In Kentucky, can a lawyer who is also a real estate sales agent represent a client in the same transaction where the lawyer earns a sales commission?

Plain-English summary

A lawyer who was also a licensed real estate sales agent with a brokerage asked, in three parts, when the lawyer could provide both legal and real estate services. The Committee began from settled ground: a lawyer may be both a real estate agent and a practicing lawyer (KBA E-74). The questions turned on conflicts of interest under KRPC 1.7(b), business transactions with clients under KRPC 1.8(a), confidentiality under KRPC 1.6, and the rules on fee sharing, solicitation, and advertising.

For Question 1 (same lawyer, same transaction, earning a commission), the Committee answered no. The lawyer's interest in closing the sale and earning the commission conflicts with the duty to protect the client, even by advising against the sale, and a real estate agent may owe duties to the other party that collide with the lawyer's confidentiality duty. The Committee concluded this is a conflict for which consent cannot properly be requested, consistent with KBA E-74 and out-of-state authority including In re Roth (N.J. 1990). For Question 2 (another agent in the same brokerage handles the deal), the Committee also answered no, reasoning that the lawyer's direct or indirect benefit from the brokerage's transaction materially limits the representation so that a disinterested lawyer would conclude the client should not consent.

For Question 3 (unrelated legal work for a person the lawyer also serves as a real estate agent), the Committee answered yes, with written disclosure and consent, because the potential for conflict is lower. The lawyer had to explain the different roles and the limits of confidentiality and privilege under KRPC 1.6, avoid using client information to the client's disadvantage under KRPC 1.8(b), and satisfy the business-transaction safeguards of KRPC 1.8(a). The opinion also reviewed solicitation (a "prior professional relationship" under Rule 7.30 means a prior lawyer-client relationship, not a real estate one), advertising (a lawyer may truthfully state a real estate license, subject to the advertising rules), and the bar on sharing legal fees with the brokerage under KRPC 5.4(a) and on paying for referrals under KRPC 7.20(2).

Currency note

This opinion was issued in 1999 and predates the Kentucky Supreme Court's substantial 2009 revisions to the Rules of Professional Conduct (SCR 3.130), under which several rules cited here, including the advertising and solicitation rules, were amended or renumbered. The Kentucky Bar Association notes that lawyers should consult the current version of the rules before relying on this opinion. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a Kentucky lawyer act as both lawyer and real estate agent in the same deal?

A: Per the opinion, no. The Committee concluded that the lawyer's stake in earning the commission conflicts with the duty to the client in a way that cannot properly be cured by consent under KRPC 1.7(b).

Q: What if a different agent at the lawyer's brokerage handles the real estate side?

A: The opinion concluded the answer was still no, because the lawyer benefits directly or indirectly from the brokerage's transaction, materially limiting the representation so that a disinterested lawyer would conclude the client should not consent.

Q: Can the lawyer do unrelated legal work for someone who is also a real estate client?

A: Per the opinion, yes, with written disclosure and consent. The Committee required the lawyer to explain the separate roles, protect confidentiality under KRPC 1.6, and meet the business-transaction safeguards of KRPC 1.8(a).

Q: Could the lawyer advertise the real estate license?

A: The opinion concluded a lawyer may truthfully state that he is a licensed real estate broker, since that is not false or misleading, subject to Kentucky's advertising-submission rules.

Background and rules framework

The opinion interprets KRPC 1.7(b) (conflicts of interest; the Model Rule 1.7 counterpart), KRPC 1.8(a) and (b) (business transactions with and use of information about clients; Model Rule 1.8), KRPC 1.6 (confidentiality; Model Rule 1.6), KRPC 5.4(a) (sharing fees with nonlawyers; Model Rule 5.4), and the Kentucky advertising and solicitation rules (KRPC 7.01-7.30, the Model Rule 7.x counterparts). It applies comment 4 to KRPC 1.7 on when consent may not be requested.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / KRPC 1.7(b) (conflicts of interest; materially limited representation)
• MR 1.8 / KRPC 1.8(a), (b) (business transactions; use of client information)
• MR 1.6 / KRPC 1.6 (confidentiality)
• MR 5.4 / KRPC 5.4(a) (sharing fees with nonlawyers)
• KRPC 7.20(2); KRPC 7.30 (paying for referrals; solicitation)

Cases:

• In re Roth, 577 A.2d 490 (N.J. 1990), lawyer earning brokerage commission in the same transaction
• Ibanez v. Florida Dept. of Bus. & Prof. Reg., 512 U.S. 136 (1994), truthful professional advertising

Other opinions cited:

• KBA E-74 (1973): a lawyer may be a real estate broker but not in the same transaction
• Colo. Op. 98; N.C. Op. RPC 201; N.Y. Op. 493; R.I. Op. 96-29: dual lawyer/broker practice

