Ethics Opinions

Print opinion

Back to ethics opinions search

2006 Formal Ethics Opinion 2

April 21, 2006

Referring Client to a Financing Company

 

Opinion rules that a lawyer may only refer a client to a financing company if certain conditions are met.

 

Inquiry #1:

 

Lawyer receives an unsolicited email from a representative of ABC Financial, a company that purchases notes secured by deeds of trust, mortgages, and contracts. ABC Financial also will pay its clients a lump sum of cash in exchange for a client's interest in lottery winnings, structured insurance settlements, and rental income. ABC Financial would like Lawyer to refer his clients to them.

 

May Lawyer do so?

 

Opinion #1:

 

Lawyer may only make the referral if certain conditions are satisfied. Pursuant to 2000 Formal Ethics Opinion 4, a lawyer may refer a client in need of money for living expenses to a finance company if the lawyer is satisfied that the company's financing arrangement is legal, the lawyer receives no consideration from the financing company for making the referral, and, in the lawyer's opinion, the referral is in the best interest of the client. In no event should Lawyer refer a client to ABC Financial merely as a means to pay Lawyer for his legal services.

 

The Ethics Committee cannot opine as to the legality of any financing arrangement with ABC Financial.

 

Inquiry #2:

 

If Lawyer determines that the financing arrangement is legal and that the referral is in the best interest of the client, may Lawyer accept a "finder's fee" from ABC Financial in exchange for the referral?

 

Opinion #2:

 

No. See Opinion #1 above.

Back to ethics opinions search

THE NORTH CAROLINA STATE BAR
217 E. Edenton Street • PO Box 25908 • Raleigh, NC 27611-5908 • 919.828.4620
Copyrightę North Carolina State Bar. All rights reserved.