Can a lawyer who is also a real estate agent close transactions for the brokerage's customers, take a sales commission on deals he provides legal services on, and share an office and phone with the brokerage?
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This page answers the general question as of 1995. Ezel answers yours: whether it's allowed on your facts, under the current North Carolina Rules of Professional Conduct, with citations.
Plain-English summary
The opinion addressed a lawyer who was also a licensed real estate salesman working for a "full service" real estate company, with his law office located inside the company's offices, sharing its phone number and signage, advertising himself as a lawyer only in the company's ads, and getting most of his legal business from the company's referrals. The committee answered fourteen inquiries about how he could combine the two roles.
The opinion concluded that the lawyer may not receive a real estate sales commission on a transaction in which he also provides legal services to any party other than the company, because Rule 5.1(b) requires a lawyer to decline a representation that may be materially limited by the lawyer's own interest, and a valuable commission would likely materially limit his judgment on behalf of the buyer, seller, or lender (citing CPR 307 and RPC 49). For the same reason, he may not waive his legal fee in exchange for the commission, or take the commission in lieu of a fee even if he shares it with other agents. He may close transactions the company brokered if he did not list or sell the property and earns no commission, provided he reasonably concludes his independent professional judgment will not be materially impaired by his desire to advance the company's interests or future referrals, and provided the clients consent after full disclosure of his affiliation; the committee noted serious concerns about his ability to maintain confidentiality while practicing inside the company's offices. He must disclose to referred clients that he is the company's agent and is paid commissions by it. He may provide legal services only to customers referred to him, may not share legal fees with the company or pay it for recommending him (Rule 3.2 and Rule 2.3(c)), and may not serve as in-house counsel providing legal services to the company's customers, which would violate G.S. 84-5's bar on corporations practicing law and constitute aiding the unauthorized practice of law under Rule 3.1(a). The committee declined to decide whether the company itself was engaged in unauthorized practice as a question of law. Finally, he may share the office and phone number, and appear in the company's ads with business cards in its packets, only if the receptionist, signage, and advertisements clearly show his law practice is separate and not false or misleading (Rule 2.1(a) and CPR 266).
Currency note
This opinion was issued in 1995, before the North Carolina State Bar's adoption of the 2003 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-realtor take a sales commission on a deal where he also provides legal services to a party?
A: No. The opinion concluded that a commission would likely materially limit the lawyer's judgment on behalf of the buyer, seller, or lender, so Rule 5.1(b) bars it, and he cannot evade that by waiving his fee or sharing the commission.
Q: Can he close transactions the brokerage refers to him?
A: Yes, with limits. The opinion concluded he may close deals he did not list or sell, earning no commission, only if he reasonably concludes his independent judgment will not be materially impaired and the clients consent after full disclosure of his affiliation.
Q: Can the lawyer share fees with the brokerage or pay it for referrals?
A: No. The opinion concluded he may not share legal fees with the company (Rule 3.2) or pay it anything for recommending his services (Rule 2.3(c)).
Q: Can he be the brokerage's in-house counsel and close its customers' deals?
A: No. The opinion concluded that providing legal services to the company's customers as its in-house counsel would violate G.S. 84-5's bar on corporations practicing law and would aid the unauthorized practice of law under Rule 3.1(a).
Q: Can he share the brokerage's office, phone, and ads?
A: Yes, if clearly separate. The opinion concluded he may do so only if the receptionist, signage, and advertisements clearly indicate his law practice is separate and contain no false or misleading communications (Rule 2.1(a)).
Background and rules framework
The opinion applied North Carolina's then-current Rule 5.1(b), the personal-interest conflict provision (corresponding to Model Rule 1.7); Rule 3.2, barring fee-sharing with nonlawyers, and Rule 2.3(c), barring payment for recommendations (corresponding to Model Rules 5.4 and 7.2); and Rule 3.1(a) on aiding the unauthorized practice of law together with G.S. 84-5's bar on corporate practice (corresponding to Model Rule 5.5). It also applied Rule 2.1(a) on truthful communications about a lawyer's services and relied on prior opinions CPR 307, CPR 266, and RPC 49.