See also

• KBA Ethics Op. E-420: Borrowing Litigation Costs and a Security Interest in a Contingent Fee
• KBA Ethics Op. E-417: Sharing Office Space With Nonlawyers

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-408.pdf

Original opinion text

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

Kentucky Bar Association
Ethics Opinion KBA E-408
Issued: July 1999

Since the adoption of the Rules of Professional Conduct in 1990, the Kentucky Supreme
Court has made substantial revisions to the rules governing the advertisement of legal
services. For example, this opinion refers to Rules 1.7, 7.02 and 7.05, which were
amended. Rule 1.8 now requires that certain information be reduced to writing, and
in some cases, signed by the client. The prohibition on false, deceptive and misleading
communications is contained in Rule 7.15 and Rule 7.30 has been replaced by Rule
7.09. Lawyers should consult the current version of the rules and comments, SCR 3.130
(available at http://www.kybar.org) and the Attorneys’ Advertising Commission
Regulations, before relying on this opinion.

Question 1:

May a lawyer who is also a real estate sales agent with a brokerage firm provide
legal representation to a client in the same transaction in which the lawyer
provides to the client services as a real estate sales agent and is to receive a
commission?

Answer:

No.

Question 2:

May a lawyer who is a real estate sales agent with a brokerage firm provide legal
representation to a client if other real estate agents working with the same
brokerage firm are providing real estate services for the transaction in which the
legal services are to be rendered?

Answer:

No.

Question 3:

May a lawyer who is also a real estate sales agent with a brokerage firm provide
legal representation to a client if the lawyer also provides services as a real estate
sales agent to that client and if the legal services are unrelated to the real estate
services?

Answer:

Yes, upon written disclosure and consent. See opinion.

References:

Kentucky Rule of Professional Conduct (KRPC) 1.7(b) (SCR 3.130(1.7)); KRPC
1.8(a); KRPC 1.6; KRPC 7.01-7.5; KRPC 5.4(a); KBA E-74 (1973) ; Jean A.
Mortland, Attorneys as Real Estate Brokers: Ethical Considerations, 25 Real
Prop. Prob. & Tr. J. 755 (1991); Caryl Yzenbaard, Kentucky Real Estate and
Sales Contracts (1995); Stephen L. Frank, Real Estate Professionals and the Law
(1986); Colo. Op. 98 (1996); Mich. Op. RI-135 (1992); N.C. Op. RPC 201
(1995); N.Y. Op. 493 (1978); N. Y. County Op. 685 (1991); R.I. Op. 96-29
(1996); R.I. Op. 96-26 (1996); Utah Op. 146A (1995); In re Roth, 577 A.2d 490
(N.J. 1990); Ibanez v. Florida Dept. of Bus. & Prof. Reg., Bd. Of Accountancy,
512 U.S. 136 (1994).

OPINION
There is no doubt that a lawyer may be both a real estate agent and a practicing lawyer.
See KBA E-74 (1973) (attorney may be a real estate broker). See also KBA E-376 (1995)
(attorney may be a seller of insurance). The questions presented here deal with the
circumstances in which the lawyer may provide both legal services and real estate sales services
to the same client. In such situations, the rules relating to conflicts of interest (Kentucky Rule of
Professional Conduct (KRPC) 1.7(b)), transaction of business with clients (KRPC 1.8(a)),
confidentiality (KRPC 1.6), solicitation (KRPC 7.30), advertising (KRPC 7.01-7.5), sharing fees
with nonlawyers (KRPC 5.4(a)), and referral fees (KRPC 7.20(2)) must be observed and
followed.
Question 1:
First, KRPC Rule 1.7(b)(SCR 3.130 (1.7(b)) states:
A lawyer shall not represent a client if the representation of that client may be
materially limited by the lawyer's responsibilities to another client or to a third
person, or by the lawyer's own interests, unless:
(1) The lawyer reasonably believes the representation will not be adversely
affected; and
(2) The client consents after consultation. When representation of multiple clients
in a single matter is undertaken, the consultation shall include explanation of the
implications of the common representation and the advantages and risks involved.
The comment 4 to KRPC 1.7 states with regard to consent that “when a disinterested lawyer
would conclude that the client should not agree to the representation under the circumstances, the
lawyer involved cannot properly ask for such agreement, or provide representation on the basis
of the client’s consent.”
Question 1 asks whether a lawyer may serve as both lawyer and real estate sales agent for
the same client in the same transaction. The lawyer's own interest in consummating the sale and
obtaining the commission conflicts with the lawyer's responsibility to the client to protect the
client's interests even if such protection takes the form of advising against consummation of the
sale. The lawyer’s independent professional judgment would be impermissibly affected by the
lawyer’s personal interest in consummating the sale.
In addition, as a real estate sales agent, the lawyer may owe fiduciary or other duties to
the other party in the proposed transaction. For example, a real estate agent employed by a
brokerage firm representing the seller may have a duty to disclose information about defects in
the seller’s property while at the same time may have a duty of confidentiality as an attorney to
keep such matters confidential. See Jean A. Mortland, Attorneys as Real Estate Brokers: Ethical
Considerations, 25 Real Prop. Prob. & Tr. J. 755 (1991). See also Caryl Yzenbaard, Kentucky
Real Estate and Sales Contracts (1995); Stephen L. Frank, Real Estate Professionals and the Law
(1986) (discussing Kentucky law).
Given the nature of these conflicts, the Committee believes that the situation is one for
which consent cannot properly be requested and thus the lawyer may not provide both real estate

