Summary: An attorney who represents a real estate owner or promoter in drafting condominium documents, and in participating in the closing of titles to the condominium units, may properly act as a broker for the owner in the sales of the condominium units, provided she obtains consent from the owner or promoter after full disclosure of the possible impact of the brokerage activities on her responsibilities as attorney.
Facts: An attorney has inquired whether she may agree with a real estate owner or promoter to draft documents relating to condominiums and to participate in the closing of titles to the condominium units created thereby, in consideration of the exclusive right to broker the condominiums. She states that she will not certify the titles to the units. She also inquires whether she may advertise an offer to enter into such an arrangement to real estate owners and promoters by means of newspapers and trade publications.
Discussion: Three disciplinary rules bear particularly on the first question raised. Disciplinary Rule 5-101(A) provides that "[e]xcept with the consent of his client after full disclosure, a lawyer shall not accept employment if the exercise of his professional judgment on behalf of his client will be or reasonably may be affected by his own financial, business, property, or personal interests." Disciplinary Rule 5-104(A) provides that "[a] lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure." Disciplinary Rule 5-107(A) provides that ''[e]xcept with the consent of his client after full disclosure, a lawyer shall not ... (2) [a]ccept from one other than his client anything of value related to his representation of or his employment by his client."
In Opinion No. 76-16 we stated that a lawyer may accept stock in a client corporation as compensation for providing legal services to the corporation. The agreement here provides for another form of intangible compensation. We see no reason of ethics to distinguish these two forms of compensation.
The activity described by each of the rules referred to above is permitted if there has been consent by the client after full disclosure. Care should be taken to assure that the disclosure is indeed full and fair; the trend of the authorities is to make disclosure requirements stricter. The client--the promoter or owner--should be told carefully in advance of entering into any such arrangement of the conflicting pulls it may create on the attorney's loyalties. For example, the client should be told of the possibility that a desire to earn brokerage commissions might tempt the lawyer to draft documents in a manner more appealing to potential purchasers; and he should be told of the nature of the duties to purchasers which the brokerage relationship involves.
Instances may arise in which the lawyer will be prohibited by ethical provisions from affording the full services which either a broker or attorney would provide were there no dual relationship. The attorney could not permit the purchaser to rely on her for advice or assistance without risking the creation of an attorney-client relationship with the purchaser, and the possible violation of Disciplinary Rule 5-105, relating to multiple representation. As an attorney for the promoter or owner, the lawyer might be unable to become involved in litigation drawing into question her entitlement to a brokerage fee or requiring her appearance as a witness because of statements made by her as a broker. Such possibilities should also be explained prior to obtaining consent.
Provided consent after full disclosure is obtained, the representation arrangement described would be proper.
As to offering the arrangement to owners and promoters by means of newspapers and trade publications, the present rules regarding advertising were adopted by the Supreme Judicial Court on an interim basis pending completion of a study of the entire question. Disciplinary Rule 2-101, relating to publicity and advertising, provides "[a] lawyer shall not ... knowingly use or participate in the use of any form of public communication containing a deceptive statement or claim." So long as any advertisement was not deceptive, it would not be prohibited. Disciplinary Rule 2-103, relating to solicitation, provides ''[a] lawyer shall not, by direct mail or other form of personal contact, recommend employment ... of himself ... to a non-lawyer who has not sought his advice regarding employment as a lawyer." The boundary between advertising and solicitation is not clearly drawn. Because the proposed promotional efforts would be directed to, and tailored to the particular needs of, a specific group, they might be deemed to involve solicitation. This sort of question is at present being considered by a committee appointed by the Supreme Judicial Court, and consequently our committee believes it would be inappropriate for it to express an opinion on the subject. We are not prepared to say when advertising might fall within the prohibition of DR 2-103, but so long as the advertising is not directed toward specific individuals or narrow groups, we see no problem.
Permission to publish granted by the Board of Delegates, March 10, 1982. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.