employer in adopting the plan, and a form of announcement to be used to apprise
employees of the plan. He is also asked to present the plan, after its formal
adoption, to the Internal Revenue Service for the purpose of qualifying it and
determining that the trust shall have tax-exempt status. In order to do this, the
lawyer would require a power of attorney from the corporate employer. The bank
has a vital interest in assuring that the proposed plan is properly drafted and
presented to the Internal Revenue Service. It wishes to employ his firm in order to
assure that the necessary legal work will be expedited.
The lawyer’s compensation for services rendered would be paid by the bank.
The charges, however, would be passed on by the bank to the corporate employer
as part of the bank’s initial cost incurred in adoption of the plan. It would be made
clear to the corporate employer that the lawyer is representing the bank. The
corporate employer would be invited to retain its own attorney to assist in and
review the work done by the lawyer’s firm.
It is the unanimous opinion of the Committee that the proposed arrangement involves
ethical improprieties which should be avoided.
Canon 6 is involved. That Canon deals with conflicts of interest. Herein, the firm, though
acting initially for the bank, will be required to represent the interests of the corporate employer
before the Internal Revenue Service. It will also draft instruments which the corporate employer
must use and adopt in order to effectuate a plan. Although it is not necessarily unethical to
represent conflicting interests, it is the opinion of this Committee that such representation should
be avoided wherever possible, particularly where there is possibility of substantial conflict and
where the attorney has a basic allegiance to, and receives his employment and compensation
from, only one of the parties whose interest is involved.
In this instance, objectionable aspects of the arrangement could be eliminated by
arrangement for the corporate employer to employ its own attorney to prepare or review all
instruments which the bank requires and to represent it before the Internal Revenue Service. The
Committee believes this would be the better practice. The bank can make arrangements with the
employer which will resolve absorption of the legal costs. The costs of the lawyer’s services to
the bank can be passed on by the bank as a charge of the trusteeship, if the bank chooses to do
so. The bank can arrange to reimburse the corporate employer for reasonable attorney’s fees
incurred by the employer, if the bank wishes to do so.
A majority of the Committee was principally concerned in this case with the problem of
conflicting interests. Two members of the Committee, however, also suggest that Canons 27 and
35 may also be involved. In their opinion, the present arrangement could also lead, in effect, to
the insurance agents channeling legal employment to a law firm, contrary to the spirit of Canon
27, and to practicing law for another through an intermediary, contrary to Canon 35. It is
believed the Committee’s suggestion that separate counsel be employed by the corporate
employer would tend to obviate these objections also.