Samuel C. Stretton.

Fee sharing with nonlawyers is not allowed under the Rules of Professional Conduct.

If I am representing a client for estate planning, can I accept a referral fee from an insurance agent or an investment company I have worked with in the past for referring the estate business?

The answer traditionally would be no. Lawyers are not allowed to share fees with a nonlawyer or receive fees from a nonlawyer, see Rule of Professional Conduct 5.4(a). Another good reason not to enter into such an arrangement is it could create a conflict of interest under Rule 1.7 of the Rules of Professional Conduct. As part of the conflict of interest rules under the concurrent conflict of interest rules, a lawyer cannot represent someone if the representation would be materially limited by the lawyer's responsibility to a third person or the personal interest of a lawyer. There can be a waiver under certain circumstances, but there has to be full disclosure.

The problem with being paid a referral fee by an investment group or insurance agent is that a lawyer's interest may be different from the client. If the lawyer has a relationship with an investment adviser or an insurance broker or real estate broker then the lawyer might well send the client to that person if the lawyer knows he is getting a referral fee. If the lawyer sent the estate or client to a person they didn't know, even though the other person might be able to provide better advice, the lawyer wouldn't necessarily get a fee because the lawyer didn't have a relationship with that person. Also, under the Specialized Conflict of Interest Rule 1.8(f), a lawyer cannot accept compensation for representing a client from someone else unless the client gives informed consent, there is no interference with the lawyer's independence or professional judgment, and the information is protected by confidentiality under Rule 1.6. It could be argued that accepting monies by way of a referral fee could affect the independence of the lawyer's professional judgment to the client since the client's interest might better be served by sending the work to someone else as opposed to the lawyer's friend.