Can a lawyer be a director, stockholder, and legal advisor of a corporation that provides condominium-development consulting using lawyers and real estate brokers?

Plain-English summary

A member's client wished to form a corporation to furnish consulting services to prospective sponsors of condominium housing developments under the Florida Condominium Act. The corporation's personnel would be lawyers and real estate brokers or salesmen, and the service would run from the initial planning stage through the sale of a dwelling unit. The inquiring lawyer's firm expected to furnish legal representation to some of the service's clients, and he had been asked to act as the service's legal advisor and as a director and stockholder.

The committee said that, subject to more detail, violation of one or more of Canons 6, 27, 33, and 47 was probable. A lawyer may form a corporation, advise it, and be a director or stockholder; the problem was that he suggested rendering legal advice not only to the corporation but also to its clients, where a conflict of interests could develop and offend Canon 6. More importantly, his firm expected professional employment from the service's clients, and Canon 27 prohibits soliciting representation directly or indirectly: a lawyer may be in more than one business, but they must be kept separate, and no other business interest should be used to obtain or channel legal work. The committee found it inevitable that the service would render legal services through its personnel, some possibly not admitted in Florida, creating a strong possibility of unauthorized practice that Canon 47 forbids a lawyer to aid. One member added that Canon 33 bars lawyer-nonlawyer partnerships where part of the work is the practice of law, and that the arrangement would offend its spirit because the corporation would interpret and apply the Condominium Act.

Currency note

This opinion was issued in 1963-64, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct, and before the United States Supreme Court's decision in Bates v. State Bar of Arizona, 433 U.S. 350 (1977), which reshaped the law governing lawyer solicitation and advertising. The opinion itself carries a caveat that its validity may be affected by United Mine Workers v. Illinois State Bar Association, 389 U.S. 217 (1967). The opinion applied former Canons 6, 27, 33, 35, and 47 of the Canons of Professional Ethics; conflicts are now addressed by Rule 4-1.7, professional independence and lawyer-nonlawyer association by Rule 4-5.4, unauthorized practice by Rule 4-5.5, and solicitation by Rule 4-7.18 of the Rules Regulating The Florida Bar (Model Rules 1.7, 5.4, 5.5, and 7.3). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Can a lawyer be a director and stockholder of a corporation he also advises?

A: Yes, in general. The committee said any lawyer may form a corporation, act as its legal advisor, and be a director or stockholder. The problem in this opinion arose from the further features described below.

Q: What made this particular arrangement likely improper?

A: The lawyer proposed to advise the corporation's clients (raising conflict concerns under Canon 6), his firm expected to draw client work through the service (solicitation under Canon 27), and the service would render legal advice through its personnel, making unauthorized practice nearly inevitable (Canon 47).

Q: Did Canon 33 on partnerships factor in?

A: One member invoked Canon 33, which bars lawyer-nonlawyer partnerships involving the practice of law, reasoning that close connection with this corporation would offend its spirit because the corporation would interpret and apply the Condominium Act.

Background and rules framework

The opinion applied former Canons 6 (conflicting interests), 27 (solicitation), 33 (partnerships with nonlawyers), 35 (professional independence), and 47 (aiding unauthorized practice) of the Canons of Professional Ethics. Those concerns map to current Rule 4-1.7 (conflicts), Rule 4-5.4 (professional independence and association with nonlawyers), Rule 4-5.5 (unauthorized practice), and Rule 4-7.18 (solicitation) of the Rules Regulating The Florida Bar (Model Rules 1.7, 5.4, 5.5, and 7.3). The committee distinguished a lawyer's permissible ownership of a business from the use of that business to channel legal work and to deliver legal services through nonlawyer or unadmitted personnel.

Citations and references

Rules of Professional Conduct:

• Canons 6, 27, 33, 35, 47 [Canons of Professional Ethics; see current Rules 4-1.7, 4-5.4, 4-5.5, 4-7.18]

Cases:

• United Mine Workers v. Illinois State Bar Association, 389 U.S. 217 (1967): cited in the opinion's caveat as possibly affecting its validity

See also

• FL Bar Ethics Op. 64-25: Multidisciplinary Building-Services Corporation
• FL Bar Ethics Op. 64-29: Employment by a Broker's Tax-Advisory Company
• FL Bar Ethics Op. 64-33: Estate Analyses for an Insurer's Prospects

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-63-37/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-63-37.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 63-37
January 11, 1964
Advisory ethics opinions are not binding.
If an attorney participates with his clients in a corporation formed as a consulting service for prospective sponsors of condominium housing developments, the personnel of which would be lawyers and real estate brokers, and legal services are rendered to the consulting service and to its clients, ethical violations are probable and inevitable.
Caveat: The validity of this opinion may be affected by United Mine Workers v. Illinois State Bar Association, 389 U.S. 217 (1967).
Canons: 6, 27, 33, 35, 47
Chairman Smith stated the opinion of the committee:
A member of The Florida Bar states that a client of his office wishes to form a corporation for the purpose of furnishing a consulting service for prospective sponsors of condominium housing developments under the Florida Condominium Act. Personnel of the corporation will consist of lawyers and real estate brokers or salesmen. He mentions the names of two of the lawyers but does not indicate whether they are members of The Florida Bar. He indicates that the service rendered will include consultation from the initial planning stage through the sale of a dwelling unit. He further states that his firm expects to furnish legal representation to some of the clients of the consulting service and that he has been asked to act as a legal advisor to the service and as a director and stockholder.
Attention is directed to the provisions of Canons 6, 27, 33 and 47 respectively. They are published in Florida Statutes Annotated and elsewhere. Subject to receipt of further details concerning the plan and his expected participation, it is the opinion of the Committee that violation of one or more of the Canons mentioned is probable.
Of course, any attorney duly admitted to practice in this state can form a corporation and act as legal advisor to it. Further, he may also be a director and/or stockholder of the corporation. His inquiry suggests the possibility, however, of rendering legal advice not only to the corporation but also to its clients. Conceivably a conflict of interests could develop which could offend the provisions of Canon 6.
More importantly, he suggests that his firm expects to receive professional employment from clients of the consulting service. Canon 27 prohibits the solicitation of legal representation either directly or indirectly. A lawyer can be engaged in more than one business or profession but they must be kept separate and apart and no other business or professional interest should be used to obtain or channel professional work.
It seems inevitable that the consulting service will render legal service through its personnel, some of whom are lawyers possibly not admitted to practice in this State. There is a strong possibility that the service contemplated will, at least partially, constitute unauthorized practice of law. Canon 47 provides that no lawyer shall permit his professional services, or name, to be used in aid of unauthorized practice of law by any lay agency, personal or corporate.
One member of this Committee refers to Canon 33, which relates to partnerships and prohibits the formation of partnerships between lawyers and non-lawyers where any part of the partnership's employment consists of the practice of law. It is suggested that to become intimately connected with the corporation as suggested would offend the spirit of this Canon since the corporation will advise its clients about legal matters and will necessarily interpret and apply the provisions of the Florida Condominium Act.