Citations and references
Rules of Professional Conduct:
- MR 1.7 (conflict of interest; lawyer's personal interest)
- MR 5.4 (professional independence; fee-sharing with nonlawyers)
- MR 5.5 (unauthorized practice of law)
- North Carolina Rule 5.1(b), Rule 2.3(c), Rule 3.2, Rule 3.1(a), Rule 2.1(a)
Statutes:
- N.C. Gen. Stat. 84-5 (prohibition on corporations practicing law)
Other opinions cited:
- CPR 307 (lawyer may not certify title to property he listed or sold)
- CPR 266 (using one office for law practice and another business)
- RPC 49 (lawyer's interest in real estate transaction)
See also
- NC Ethics Op. RPC 248: mortgage brokerage owned by lawyers
- NC Ethics Op. RPC 210: multiple parties to a residential real estate closing
- NC Ethics Op. RPC 9: corporate house counsel and loan closings
Source
- Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-201/
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
Inquiry #1:
Attorney A has an active real estate license and is a real estate salesman for Real Estate Company. Attorney A's office is located inside the offices of Real Estate Company. From his office, Attorney A operates his law practice and sells real estate. There is no signage on the office door for Real Estate Company or on the exterior of the building that indicates that Attorney A operates a separate law practice from within the offices of Real Estate Company. The same telephone number is used for Real Estate Company and Attorney A's law practice.
Attorney A does not separately advertise his services as a lawyer. He does advertise and hold himself out as a lawyer in Real Estate Company's television and print advertisements. Real Estate Company advertises itself as providing "full service" which includes real estate closing services. Most of Attorney A's legal business comes from referrals from Real Estate Company, and Real Estate Company recommends that its customers use Attorney A to close their real estate transactions.
May Attorney A receive a real estate sales commission on a real estate transaction for which he provided legal services to any party involved in the transaction other than Real Estate Company?
Opinion #1:
No. Rule 5.1(b) requires a lawyer to decline to represent a client if the representation of the client may be materially limited by the lawyer's own interest. If Attorney A would realize a valuable commission from the closing of a real estate transaction, it is likely that Attorney A's judgment on behalf of the buyer, seller, or lender will be materially limited. CPR 307 specifically holds that a lawyer may not certify title to property he has listed or sold. See also RPC 49.
Inquiry #2:
May Attorney A close real estate transactions brokered by Real Estate Company if he did not list or sell the property and he will not earn a commission from the transaction?
Opinion #2:
Yes, provided Attorney A 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. Rule 5.1(b). A lawyer is not prohibited by the Rules of Professional Conduct from utilizing the same office for both the practice of law and for conducting another business. See CPR 266. However, in analyzing his ability to exercise his independent, professional judgment on behalf of his clients, Attorney A must consider whether the location of his law practice within the confines of the offices of Real Estate Company will affect his professional judgment because of the close physical proximity of realtors who are referring legal business to him. If the location of his office will affect his professional judgment, Attorney A must either decline to represent the parties to real estate transactions brokered by Real Estate Company or he must relocate his law practice to separate offices. If Attorney A concludes that he can manage the potential conflict of interest, the clients must also consent to the potential conflict after full disclosure of Attorney A's affiliation with Real Estate Company. See Rule 5.1(b).
[Apart from the potential conflict of interest posed by this inquiry, the Ethics Committee has serious concerns about Attorney A's ability to fulfill his duty of confidentiality while he is practicing law within the confines of the offices of the real estate company with which he is affiliated.]
Inquiry #3:
May Attorney A waive his legal fee for services rendered in closing a real estate transaction in exchange for the real estate commission he earned as the agent responsible for the sale of the real property?
Opinion #3:
No. See opinion #1 above.
