Can one lawyer draft a contract for deed for both buyer and seller, and later represent the seller when the buyer defaults and sues?

Plain-English summary

A real estate agent asked an attorney to draft a contract for deed reflecting a buy-sell the agent had facilitated, with buyer and seller splitting the legal cost; the attorney prepared the documents after meeting both. When the buyers later defaulted and sought rescission and damages, the sellers asked the attorney to defend them. The committee was asked whether a lawyer can represent both buyer and seller and whether a lawyer who represented both can later represent one against the other, answering yes (with conditions) to the first and no to the second.

On joint representation, the committee observed that representing both buyer and seller carries a high potential for conflict, but that Rule 2.2 permits multiple representation where the common representation will not adversely affect any client and all clients consent after full disclosure. It described the conditions for acting as an intermediary: each client's informed consent after the lawyer fully explains the advantages and risks (including the impact on privilege); a reasonable belief that the matter can be resolved on terms consistent with the clients' interests and handled impartially; and keeping clients adequately informed, terminating if any condition cannot be met. The committee stressed the lawyer must use independent judgment about fairness, and that the clients must be able to make informed decisions. On these facts it found it unclear whether Rule 2.2's requirements were met, and emphasized the attorney must consult each client directly (not rely on the realtor to convey information) and must not treat the matter as "representing the realtor," who is not a client.

On the later switch, the committee concluded the lawyer may not represent one party against the other. Under Rule 2.2, if any client asks the lawyer to withdraw, the lawyer must terminate and may not afterward represent any client in the matter that was the subject of intermediation. Rule 1.9 reinforces this, barring later representation of another person in the same or a substantially related matter materially adverse to a former client absent consent.

Currency note

This opinion was issued in 1998, before the State Bar of Montana's adoption of the 2004 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 one lawyer represent both buyer and seller in a real estate deal?

A: The opinion concludes yes, but only with direct consultation of both, full disclosure of the disadvantages, and each client's consent, preferably in writing.

Q: Can the lawyer rely on the real estate agent to relay information to the clients?

A: No. The opinion requires the lawyer to consult each client directly and not rely on the realtor, who is not a client.

Q: Can the lawyer later defend the seller when the buyer sues?

A: No. The opinion holds the lawyer may not represent one former joint client against the other in the same matter, under Rules 2.2 and 1.9.

Q: What if one client asks the lawyer to withdraw?

A: The opinion says the lawyer must terminate the intermediation and may not afterward represent any of the clients in that matter.

Background and rules framework

The opinion interprets Montana Rule of Professional Conduct 2.2 (lawyer as intermediary; then in force), Rule 1.7 (concurrent conflicts; Model Rule 1.7), and Rule 1.9 (former-client conflicts; Model Rule 1.9) in the context of joint representation of buyer and seller.

Citations and references

Rules of Professional Conduct:

• Mont. R. Prof. Cond. 2.2 (intermediary) / Model Rule 2.2 (since withdrawn from the Model Rules)
• Mont. R. Prof. Cond. 1.7 (concurrent conflicts) / Model Rule 1.7
• Mont. R. Prof. Cond. 1.9 (former-client conflicts) / Model Rule 1.9

Other authorities:

• Comment, Representing Vendor and Vendee in a Single Transaction, 2 J. Legal Prof. 133 (1977)

See also

• State Bar of Montana Ethics Op. 960731: Couples and Estate-Plan Conflicts
• State Bar of Montana Ethics Op. 951026: Former-Client Superfund Conflict

Source

• Landing page: https://www.montanabar.org/For-Attorneys/State-Bar-Resources/Ethics-Opinions
• Original PDF: https://www.montanabar.org/Portals/MONTANA/Site Resources/Ethics Opinions/1.6 confidentiality/981216.pdf

Original opinion text

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

Ethics Opinion
FACTS: Attorney is approached by a real estate agent requesting attorney draft a contract for deed containing the terms of a buy-sell the agent facilitated. The realtor has arranged for the buyer and seller to split the cost of the legal work equally. The attorney prepares the documents after meeting with both the buyer and seller. Later, the buyers, unhappy with their purchase, default on the contract and seek rescission and damages. The sellers ask the attorney who prepared the documents to defend their interests.

QUESTIONS PRESENTED:

1. Can an attorney represent both the buyers and sellers in a real estate transaction?

2. Can an attorney who has represented both parties, later represent one of the parties against another?

SHORT ANSWER:

1. Yes, but only if the attorney directly consults both buyer and seller, explains fully the disadvantages of multiple representation, and obtains each client's consent to the arrangement, preferably in writing. The attorney must not rely upon the realtor to convey the information.

2. No.

DISCUSSION AND AUTHORITY: Lawyers should be cautious about representing both the buyer and seller in real estate transactions since the potential for conflict is high and consequences of failure can be severe. See Comment, Representing Vendor and Vendee in a Single Transaction: A Strict View of Conflicting Interests, 2 J. Legal Prof. 133 (1977). However, lawyers can represent multiple clients who, despite potential conflicts of interest, have an overriding desire to achieve a common goal. Rule 2.2 of the Montana Rules of Professional Conduct permit multiple representation so long as the common representation will not adversely affect any one of the clients and all of the clients consent after full disclosure.

A lawyer may act as an intermediary between two or more clients if: 1) the clients each consent after the lawyer explains fully the advantages and risks of such representation, including its impact on the attorney-client privilege; 2) the lawyer reasonably believes that the matter can be resolved on terms consistent with the clients' best interests; 3) the lawyer reasonably believes that the matter can be handled impartially and without improper effect on any other clients; and 4) the lawyer keeps the clients adequately informed about the decisions to be made and the considerations that are relevant to making those decisions. If the lawyer finds that any of these conditions cannot be satisfied the lawyer must terminate the representation.

Before undertaking intermediation, a lawyer must subjectively believe that the benefits of multiple representation will far outweigh the risks posed by any potential conflict. The lawyer must use independent judgment as to the fairness of any possible agreement and must gauge whether the agreement would be consistent with each individual client's interest. Also, the lawyer must reasonably believe that the clients can each make informed decisions in the matter. For instance, the lawyer should not agree to represent both the buyer and seller in the sale of a business - despite the parties' consent - where the lawyer knows that the seller is unaware of key information about the buyer's financial condition.

Given the facts presented, it is unclear whether the requirements of Rule 2.2 have been met. While the attorney may draft a contract for deed containing the terms of a buy-sell the real estate agent facilitated, the attorney must not rely upon the realtor to convey the information. Nor should the attorney rationalize the relationship as "representing the realtor." The lawyer owes no duty to the realtor as the realtor has no substantive legal rights in the agreement and clearly is not a client. The lawyer is obliged to consult with each client, that is the buyer and seller, explain fully the advantages and disadvantages of multiple representation, and obtain each client's consent to the arrangement, preferably in writing.

Under Rule 2.2 on intermediation, if any one of the clients asks the lawyer to withdraw, the lawyer must terminate the representation. After withdrawal, the lawyer may not represent any of the clients in the matter that was the subject of the intermediation. This responsibility to withdraw is also stated in Rule 1.9, which states:

A lawyer who has formerly represented a client in a matter shall not thereafter:

   (a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation; or

   (b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information has become generally known.