Focus on Professional Responsibility
Focus on Professional Responsibility—Wearing Two Hats: Lawyers Who Also Practice in Other Professions
Although most lawyers practice law as their sole occupation, some lawyers own, operate, or work in nonlaw professions in addition to practicing law. Some lawyers also hold licenses to practice in other professions, such as real estate, insurance, investment counseling, security brokering, or medicine. Other lawyers may operate law-related, nonlaw businesses such as mediation services, collection agencies or title insurance companies. A third category of a ‘‘dual practice’’ is a lawyer who serves as a public official, such as a county commissioner, city council member, or part-time magistrate. The blurring of lawyer and nonlawyer occupations makes interpretation of lawyer ethics rules particularly troublesome.
The Standing Committee on Professional and Judicial Ethics has offered interpretations of the ethics rules that deal with the so-called ‘‘dual practice’’ issue. This article will summarize the most important ethics opinions dealing with lawyers who practice in other professions.
The Michigan Rules of Professional Conduct do not prohibit a lawyer from engaging in a career or business other than the practice of law, and the bar does not regulate nonlaw businesses. However, a lawyer’s ethical obligations may be affected by involvement with a nonlaw business. MRPC 1.8(a) states:
A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to the client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and are fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and
(3) the client consents in writing thereto.
In Ethics Opinion RI-005, the Ethics Committee was asked to consider the situation in which a lawyer held an ownership interest in a title insurance company. After considering the applicable ethics rules, the committee opined that it is not improper for a lawyer to hold an ownership interest in a title company if the businesses are maintained separately. That opinion further stated, however, that it is improper for a lawyer having an ownership interest in a title company to agree to represent a client who is obtaining services from the title company, or to review the sufficiency of the title insurance policy issued by the company.
A lawyer who was also an insurance agent sought the advice of the Ethics Committee on how those two businesses might be operated ethically. In RI-135, the Ethics Committee opined that this lawyer may sell insurance to law clients provided that ethics rules regarding business transactions with clients, confidentiality, and conflicts of interests are observed. Client solicitation rules (MRPC 7.3) do prohibit this lawyer from soliciting legal employment in person or by telephone from a current or former insurance customer unless the insurance customer is also a current or former law client of the lawyer. Ethics Opinion RI-135 also established the guidance that a lawyer may share office space with the lawyer’s nonlaw business, as long as the businesses are segregated. For more details on office sharing arrangements, please refer to ‘‘Lawyers Sharing Office Space’’ in the February 1998 edition of the Michigan Bar Journal, Volume 77, Number 2, Page 194.
Lawyers who own or operate an estate planning business are also faced with ethical dilemmas. In RI-190, a lawyer who also owned an estate planning business was presented with the issue of whether a law client may be referred to the lawyer’s estate planning business. In that opinion, it is stated that it is ethical for a lawyer to refer law clients to the financial planning business owned by the lawyer if the following three conditions are met:
• The lawyer must disclose the lawyer’s interest in the nonlaw business
• The lawyer must advise the client that the client is free to use another financial planner of his or her choice
• The lawyer must advise the client that the client has the opportunity to obtain independent counsel before deciding whether to seek services from the lawyer’s nonlaw company.
Ethics Opinion RI-190 also opined that a lawyer may accept referrals from a nonlaw business owned by the lawyer if the lawyer’s interest in the nonlaw business is disclosed to the client, the legal services are not part of the contract with the nonlaw business, and the lawyer exercises independent professional judgment without being influenced by whatever the nonlaw business has recommended to the customer. However, a lawyer may not represent a client in a dispute involving the services provided by the lawyer’s nonlaw business.
Ethics problems surface when the nonlaw business operated by the lawyer engages in activities that could not be undertaken by the lawyer directly. For example, a lawyer may not ethically establish a business that employs a nonlawyer agent to sell will and trust forms where the agent will most likely provide consultation or advice to the clients. In Ethics Opinion RI-191, it was stated that a lawyer may not give anything of value to a person for recommending the lawyer’s services other than paying the reasonable costs of advertising or by participating in a not-for-profit referral service. That opinion also stated that a lawyer may not employ individuals where the lawyer has no effective control over the employee’s communications regarding the lawyer, is not involved in the decision of whether to form a lawyer-client relationship, has no conflict screening mechanism, and may be unaware of the client’s confidences and secrets.
It is proper for a lawyer holding a license in another profession to indicate the dual licensure in advertising or on business stationery. See RI-212. That opinion also states that a lawyer holding dual licenses may practice both professions if client confidences are protected and public communications about each business are clear and do not create unjustified expectations about the results that might be achieved. Also, a lawyer with dual licensure may not engage in in-person client solicitation unless the person solicited is a current or former law client of the lawyer.
Lawyers who are also public officials are presented with unique ethics concerns. The Ethics Committee has issued a number of opinions dealing with this issue. Lawyers who serve as a county commissioner should review Ethics Opinion R-015. In that opinion, it was opined that a lawyer/commissioner may not undertake representation in any matter adverse to the county, and may not:
1. represent a client in a matter in which the lawyer participated personally and substantially as commissioner
2. participate as commissioner in any matter in which the lawyer participated while in private practice
3. represent a client if the representation will be materially limited by duties as a commissioner, unless a disinterested lawyer would reasonably believe the representation will not be adversely affected and the client consents
Other ethics opinions dealing with the dual role of lawyer and public official include RI-110, RI-126, RI-129 and RI-180.
There are numerous other ethics opinions that offer guidance on dual practice issues. Lawyers interested in this topic are encouraged to visit the State Bar of Michigan’s website, found at www.michbar.org and browse through the ethics information (including the full text of all reported ethics opinions) on this and other ethics issues.