Can a lawyer sell real estate he owns to a client he is currently representing in the client's divorce?
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This page answers the general question as of 1993. Ezel answers yours: whether it's allowed on your facts, under the current Massachusetts Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer represented a woman in a divorce. She ran a growing day-care business that had outgrown her home and needed new space, a need her husband and his counsel knew about and seemed willing to fund from marital assets. The lawyer's own wife, a real estate broker, had listed a parcel suitable for the day care; the lawyer was trustee, and he and his wife were beneficiaries, of the trust holding title. The divorce client wanted to buy it, and the lawyer asked whether he could negotiate the sale while continuing to represent her in the divorce.
The committee examined three disciplinary rules. Under DR 5-104(A), a lawyer may not enter a business transaction with a client where their interests differ and the client expects the lawyer's protection, unless the client consents after full disclosure; the committee treated the trust ownership as if the property were the lawyer's own and the interests as clearly differing, and said the client needed separate counsel on the transaction. Under DR 5-101(A), the lawyer had to avoid letting his financial interest interfere with his professional judgment, staying alert to situations where, for example, it might no longer serve the client to buy the parcel but would serve the lawyer and his wife to sell it. Under DR 5-103(A), a lawyer may not acquire a proprietary interest in the subject of litigation, but the committee found no ongoing proprietary interest in the litigation's subject matter, distinguishing Opinion 91-1.
Calling it a judgment call, the committee concluded the transaction could go forward on two conditions. First, the client had to have separate counsel advising her on the real estate purchase, and if that counsel thought the conflicting pulls made it inadvisable, would presumably advise against buying. Second, the lawyer had to fully inform opposing counsel in the divorce of the client's wish to buy the parcel he held in trust, and if opposing counsel objected to spending marital assets on it, that should end the matter unless a court decreed otherwise.
Currency note
This opinion was issued in 1993, before Massachusetts's adoption of the 2015 revisions to the Rules of Professional Conduct. 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, deadline, or requirement mentioned here.
Common questions
Q: Can a lawyer do a business deal with a current client?
A: Under DR 5-104(A), the committee said a lawyer may enter a business transaction with a client where interests differ only if the client consents after full disclosure, and here the client needed separate counsel advising her on the deal.
Q: Does it matter that the lawyer owned the property through a trust?
A: No. The committee saw no significance in the trust ownership and analyzed the matter as though the lawyer owned the property outright, with his interest and the client's clearly differing.
Q: What did opposing counsel's role have to be?
A: The committee required the lawyer to fully inform the opposing spouse's counsel of the client's desire to buy the parcel, and said that if that counsel objected to using marital assets for it, the deal should not proceed unless a court ordered otherwise.
Background and rules framework
The opinion applied DR 5-104(A) (business transactions with a client where interests differ), corresponding to Model Rule 1.8(a), DR 5-101(A) (a lawyer's own financial interest interfering with professional judgment), corresponding to Model Rule 1.7(a)(2), and DR 5-103(A) (acquiring a proprietary interest in the subject of litigation), corresponding to Model Rule 1.8(i).
Citations and references
Rules of Professional Conduct:
- Model Rule 1.8(a) / DR 5-104(A) (business transactions with a client)
- Model Rule 1.7(a)(2) / DR 5-101(A) (lawyer's personal interest conflict)
- Model Rule 1.8(i) / DR 5-103(A) (proprietary interest in the subject of litigation)
Other opinions cited:
- MBA Opinion 91-1 (matrimonial lawyer barred from securing a fee by a mortgage on a home still part of marital assets)
See also
- MA Bar Ethics Op. 94-3: Estate funds a client may divert and a surety conflict
- MA Bar Ethics Op. 02-1: Lawyer for co-executors asked to take a spouse's divorce
Source
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