93 N.J.L.J. 461
                                            June 25, 1970

OPINION 178

Finder's Fees
Disclosure to Client

    An attorney has made the following inquiries:
    1. May a lawyer recommend that clients' funds, either personal, estate or trust, be invested in savings accounts or savings certificates of a financial institution, where the lawyer will be paid a finder's fee by that institution?
    2. If so, must the lawyer disclose to the client the finder's fee arrangement?
    3. Must the lawyer turn over to the client the finder's fee?
In this case the attorney received from a financial institution an announcement and form of contract offering to pay him a finder's fee of 2% of the monies which his clients (some of whom may be executors or trustees) invest in savings accounts or savings certificates as a result of the attorney's recommendation of that
particular institution.
    In our Opinion 12, 86 N.J.L.J. 621 (1963) we held that title insurance rebates belong to the client and the attorney may keep the rebate only if he obtains the consent of his client after full
disclosure. To the same general effect see A.B.A. Comm. on Professional Ethics, Opinion 304 (1962).
        Former Canon 38 of the Canons of Professional Ethics of the American Bar Association provides as follows:
         38. Compensation, Commissions and Rebates
            A lawyer should accept no compensation, commissions, rebates or other advantages from others without the knowledge and consent of his client after full disclosure.

    The Code of Professional Ethics was adopted by the American Bar Association on August 12, 1969, to become effective for American Bar Association members on January 1, 1970. The Code has not been adopted by the Supreme Court of New Jersey, but we review it as persuasive authority. Section EC 2-21 provides as follows:
            A lawyer should not accept compensation or anything of value incident to his employment or services from one other than his client without the knowledge and consent of his client after full disclosure.

    Section DR 5-107 provides as follows:

        DR 5-107. Avoiding Influence by Others Than the Client.

        (A) Except with the consent of his client after full         disclosure, a lawyer shall not:

            (1) Accept compensation for his legal services from one other than his client.

            (2) Accept from one other than his client anything of value related to his representation of, or his employment by his client.

Drinker, Legal Ethics 96-97 (1953), states:

            Two different principles are involved in the application of this Canon: first, that a lawyer shall receive no secret remuneration from the other side; second, that he must not, by accepting or bargaining for any compensation from the other side, even if fully disclosed to his client, put himself in a position which will interfere with his wholehearted duty to his client.

            Full disclosure to the client solves the first difficulty unless it be that the party might not pay the commission if he thought it would go to the client, which would be solved by disclosure to the payor. In this connection, however, the committees have not always analyzed clearly the effect of the lawyer's turning over, or crediting, a commission to his client, apparently regarding this as splitting a fee with a layman in violation of Canon 34. Such, however, is not the case. Where the situation is such that the lawyer might keep it without its affecting his undivided zeal to serve his client, the fact that he gets it should unquestionably affect the size of his fee. Also, whatever he receives from others in the service of his client properly belongs to the client, to be payable to the client or credited against the lawyer's retainer or fee, whether he is employed only for the particular service, on an annual retainer, or on a full-time salary.

    The Committee feels that, in answer to questions 1 and 2, a lawyer may recommend that clients' funds be invested in savings accounts, etc. where a finder's fee would be paid by an institution, provided full disclosure is made to his clients and full and knowledgeable consent is given by the clients.
    The Committee feels that, in answer to question 3, a lawyer must either turn over to the clients the finder's fee, or account to or credit to his clients the amount of the rebate, or fee, since whatever he receives from others in the service of his clients properly belongs to the clients. To the same general effect, see
A.B.A. Comm. on Professional Ethics, Informal Opinion C-680 (1963); N.Y. County Lawyers Assn., Committee on Professional Ethics, Opinion 282 (1930); Wise, Legal Ethics 114 (1966).