sales agent services and legal services in the same transaction. This position was stated earlier in
KBA-74 (1973) and is thus not new to the lawyers of Kentucky. See KBA E-74. Ethics
opinions of several other states are in agreement in disapproving of dual representation in a
single transaction. See R.I. Op. 96-29 (1996); N.C. Op. RPC 201 (1995); N.Y. Op. 493 (1978);
N. Y. County Op. 685 (1991). In In re Roth, 577 A.2d 490 (N.J. 1990), the New Jersey Supreme
Court stated, “We are satisfied that an attorney who seeks to obtain a commission for brokerage
services in connection with legal services rendered in the same transaction for the same client
will have violated our ethics rules.” Id. at 496 (the court was reviewing the recommendation of
discipline for an attorney who had provided both real estate services and legal services to the
same client in the same transaction but without a real estate license). See also Colo. Op. 98
(1996) (in an opinion dealing generally with all sorts of dual practices, the committee stated that
it “strongly discourages lawyers from ever wearing two hats in the same transaction, for example
serving both as lawyer and real estate broker”).
Question 2:
Question 2 inquires whether the lawyer may provide legal services in the same
transaction in which another real estate sales agent working with the same brokerage firm
provides the real estate services. KRPC 1.7(b) must again be followed. Since the representation
“may be materially limited” by the lawyer’s attachment to the brokerage, the lawyer must
consider whether he or she “reasonably believes” the representation will not be adversely
affected and whether client consent can be sought given the limitation on requesting client
consent contained in comment 4 to KRPC 1.7. Comment 4 to KRPC 1.7 states with regard to
consent that “when a disinterested lawyer would conclude that the client should not agree to the
representation under the circumstances, the lawyer involved cannot properly ask for such
agreement, or provide representation on the basis of the client’s consent.”
Because the lawyer shares in benefit to the brokerage, direct or indirect, that accrues as
the result of the real estate representation, KRPC 1.7(b) would prohibit requesting consent from
the client and thus the representation cannot occur. Obviously, if the lawyer is to share in the
real estate commission in any way, the conflict is such that a disinterested lawyer would
conclude that the client should not consent to the representation. Even if the lawyer does not
share directly in the commission, the lawyer benefits in indirect ways such as an increased
advertising budget for the brokerage which results in the possibility of increased business for the
lawyer as a real estate agent. This indirect benefit creates a conflict such that a disinterested
lawyer would conclude that the client should not consent to the representation. But see N.C.
Op. RPC 201 (1995) (lawyer can represent the client if lawyer “reasonably concludes that the
exercise of his independent professional judgment on behalf of his clients will not be ‘materially
impaired’ by his desire to advance the interests of Real Estate Company or his desire to
encourage future referrals”).
Question 3:
Question 3 inquires whether the lawyer may provide legal representation to clients to
whom the lawyer also provides real estate services if the legal representation is not related to the
real estate services. KRPC 1.7(b) must be considered and followed. Because the potential for
conflict is less, KRPC 1.7(b) does not, in general, preclude the representation.