Inquiry #4:
May Attorney A receive a real estate commission in lieu of a legal fee for closing a real estate transaction if Attorney A shares the commission with other realtors with Real Estate Company or other unrelated real estate companies?
Opinion #4:
No. See opinion #1 above.
Inquiry #5:
May Attorney A perform legal services in connection with real estate closings for clients referred to him by Real Estate Company if Attorney A did not list or sell the property involved in the transaction?
Opinion #5:
Yes. This is the same inquiry as inquiry #2 above. See opinion #2 above.
Inquiry #6:
Is Attorney A required to disclose to all clients referred by Real Estate Company that he is a real estate agent for Real Estate Company and paid commissions by Real Estate Company?
Opinion #6:
Yes. See opinion #2 above.
Inquiry #7:
May Attorney A provide legal services to customers of Real Estate Company if Attorney A fully discloses his relationship to Real Estate Company?
Opinion #7:
Yes, see opinion #2 above. Attorney A may only provide legal services to customers of Real Estate Company who are referred to him by Real Estate Company, but he may not share his legal fees with Real Estate Company nor may he pay Real Estate Company anything for recommending his services. See Rule 2.3(c), which prohibits a lawyer from giving anything of value to someone for recommending his services, and Rule 3.2, which prohibits the sharing of legal fees with nonlawyers. Moreover, if Attorney A is employed by Real Estate Company as in-house counsel and, as such, is providing legal services to the customers of Real Estate Company, it would be a violation of G.S. §84-5 which forbids corporations to engage in the practice of law.
Inquiry #8:
Is Real Estate Company engaged in the unauthorized practice of law under the foregoing facts?
Opinion #8:
The determination of whether a nonlawyer is engaged in the unauthorized practice of law is outside of the authority of the Ethics Committee.
Inquiry #9:
Is Attorney A assisting Real Estate Company in the unauthorized practice of law under the foregoing facts?
Opinion #9:
If Attorney A is employed by Real Estate Company as in-house counsel and, in this capacity, he is providing legal services to the customers of Real Estate Company, it would be a violation of G.S §84-5, which prohibits a corporation from engaging in the practice of law. Such conduct would constitute aiding the unauthorized practice of law in violation of Rule 3.1(a).
Inquiry #10:
May a lawyer for a title insurance company issue a title insurance policy based upon Attorney A's certification of title if Attorney A is providing legal services to customers of Real Estate Company as an employee or in-house counsel for Real Estate Company?
Opinion #10:
If an attorney for a title insurance company knows that Attorney A is providing legal services to customers of Real Estate Company in violation of G.S. §84-5, which prohibits a corporation from engaging in the practice of law, the attorney for the title insurance company may not aid in this practice. Rule 3.1(a).
Inquiry #11:
May Attorney A practice law from his office in Real Estate Company's office and use the same telephone number as Real Estate Company?
Opinion #11:
Yes, if the office receptionist and the office signage clearly indicate that Attorney A's legal practice is separate and distinct from the real estate business operated by Real Estate Company. Rule 2.1(a) and CPR 266.
Inquiry #12:
May Attorney A or Attorney A's name appear in Real Estate Company's television and print ads, including brochures identifying Attorney A as a lawyer as well as a real estate salesman?
Opinion #12:
Yes, if the advertisements do not include false or misleading communications about Lawyer A or Lawyer A's services in violation of Rule 2.1 and do not imply that legal services will be provided by a corporation in violation of G.S. §84-5. See CPR 307.
Inquiry #13:
May Attorney A include business cards identifying him as a lawyer in sales promotion packets sent by Real Estate Company to customers whether the packets are solicited or unsolicited by the customers?
Opinion #13:
Yes, see opinion #12 above.
Inquiry #14:
May Attorney A be employed as in-house counsel for Real Estate Company and also close real estate transactions referred to him by Real Estate Company?
Opinion #14:
No. See opinion #7 above.
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