February 2, 1983
Where an attorney's real estate firm sells a decedent's real property on behalf of the personal representative and exacts a commission from the personal representative, it is unethical for the attorney to then additionally act as counsel for the personal representative and exact and attorney's fee for services.
References: MCPR DR 5-104(A); CI-520, CI-830; ABA i682, i709, i775.
A law firm anticipates incorporating its partners into a real estate business of which one or two of the law partners would become licensed real estate brokers. Would there be a conflict of interest in having the brokerage business sell the real estate for a personal representative and obtain the normal brokerage fee, where the firm would also be representing and charging the personal representative as its lawyer?
ABA i709 involved the similar questions of the lawyer/real estate agent selling a decedent's property and collecting a real estate commission. The ABA Committee opined that the only permissible fee was a legal fee, thereby condemning the exaction of a real estate commission by the lawyer/agent.
ABA i682, summarized the lawyer/agent context:
- If a separate business is clearly not necessarily the practice of law when conducted by a lawyer, and
- If it can be conducted in accordance with and so as not to violate the Canons, and
- If it is not used or engaged in such a manner as to directly or indirectly advertise or solicit legal matters for the lawyer as a lawyer, and
- If it will not "inevitably serve" as a feeder to his law practice, and
- It is not conducted in or from a law office, except in cases where the volume of the law practice and business is so small that separate quarters for either is not economically feasible and where, even in such cases, there is no indication on the shingle, office, door, letterhead or otherwise that the lawyer engages in any activity therein except the practice of law.
ABA i682 expressed doubts about a lawyer practicing law and conducting a "real estate business at the same time, particularly in the same office" but refused to absolutely condemn the practice "so long as the lawyer did not by engaging in the real estate business either advertise his law practice or use the business as a feeder." In accord, ABA i775.
CI-520, citing MCPR DR 5-104(A), held that the attorney/broker could list and sell a client's real estate but only upon a full disclosure of potential conflict of interest. CI-520 did not analyze ABA i790, the latter condemning the real estate fee in lieu of or in addition to a lawyer fee. CI-520 is at least distinguishable from the present context, since despite effective waivers disclosing a potential conflict of interest, the real estate business is nothing more than an estuary of commissions flowing into a bay of attorney fees. In the parallel context of lawyer advertising, this Committee has virtually unanimously condemned dissemination of information at a targeted group with an already-identified need for particularized services. E.g., CI-830.