Under this rule, an investment advisor can pay non-employees cash referral fees when the attorney sends business to the firm. howeverThere are numerous “tires” that both the investment firm and attorney must go through. In general, there are four basic requirements:

  1. There must be a written attorney’s agreement between the attorney and the investment advisor specifying the scope of the attorney’s work.
  2. T.The lawyer must provide the requested person or company with a copy of the firm’s disclosure document (form ADV). This form is provided to the attorney by the investment firm;
  3. The attorney must provide the prospect with a disclosure showing that they will be paid for the referral. and
  4. The attorney must have basic record keeping requirements. This is usually done in a spreadsheet provided by the investment advisor.

A rule change is proposed by the SEC that will eliminate the need for attorneys to submit the Form ADV, but has not yet been formally adopted. However, because the form can be delivered electronically, most attorneys should still be mistaken on the side of attaching the ADV form to correspondence with a prospect.

Some people are not allowed to act as lawyers. Anyone banned or suspended by the SEC or any state regulator, anyone convicted of a crime or misdemeanor listed in the law (usually financial crime and violent crime), anyone who has recently filed for bankruptcy, and anyone involved in any Number falls from “bad actor” provisions no lawyer can be. That being said, practically anyone can take on the role.

howeverthe lawyer cannot offer investment advice to the potential client. This is one of the most scrutinized points in attorney agreements. When a lawyer says, “I’ve looked at your portfolio and you better invest in ABC than DEF. You should talk to company Y ”, then they have crossed a line. This can get into trouble for both the lawyer and the company. However, it’s perfectly okay to say I worked with Company Y, they are great and I really like the ABC product, you should speak to them.

Legal contracts can almost always be terminated at will. This means that either party (lawyer or law firm) can simply terminate the agreement. The law firm is still required to pay the lawyer for the referred clients if it terminates the agreement for no reason (e.g. the lawyer did nothing wrong).

Lawyers must be cautious about advertising as they must comply with all SEC advertising rules. Typically, the company prohibits the use of advertising that has not been approved by the company in advance. A law firm generally prefers lawyers to use their own networks as opposed to mass advertising, but this is not always the case.

So why should you be interested in becoming a lawyer? Well, first and foremost, for most lawyers, money is. Take a standard attorney’s agreement currently in use by my law firm:

ON. Every attorney who mediates a client is entitled to 20% of the gross Management fee charged by the client, paid over a period of five years; and

BB Provided that the customer stays with the company (e.g. You get paid when the company gets paid.

For example, if attorney Steve refers a client to investment firm Y’s strategy, Steve signs up, invests $ 100,000, and Steve agrees to a 1% fee, the attorney will receive $ 200 per year for five years, provided Steve remains a client. Since the fee is tied to the investment, as Steve’s account increases in value, the attorney fee also increases. New attorneys often think that this doesn’t seem like much, but it is actually a significant part of an investment firm’s revenue. Consultancy fees are simply not a large amount compared to the size of the investment. Obtaining 20% ​​of gross annual sales is a significant achievement for the company.

Think of it this way: if you were a lawyer and brought in a company with $ 100 million in sales, that company would gross $ 1 million per year with a 1% fee structure. You would get $ 200,000 / year (if the investment stayed constant), and the company would have to run all of its business with the remaining $ 800,000 – paying dealers, attorneys, rent, government fees, insurance, sales representatives, etc.

Please do not send us an email asking if you can become a lawyer. The above is for informational purposes. If and when we want to expand our network of lawyers (probably soon), there will be a post specifically devoted to the question of whether people want to become lawyers. This post is meant to introduce the concept so that people can understand what a lawyer is, how to become one, and understand the payment structure. However, feel free to ask questions about lawyers!

Christopher Welsh is a licensed investment advisor based in the State of Texas and president of an investment firm. Lorintine Capital, LP This is a general partner of three different private funds. He is also an attorney practicing in Dallas, Texas. Chris has been practicing since 2006 and is a CERTIFIED FINANCIAL PLANNER ™. Working with a CFP® expert is the highest standard for advice on financial planning. He offers his clients investment advice both in the legal practice and outside of it. Chris holds a BS in economics, a BS in computer science from Texas A&M University, and a law degree from Southern Methodist University. Chris can do it Anchor shops Portfolio and oversees Lorintine Capital’s distressed real estate debt fund.


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