Can a lawyer hired by a business broker draft the closing documents for both the buyer and seller of a business?

Plain-English summary

A "business broker" who represented sellers of businesses, negotiated sales, and drafted the sale contracts proposed to hire an attorney on a per-case basis, with the fee paid equally by buyer and seller. The attorney would represent the broker, prepare the closing documents, bulk-sale compliance documents, closing statement, and title-transfer papers, but not the initial contract (which the broker prepared). The inquiry asked whether representing the broker and drafting the closing documents was improper, and whether the answer changed if the broker rather than the attorney prepared the bulk-sale notices or closing statement.

The committee found a "tripartite" relationship: the broker is the client, but by rendering services to both buyer and seller, the buyer and seller also become clients unless they retain independent counsel. That places the attorney in an untenable conflict under former Rules 5-105 (independent judgment) and 5-107 (undivided fidelity; not permitting a payor to direct the lawyer's judgment). The committee asked whom the attorney would represent if a commission dispute arose between the broker and seller, or a dispute arose between buyer and seller. While Opinion 86-15 left the door slightly ajar for buyer-seller representation after full disclosure under Rule 5-105(c), the broker's involvement here closes it.

The committee also voiced concern that the attorney may aid the unauthorized practice of law, citing Opinion 281 and Quinlan-Tyson; a layman's preparation of business-sale contracts could itself be unauthorized practice, and under Canon 3 a lawyer should assist in preventing it. The committee concluded it is professionally improper for an attorney hired by a business broker to draft closing documents for the seller and buyer on these facts.

Currency note

This opinion was issued in July 1989, under the former Illinois Code of Professional Responsibility and before Illinois adopted the 1990 (and later 2010) Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in May 2010 as generally consistent with the 2010 Rules (Rules 1.7 and 5.4(c)), while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions 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 Treat this page as historical context, not current guidance.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.

Common questions

Q: Can one lawyer draft the closing documents for both the buyer and seller of a business?

A: The opinion concluded that on these facts it is improper; serving both sides creates a conflict the committee found unwaivable here, especially because the lawyer was hired by a third party, the broker.

Q: Who is the lawyer's client when a broker hires and the buyer and seller pay?

A: Per the opinion, the broker is the client, but rendering services to the buyer and seller makes them clients too unless they retain their own counsel, producing a tripartite conflict under former Rules 5-105 and 5-107.

Q: What is the unauthorized-practice concern?

A: The opinion concluded that a layman broker preparing business-sale contracts could be the unauthorized practice of law, and an attorney assisting that arrangement risks aiding it, contrary to Canon 3.

Background and rules framework

The opinion applied former Illinois Code Rules 5-105(a) and (c) (declining employment that impairs independent judgment; multiple representation only with adequate representation and consent after full disclosure), Rule 5-107(a) and (c) (undivided fidelity; not permitting a payor to direct the lawyer's judgment), and Canon 3 (assisting in preventing the unauthorized practice of law). The Board's 2010 affirmation maps the analysis to current Illinois Rules of Professional Conduct 1.7 and 5.4(c), corresponding to ABA Model Rules 1.7 and 5.4.

Citations and references

Rules of Professional Conduct:

• Illinois Code Rules 5-105(a),(c); 5-107; Canon 3 (former Code, applied in the opinion)
• Illinois RPC 1.7, 5.4(c) (2010 equivalents per the Board's affirmation)
• MR 1.7 (conflicts of interest), MR 5.4 (professional independence), MR 5.5 (unauthorized practice)

Other opinions cited:

• ISBA Opinion No. 86-15: generally improper for a lawyer to represent both buyer and seller in a real estate transaction
• ISBA Opinion No. 281: an attorney retained by a real estate broker may not, through the broker, represent buyer and seller and prepare all the transaction documents

See also

• ISBA Ethics Op. 90-03: One Lawyer on Both Ends of a Linked Real Estate Chain
• ISBA Ethics Op. 88-08: A Collection Client's Staff Fielding Calls in the Firm's Name

Source

• Landing page: https://www.isba.org/ethics/opinions/8901