CABAR 1968

Can a lawyer act as an agent for a corporation soliciting personal management contracts with professional athletes?

Short answer: The committee concluded that, on the stipulated conditions, the lawyer could act as the corporation's agent soliciting management contracts, because the collateral business met the ABA's criteria for a permissible outside occupation; but he had to avoid giving legal advice to the athletes (a conflict risk under former Canon 6) and avoid aiding the corporation in any unauthorized practice of law.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

State Bar of California Formal Opinion 1968-13: Lawyer as Agent Soliciting Athlete Management Contracts

Short answer: The committee concluded that, on the stipulated conditions, a lawyer could act as a corporation's agent soliciting personal management contracts from professional athletes, so long as he gave no legal advice to the athletes or the corporation (a conflict-of-interest risk) and did not aid the corporation in any unauthorized practice of law.

Currency note

This opinion was issued in 1968, before the State Bar of California's adoption of the November 1, 2018 revisions to the Rules of Professional Conduct. The opinion interprets former California Rules 2 and 3 and former ABA Canons 6, 27, and 47; the concepts it addresses are today handled by current Rules on law-related services (Model Rule 5.7), conflicts (Rule 1.7), and assisting unauthorized practice (Rule 5.5). Subsequent rule amendments may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the State Bar of California's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. The opinion text is reproduced at the bottom; the official source (linked) controls.

View original opinion

Plain-English summary

A lawyer proposed to act as an agent for a corporation that managed professional athletes, soliciting athletes to sign personal management contracts with the corporation. He stipulated that he would not tell prospective clients he was a lawyer, would not use his attorney's card, and would not negotiate in his law offices; would not give legal advice to the athletes about the contract or anything else, but would only induce them to sign by explaining the value of the corporation's representation; would never give legal advice or services to the corporation or its clients; and that the corporation would handle contract negotiations and retain other attorneys and accountants for tax planning.

The committee analyzed the proposal under the "collateral business" line of authority, drawing on Drinker and on ABA informal decision No. 775 (1965), which set criteria for when a practicing lawyer may engage in a separate business: the business is not necessarily the practice of law; it can be conducted without violating the canons; it is not used to advertise or solicit legal matters; it will not "inevitably serve" as a feeder to the law practice; and it is not conducted in or from a law office. The committee agreed with those standards and concluded that, on the stipulated conditions, the lawyer could act as the corporation's agent soliciting management contracts, because soliciting such contracts was basically the same as soliciting any other contracts on behalf of a principal and the conditions satisfied the ABA criteria.

The committee added two cautions. First, because a solicitor of contracts may be asked to interpret the contract's terms, the athlete might ask the lawyer's advice about the agreement's legal meaning, raising a possible conflict of interest between the corporation and the athlete that former Canon 6 forbids absent informed consent; the stipulation that the lawyer would render no legal advice had to be scrupulously observed. Second, the committee was concerned that the corporation, in negotiating contracts and arranging tax devices, might be approaching the unauthorized practice of law (noting that a corporation may not itself employ and pay attorneys to render legal services to its clients, though it may, as the clients' agent, employ attorneys paid by the clients). Lacking sufficient facts to judge the corporation's relationship to its clients, the committee admonished the corporation not to exceed permissible limits and the lawyer not to aid any improper extension that would violate former Rule 3 and former Canon 47.

Common questions

Q: Could the lawyer solicit athlete management contracts for the corporation?

A: Yes, on the stipulated conditions. The committee concluded the activity was a permissible collateral business meeting the ABA's criteria, since soliciting management contracts was basically like soliciting any contracts on behalf of a principal.

Q: What conflict concern did the committee raise?

A: The committee warned that an athlete might ask the lawyer to interpret the contract's terms, creating a possible conflict between the corporation and the athlete under former Canon 6, so the lawyer's stipulation to give no legal advice had to be scrupulously observed.

Q: What was the unauthorized-practice concern?

