January 19, 1981
A lawyer may share space in an office building which is a converted home with a real estate and/or insurance concern, but the physical arrangement and use of office space of each must be such that the operations and customers of the law practice and the real estate-insurance business remain separate and distinct and do not become intermingled. Use of common areas by the lawyer and the real estate-insurance business is permissible so long as aforesaid restrictions are observed and the common areas are not used in such a way that it suggests a connection between the lawyer and the real estate-insurance business.
It is not proper for a lawyer who is likewise a real estate broker to represent a client in a real estate transaction in which said lawyer is acting as a real estate broker or otherwise involved in the business of the real estate transaction.
This letter is written in response to your request for an Ethical Committee Opinion. You indicate that besides practicing law you are licensed to sell life and disability insurance and will soon obtain a real estate broker's license. You are contemplating relocation of your present law office and the only logical or economic was for this to be done in your community would involve the operation of your law practice in the same building as a real estate and insurance office which would be owned by you.
The questions which you ask are: "Is it ethical for a lawyer to chare a converted house with a non-legal business?" and "Can this be done if those associated with any of my businesses are given separate office space, but share common areas such as secretarial and waiting areas?" Your request indicates you understand (a) the need to keep all books, accounts and files separate, (b) the need to maintain confidentiality of all files for the clients of your law office, and (c) that you should not use or utilize your insurance or real estate business to promote your law practice nor vice versa.
Informal Opinion CI-221 of this Committee held as follows:
"It is proper for a law firm and a real estate firm to share a common closing room so long as the facilities are separate and are not used for the purpose of solicitation of clients." (July 7, 1975)
Operation of more than just your law practice from the same office building will require you to keep the operation of your real estate and insurance business separate and distinct from your law office. There must be no suspicion or appearance that the law practice and/or the insurance and real estate business are serving as feeders for the other. People who come to the office in response to an advertisement directed to real estate or insurance prospects should not find themselves at a law office and vice versa.
I therefore conclude it is ethical for a lawyer to share office space in a house converted for office use with a real estate office and/or insurance office. Further, there may be a sharing of common areas so long as the physical arrangement and use of the office space is such that clients of the law practice and customers of the real estate or insurance business remain separate and distinct and do not become intermingled.
You also asked for the opinion of the Committee as follows: "Is it ethical for a lawyer to do both legal and non-legal work for the same client and on the same project? Is it ethical to bill for both services if duplicate billing is not involved?"
You indicate that you have been informed by the lawyer for the local board of realtors that he has encountered lawyer-real estate brokers who have handled both the brokerage and legal matters during a single real estate transaction. Canon 4 of the Code of Professional Responsibility refers to a lawyer preserving the confidences and secrets of his client. Incident to legal representation of the client ina real estate transaction, the lawyer may become privy to certain confidences and secrets of his client which should not be known by the real estate broker in many cases.
More importantly, DR 5-104(a) indicates as follows:
"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 judgement therein for the protection of the client, unless the client has consented after full disclosure."
All of the provisions of Canon 5 of the Code relate to a lawyer exercising independent professional judgment on behalf of his client. It would not be possible for a lawyer to properly represent his client in a real estate transaction and be involved as the broker in such transaction because his interest as broker may become in conflict with a buyer or seller. Your question as to the billing for services as a lawyer and real estate broker is therefore not considered.
While the opinion has been prepared by the undersigned, it has been circulated to other members of the committee for their concurrence prior to its release to you.