Attorney Disbarred After Attempted Annuity Sale to Elderly Client

July 12, 2012 - PRLog -- In the recent case of The Florida Bar v. Doherty, a Florida elder law attorney was disbarred by the Florida Supreme Court for attempting to sell an annuity to an elderly client without notifying the client in writing about the commission generated by the transaction.  The case is another example of the dangers inherent with attorneys providing financial planning services to their clients.

In July and August of 2006, the attorney assisted his elderly, widowed client in the purchase of an annuity, which he was licensed to sell.  The attorney was set to receive a 7% commission, which would have been applied to a debt he owed the insurance company.  However, the client passed before the annuity could be purchased.

It was found that the attorney wrote himself into the client's estate plan as a personal representative and trustee.  Documents were written to grant the trustee authority to purchase annuities only from the providers to whom the attorney owed money.  The attorney had also previously been suspended by the New Hampshire bar for two years, and deliberately chose annuities whose commissions he wouldn't have to forfeit if the client passed during a "chargeback" period.

It was recommended that the attorney be found guilty of violating two rules.  The first being Rule 4.17(a)2, which states an attorney may not represent a client if there is no substantial risk that the representation will be materially limited by the attorney's personal interests.  The attorney did not challenge his violation of this rule.  The second rule was Rule 4-1.8(a), relating to business transactions with clients.  The attorney challenged this violation of this rule, stating that the rule was inapplicable in his case.  Florida's Supreme Court ended up throwing the book at him because of some egregious aggravating factors.

While in many states it is certainly an allowable practice for attorney's to provide their clients with financial planning services, it is important to remember to always follow the disclosure and consent rules set by each state bar.