A: The committee was concerned the corporation's negotiating contracts and arranging tax devices might approach the unauthorized practice of law, noting a corporation may not employ and pay attorneys to render legal services to its clients, and it admonished the lawyer not to aid any improper extension.

Background and rules framework

The opinion interprets former California Rules of Professional Conduct 2 (solicitation) and 3 (aiding unauthorized practice), together with former ABA Canons 6 (conflicting interests), 27 (advertising), and 47 (aiding unauthorized practice). The concepts are now addressed by Model Rule 5.7 (law-related services), Model Rule 1.7 (conflicts of interest), and Model Rule 5.5 / California Rule 5.5 (assisting the unauthorized practice of law).

Citations and references

Rules of Professional Conduct:

Former California Rules 2 and 3; former ABA Canons 6, 27, and 47
Current analog: Model Rules 5.7, 1.7, and 5.5

Cases:

Libarian v. State Bar (1944) 25 Cal.2d 314 [153 P.2d 739], a licensed attorney must conform to professional standards in whatever capacity he acts
Jacobs v. State Bar, 219 Cal. 59 [25 P.2d 401]
People v. Merchants Protective Corp. (1922) 189 Cal. 531, corporation may not employ attorneys to render legal services to its clients

Other opinions cited:

ABA Committee on Professional Ethics informal decision No. 775 (1965)

Other authorities:

Drinker, Henry S., Legal Ethics (1953) pp. 180, 221-228.

Source

Landing page: https://www.calbar.ca.gov/legal-professionals/ethics-compliance-practice-resources/ethics/ethics-opinions
Original opinion: https://www.calbar.org/ethics/Opinions/1968-13.htm

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Ethics Opinions - FORMAL OPINION NO. 1968-13

The attorney will not inform the prospective clients of the corporation that he is a lawyer, will not use his attorney's business card, and will not carry on negotiations with the clients in his law offices.
The attorney will not give legal advice to the prospective clients regarding the contract with the corporation or any other matter. He will merely attempt to induce the prospective clients to sign by explaining the value to them of representation by the corporation.
The attorney will not at any time give legal advice to the corporation nor render legal services to it or to its clients.
The corporation will represent its clients in contract negotiations for the clients' services and, in addition, will retain other attorneys and accountants to work out tax-saving devices for its clients.

Over the years, the question of the propriety of a practicing attorney engaging in another business has been the subject of many, often widely divergent, opinions of committees on legal ethics. A great number of these are noted and discussed in Drinker, Legal Ethics (1953) at pages 221-228. The principal objections raised in this area are that such lay activities may serve as a feeder for law business or that they may be used as a means of indirect solicitation by the attorney, thus involving a violation of rule 2, section (a), of the Rules of Professional Conduct and [former] canon 27 of the Canons of Professional Ethics of the American Bar Association.

Rule 2, section (a), of the Rules of Professional Conduct provides, in part:

"A member of the State Bar shall not solicit professional employment by advertisement or otherwise."

[Former] canon 27 of the Canons of Professional Ethics of the American Bar Association provides in part:

"Advertising, Direct or Indirect. It is unprofessional to solicit professional employment by circulars, advertisements, through touters or by personal communications or interviews not warranted by personal relations . . ."

It is manifest that not every independent business which is carried on by a practicing attorney involves the probability of a violation of these ethical principles. Thus, Henry S. Drinker has stated at page 221 of his treatise, Legal Ethics, supra:

"There is, of course, nothing in the Canons to prevent this as to an occupation entirely distinct from and unrelated to his law practice. Thus, no one would dispute the right of a lawyer to be a teacher, or a violinist or doctor or a farmer, or to sell rare postage stamps, provided he in no way used such occupation to advertise, or as a feeder to his law practice." (Emphasis added.)

