Opinion 2025

You have asked the RPC Committee to advise you whether a Disclosure and Authorization form that you intend to use when referring your legal clients to a real estate office with which you are associated satisfies relevant RPCs relating to conflicts of interest. For the reasons expressed below, the Committee concludes that it would not.

As a preliminary matter, the Committee sees very serious conflicts of interest in the circumstances you present. In all likelihood, there will be circumstances where it would not be permissible for you to represent clients who you have referred to the real estate office with which you are associated, or real estate clients who wish to engage your legal services.

Under RPC 1.7(b), a lawyer “shall not represent a client if the representation may be materially limited by the lawyer’s responsibilities to a third party or by the lawyer’s own interests” unless (1) the lawyer reasonably believes the representation will not be adversely affected, (2) and the client consents in writing after full disclosure of the material facts. See RPC Terminology “Reasonable belief” or “reasonably believes”… denotes that the lawyer believes the matter in question and that the circumstances are such that the belief is reasonable.”; People v. Mason, 938 P.2d 133, 136 (1997)(“The key provision is that the lawyer must reasonably believe, not just have a subjective belief that the representation will not be adversely affected.”)

Whether you could “reasonably believe” that the representation will not be materially affected by your responsibilities to your real estate office, or by your self-interest in your capacity with that office, will depend upon the nature of the legal representation and its relationship to the real estate transaction. For example, if a client is seeking your representation to protect the client’s interests in effectuating the real estate transaction for which the referral was made, it may be very difficult to argue that you could “reasonably believe” that the representation would not be adversely affected. The Disclosure and Authorization form reflects this reality when it states:

“[The lawyer] will not be able to advise client on any issues involving disputed terms of the listing agreement signed or to be signed by clients with the aforementioned realty office, or any alleged breach (violation) or lack of adequate performance by the agents under such agreement.”

On the other hand, if the representation is unrelated to the real estate transaction, it is likely that RPC 1.7(b) would not apply. Under such circumstances, neither your obligations to the real estate office or your self-interest would materially limit the representation. Whether a particular representation would be adversely affected by your self-interest or by your obligation to your real estate office thus will require you to make an individualized reasonable professional determination.

Second, where RPC 1.7(b) would permit continued representation, the rule still requires full disclosure concerning the material facts, and written consent from the client. In addition, RPC 1.8(a) would apply when you refer a client to your real estate office because you are entering into a business transaction with the client. RPC 1.8(a) provides that a lawyer representing a client in a matter “shall not enter into a business transaction” with the client unless: (1) the transaction is fair and reasonable, (2) its terms are fully disclosed to the client in writing in language that can be reasonably understood by the client, (3) the client is given a reasonable opportunity to seek independent legal advice, and (4) the client consents.

It is not clear whether you intend your Disclosure and Authorization form to provide all information and consultation required by RPC 1.7 and/or RPC 1.8. The Committee doubts that a standard form could satisfy the obligation of “consultation and full disclosure of material facts” under RPC 1.7(b)(2), or full disclosure of transaction terms under RPC 1.8(a), for all cases. In any event, however, the proposed Disclosure and Authorization form that you have asked us to review lacks any meaningful information concerning your obligations to and compensation from the real estate business with which you are associated. Thus, while the Committee ordinarily would not be in a position to evaluate whether a particular disclosure satisfies these rules, the absence of plainly material facts from the form makes it evident that the form does not “fully disclose”, in writing, the terms of the transaction as required by RPC 1.8 (a)(1), or the material facts as required by RPC 1.7(b)(2).

Third, the form authorizes you to accept a referral fee from the real estate office. Your letter indicates that this is intended to address “acceptance of payment from a third party source.” It is not clear to the Committee what you mean by this. RPC 1.8(f), which addresses compensation by third parties, applies where a third party compensates the lawyer for legal representation of a client. We understand the compensation that you receive from the real estate office to be compensation for the initial referral and subsequent activities undertaken as a real estate agent. However, if you are being compensated by the realty office for legal work for your clients, then you also must satisfy the remaining requirements of RPC 1.8(f).

Fourth, you indicate that you do not see solicitation as an issue because “the real estate services were offered to an existing client, not the reverse. (E.g., where I was acting as their real estate agent first and suggested they use my law office for legal services.)” This statement may reflect a misunderstanding of RPC 7.3(a). The rule prohibits certain types of in-person and telephone solicitation of prospective legal clients by a lawyer, unless the lawyer has a family or prior professional relationship with the prospective client, and the “prior professional relationship” to which the rule refers is a prior attorney-client relationship. Thus, the exception from RPC 7.3(a) is not satisfied simply because the prospective legal client had a prior professional relationship with a lawyer who was acting in a capacity other than that of a lawyer, such as a real estate agent. The prohibition on in-person and telephone solicitation would continue to apply.

Finally, nothing in this opinion addresses your ethical or legal obligations as a real estate agent, and nothing in it is intended to suggest that your proposed course of action would be consistent with those obligations.

[Ed. note - the following is in response to several additional questions from the inquirer after receiving the above opinion.]

The inquiring lawyer originally asked several questions concerning ethical constraints in serving clients as a lawyer and a real estate agent. The Committee responded to the lawyer’s inquiry with Unpublished Informal Ethics Opinion 2025. The lawyer now poses three follow-up questions. First, the inquiring lawyer questions the Committee’s conclusion that his successful referral of legal clients to a real estate brokerage with which he is associated amounts to entering into a “business relationship” with the client so as to trigger RPC 1.8. Second, assuming RPC 1.8 applies, the inquiring lawyer asks whether he would violate the rule by failing to suggest independent review of the transaction. Third, the lawyer asks whether the informal opinion was meant to suggest that RPC 7.3(a) governs his solicitation of existing legal clients to use the services of the real estate office with which he is associated.

The Committee understands the inquirer’s recent correspondence to ask the following three questions as matters of follow-up to Unpublished Informal Ethics Opinion 2025.

(1) Why does the lawyer’s successful referral of clients to a real estate office with which the lawyer is associated as a real estate agent constitute entering into a business transaction with the client for purposes of RPC 1.8?

Under the circumstances of the initial inquiry, the lawyer has referred legal clients to a real estate office with which the lawyer is associated, to provide services in which the lawyer may participate and from which the lawyer stands to benefit economically. For these reasons, the referral constitutes entering into a business relationship with the client for purposes of RPC 1.8.

(2) Does the lawyer violate RPC 1.8 if the lawyer does not recommend independent legal review of this business transaction between the lawyer and the client?

RPC 1.8(a)(2) requires a lawyer to advise the client of the opportunity to seek the advice of independent counsel with respect to the transaction and to give the client a reasonable opportunity to seek that advice. Implicit in this requirement is providing the client sufficient objective advice and direction to protect the client’s interests. Thus, it seems likely that in most, if not all circumstances, RPC 1.8 would require the lawyer to recommend independent legal review of the transaction. The lawyer’s duty of competent representation under RPC 1.1 also likely would compel the lawyer to recommend such independent review.

(3) Would RPC 7.3(a) govern the lawyer’s solicitation of an existing legal client to enter into a business transaction with the lawyer’s real estate office?

No. RPC 7.3(a) does not govern a lawyer’s solicitation of an existing legal client.