The lawyer should explain the implications of such dual role representation to the client
so that the client understands the different roles of the lawyer and duties of the lawyer as lawyer
as opposed to duties as real estate sales agent. It is especially important that the lawyer explain
the application of the lawyer's ethical duty of confidentiality as stated in KRPC 1.6 as well as the
application of the attorney-client privilege so that the client understands which communications
are protected and which are not. In addition to explaining the confidentiality issues to the client,
the lawyer must ensure that confidential information protected by KRPC 1.6 or the attorneyclient privilege maintains its confidential or privileged status.
Further, the lawyer must heed KRPC 1.8(b) which states that a “lawyer shall not use
information relating to representation of the client to the disadvantage of the client unless the
client consents after consultation.” A lawyer may have financial or other information about the
client. The lawyer must be ever mindful that he or she not use that information to the
disadvantage of the client when the lawyer is acting as lawyer or when the lawyer is acting as
real estate agent.
A lawyer providing a dual role representation must take care to follow KRPC 1.8(a)
which governs entering into a "business transaction with a client or knowingly acquir[ing] an
ownership, possessory, security or other pecuniary interest adverse to a client." KRPC 1.8(a)
requires that the "transaction and terms on which the lawyer acquires the interest" be "fair and
reasonable to the client" and "fully disclosed and transmitted in writing to the client in a manner
which can be reasonably understood by the client." This disclosure should include a full
explanation of fees and commissions. The client must be "given a reasonable opportunity to
seek the advice of such independent counsel in the transaction." The arrangement will be ethical
only if the client "consents in writing thereto."
General Discussion:
Because other ethical pitfalls are inherent in a dual practice setting, dual practice
attorneys must be ever careful to avoid not only the problems discussed above but also those
touching upon the ethical constraints on solicitation, advertising, sharing fees with non-lawyers
and referral fees.
Solicitation
Rule 7.30 prohibits in-person or live telephone solicitation of professional employment
but allows otherwise prohibited solicitation if the lawyer has a "prior professional relationship"
with the prospective client or if the prospective client is a member of the family. "Prior
professional relationship" refers to a prior lawyer-client relationship, not any other arguably
"professional" relationship. See R.I. Op. 96-26 (1996) (“‘professional relationship’ refers to the
attorney-client relationship, and not to some other business relationship”); Colo. Op. 98 (1996)
(“‘[p]rior professional relationship’ has been construed as limited to a prior lawyer-client
relationship.”); Utah Op. 146A (1995); (same); Mich. Op. RI-135 (1992) (same). Thus, if the
lawyer has performed legal services in the past for a prospective client, the lawyer may engage in
in-person or live telephone solicitation of a non-family member. In any other situation, inperson or live telephone solicitation cannot occur ethically. Thus, a dual practice lawyer cannot
solicit, in person or by telephone, legal business from a real estate client for whom the lawyer
has not rendered legal services in the past.

Advertising
With regard to advertising, Kentucky’s advertising rules apply to “advertisements in any
way related to or concerning legal services, which are directed to residents of the
Commonwealth of Kentucky, or which originate in the Commonwealth of Kentucky.” KRPC
7.01. KRPC 7.02 states: “‘Advertise’ or ‘advertisement’ means to furnish any written, printed
or broadcast information or any other communication containing an attorney’s name or other
identifying information.” KRPC 7.02 also lists communications that are specifically excluded
from the definition of advertising. Anything that meets the definition of “‘advertise’ or
‘advertisement’” in KRPC 7.02 and is not excepted by KRPC 7.02 is subject to the submission,
retention, and approval requirements of KRPC 7.05.
KRPC 7.05(1) provides for the submission of the advertisement to the Advertising
Commission simultaneously with the publication of the advertisement if the advertisement states
only the information specified in 7.05(1)(a). See KRPC 7.05(1)(a) & (b). KRPC 7.05(1)(a)(12)
specifically lists “technical and professional licenses” as a kind of information that can be
included in an advertisement and yet be within the realm of 7.05(1)’s simultaneous submission
scheme. Thus, a lawyer may indicate that he is a licensed real estate broker if that is, in fact, the
case.
Any advertisement not excluded by KRPC 7.02 and not within KRPC 7.05(1) must be
submitted to the Advertising Commission no fewer than thirty days prior to the scheduled use of
the advertisement. See KRPC 7.05(2). Though there are specific requirements in the rules that
must be followed such as the advertisement identification requirement of KRPC 7.25 and the
fees rule of KRPC 7.04, the general rule is that a lawyer must not “make a false, deceptive or
misleading communication about the lawyer or the lawyer’s service.” KRPC 7.10. A statement
by the lawyer that he is also a licensed real estate broker would not be “false, deceptive or
misleading” if the lawyer in fact has such a license. See also Ibanez v. Florida Dept. of Bus. &
Prof. Reg., Bd. Of Accountancy, 512 U.S. 136 (1994). Lawyers should be aware that submission
and/or approval of advertising material pursuant to either KRPC 7.05(1) or 7.05(2) does not
insulate the lawyer from a later claim that the material is “false, deceptive or misleading.”
Legal Fees
A dual practice lawyer must not share legal fees with non-lawyers such as the brokerage
firm in contravention of KRPC 5.4 (a). In addition, the lawyer must guard against violation of
KRPC 7.20(2). KRPC 7.20(2) prohibits “giving anything of value to a non-lawyer for
recommending the lawyer’s services,” other than paying the “reasonable cost of advertising or
communication permitted” by the advertising rules. KRPC 7.20(2). Compensation
arrangements must be carefully scrutinized to avoid these problems.
Finally, all lawyers considering a dual practice should investigate the statutes and case
law regulating the provision of real estate services. This opinion deals only with the issues
raised by the ethical rules applicable to attorneys.

Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar

Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor
rule). The Rule provides that formal opinions are advisory only.