However, as stated further, at page 221 of Legal Ethics, supra, the probability of violation becomes greater where:

"The second occupation although theoretically and professedly distinct, is one closely related to the practice of law, and one which normally involves the solution of what are essentially legal problems.... " (Emphasis added.)

Stated slightly differently, the probability of violation is greater in situations where the other business is one which would constitute the practice of law if conducted by a lawyer.

In 1965 the Committee on Professional Ethics of the American Bar Association, in dealing with the difficult problem of an attorney who wished to engage in a real estate brokerage business, reviewed in informal decision No. 775 (1965) the history of the ethics of the "collateral business" and concluded that:

"The Committee's present opinion, developed over the years as outlined above, is that

"(1) If a separate business is clearly not necessarily the practice of law when conducted by a lawyer, and

"(2) If it can be conducted in accordance with and so as not to violate the Canons, and

"(3) 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

"(4) If it will not "inevitably serve" as a feeder to his law practice, and

"(5) It is not conducted in or from a lawyer's 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.

"It is not necessarily a violation of the Canons for a practicing lawyer to engage in such a business activity. The Committee is of the further opinion that the real estate brokerage business can qualify under these present criteria..."

This Committee agrees with the Committee on Professional Ethics of the American Bar Association in establishing the aforesaid standards of conduct for practicing attorneys engaging in collateral businesses and determines that, on the conditions stipulated, the requesting attorney may act as an agent for the corporation in soliciting personal management contracts from professional athletes. It is the opinion of this Committee that soliciting personal management contracts from professional athletes is basically the same as soliciting contracts of any other type on behalf of a principal, and that requirements 1, 2 and 4 in informal decision No. 775, supra, have been satisfied in the present situation. In addition, the factual conditions stipulated in the request would appear to meet the requirements of conditions 3 and 5 more than adequately.

Nevertheless, it should be pointed out that, in a business involving the solicitation of contracts of any type, the solicitor may be asked by the customer to interpret the conditions and requirements of the contract. Thus, in this factual situation, the athlete is quite likely to ask the attorney's advice as to the legal meaning of the terms of the agreement he is about to sign, thereby presenting the possibility of a conflict of interest between the corporation and the athlete. Such conflicts are violative of [former] canon 6 of the Canons of Professional Ethics of the American Bar Association which provides, in part:

"It is unprofessional to represent conflicting interests, except by express consent of all concerned given after a full disclosure of the facts. Within the meaning of this canon, a lawyer represents conflicting interest when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose."

In this regard, the Supreme Court of California, in Libarian v. State Bar (1944) 25 Cal.2d 314 [153 P.2d 739], has established the rule that:

"One who is licensed to practice as an attorney in this state must conform to the professional standards in whatever capacity he may be acting in a particular matter. (Jacobs v. State Bar 219 Cal. 59 [25 P.2d 401].)"

The requesting attorney here has stipulated that he will not render legal advice to the athletes or to the corporation or its clients, and it is the opinion of the Committee that these conditions must be scrupulously observed to avoid conflict with [former] canon 6 of the Canons of Professional Ethics of the American Bar Association.

The Committee is also concerned that the facts herein indicate that the corporation, in carrying out its functions of conducting contract negotiations and working out tax devices for the athletes, may be approaching the area of unauthorized practice of law. For example, the corporation may not itself employ and pay attorneys to render legal services to its clients, although it would be proper for the corporation, acting as the clients' agent, to employ attorneys whose fees are fixed and paid by the clients themselves. (People v. Merchants Protective Corp. (1922) 189 Cal. 531; Drinker, Legal Ethics (1953) at p. 180.)

The Committee does not have before it sufficient facts to determine the propriety of the corporation's relation to its clients. However, the Committee would admonish the corporation to take care not to extend its activities beyond permissible limits and the attorney to take care not to aid the corporation in any improper extension which would cause him to violate rule 3 of the Rules of Professional Conduct of the State Bar and [former] canon 47 of the [former] Canons of Professional Ethics of the American Bar Association.