Advisory Opinion: 2169

Year Issued: 2008

RPC(s): RPC 5.4(a) and (b), 5.5, 1.5(b), 1.7, 1.2(c), FO 2153

Subject: providing limited scope legal representation to customers of a real estate brokerage firm by the firm's general counsel


I. FACTS

The inquirer is general counsel to a duly licensed real estate brokerage that syndicates houses for sale in Washington on the internet. The inquirer wants to provide limited-scope legal representation services to the customers of the brokerage. The services would be limited to answering miscellaneous legal questions relevant to the home selling process. The customer would receive a disclosure about the limited scope of the representation and relevant conflicts of interest information stating that the inquirer is also general counsel to the brokerage. Further, the customer would be advised that if conflicts of interest were to arise between them and the brokerage, the inquirer would immediately cease representation of either party and each would need to secure separate counsel. Customer questions within the limited-scope would be answered by the inquirer and, if the outside the limited-scope, the customer would be advised to seek outside counsel. The customer would not be charged any extra or special fees for the limited-scope representation because it would be part of the total services provided by the brokerage. The inquirer would be paid a straight salary for his legal work, regardless of if the services were as general counsel only or included limited-scope representation of the customers.

II. QUESTION PRESENTED
Does the above arrangement violate the RPCs?

III. RESPONSE
Yes, the above arrangement violates Rule 5.4(a) and (b), which prohibits the splitting of fees and partnership with a non-lawyer when any part of the activity constitutes the practice of law. The arrangement may also implicate Rule 5.5 relating to the unauthorized practice of law. Regardless of any Rule 5.5 implications, the arrangement raises difficult ethical issues under Rule 1.5(b) and Rule 1.7.

IV. ANALYSIS
This arrangement raises several potential ethical issues under the Washington RPCs, though most can be satisfied with appropriate disclosures. The most significant issue arises from Rule 5.4, which prohibits fee splitting or forming a partnership with a non-lawyer if any part of the business is to provide legal services.
Under RPC 1.2(c), a lawyer may limit the scope of representation if the limitation is reasonable and the client gives informed consent. As illustrated by the Comments to this rule, it is permissible for a lawyer retained by an insurer to represent an insured to limit the representation to matters related to insurance coverage. The Comments also discuss the wide latitude of a lawyer and client to craft the scope of representation. Under the facts presented, it seems reasonable for the inquirer to limit the representation of a customer to particular real estate issues with appropriate disclosure and consent.
Rule 1.5(b) requires that the scope of representation and the basis or rate of a fee be communicated to the client, preferably in writing. Rule 1.7 prohibits a lawyer from representing a client directly adverse to another client or if there is a significant risk that the representation will be limited by the lawyer's responsibilities to another client or personal interest. The inquirer must be sure that the limited-scope representation of the customer does not create a conflict with the brokerage or another client. If there is a conflict, it must be determined if it is waiveable. Barring any conflict of interest, the inquirer must still determine if there is a risk of material limitation and, if so, proceed only if he believes he will be able to provide competent and diligent representation and the client consents after sufficient disclosure.
This arrangement is similar to the one discussed in Informal Opinion 2153 where the Committee found that an attorney who represented for sale by owner sellers violated the RPC's, including 5.4.

Notwithstanding the conclusion that the inquirer may be able to overcome the conflicts of interest issues, the arrangement violates RPC 5.4 which prohibits the splitting of fees and partnership with a non-lawyer when any part of the activity constitutes the practice of law.

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Advisory Opinions are provided for the education of the Bar and reflect the opinion of the Committee on Professional Ethics (CPE) or its predecessors. Advisory Opinions are provided pursuant to the authorization granted by the Board of Governors, but are not individually approved by the Board and do not reflect the official position of the Bar association. Laws other than the Washington State Rules of Professional Conduct may apply to the inquiry. The Committee's answer does not include or opine about any other applicable law other than the meaning of the Rules of Professional Conduct.