Why these areas? ?Well, if you are familiar with these fields, gifting and the liquidation of assets are very common in the legal plans created by attorneys. ? This means there are often large amounts of cash-on-hand that require conservative money management.? Historically, attorneys bring in the financial gurus at the end of a deal to handle the financial aspects of the plan to avoid having a million dollars sitting in a checking account.?? Despite not being brought in until the late stages, these deals are typically pretty lucrative for the financial expert.?
Attorney, meet opportunity (knocking).?
Whether it was the downturn in the economy or just plain opportunism, the temptation to cross over to the financial field was too much for many attorneys to resist.? This resulted in many elder law attorneys not only developing estate plans, but also selling financial products as a ?requirement? of their overall plan.? From the client?s perspective, it becomes a comprehensive plan and the ability to distinguish between the legal and financial decisions disappear.
And so, an attorney?s legal objectivity takes a back seat to financial considerations (and would-be sales). ?With tens of thousands of dollars on the line, it?s difficult, if not impossible, to remain unbiased.? We?ve heard the endless justifications about providing a ?holistic? one-stop-shop service for the benefit of the clients.? Not buying it.? It?s about one thing and one thing only.? MONEY.??
Under the current rules of professional conduct in Ohio, attorneys can wear both hats ? legal and insurance.? The Supreme Court puts only a few hurdles in the way.? ?They must provide adequate disclosures regarding the arrangement (which are inevitably buried in an endless engagement letter) and they cannot give ?discount? legal services in exchange for using their financial services.? This really comes as a surprise to us and many other local professionals given the inherent and obvious bias.?
The result?? Many people, who were just seeking out a ?legal? plan, end up walking out the door with not only legal documents but a financial product too.
Our firm and many others routinely utilize short-term pensions, conservative investments and other financial strategies from our team of professionals.? However, our plans and financial recommendations are done in conjunction with a separate financial team.? Often the client?s current planner.? We don?t receive any benefit from any financial products utilized in our plans and leave the finance mumbo-jumbo to the experts.?? This ensures that when financial products are used, they are in the best legal interest of the client and an actual financial specialist is involved.
I would like to say that this issue was diligently monitored for safety and protection of Ohio?s seniors but unfortunately Ohio doesn?t have an enforcement body looking over our shoulders so we rely heavily on self-reporting by other attorneys, professionals and clients. Frankly, this doesn?t happen very often.
To ensure our client?s continue to receive unbias and objective legal advice we need to keep a look out.? Always make sure to take a little harder look at legal plans that include irregular/egregious liquidation of assets to fund the sale of financial products by an attorney who coincidentally designed that same plan.
If you want to know more information, go to the Ohio Disciplinary Counsel?or the?Ohio?Department?of Insurance.
If you are curious about which attorneys wear both hats ? give us a ring, we keep a list!!!
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Source: http://blog.alerstallings.com/2012/10/conflict-of-interest-attorneys-selling-insurance.html
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