Can a New Jersey lawyer go ahead with a closing when the other party is represented by an out-of-state lawyer or a non-lawyer who is engaged in unauthorized practice?

Plain-English summary

The Committee was asked whether it is ethical for a New Jersey attorney to participate in a transaction where he knows or has good reason to believe the other party will be represented, in whole or in part, by someone not authorized to practice law in New Jersey, such as an out-of-state attorney or a layman. It noted that this arises most often in real-estate matters and described common variations: mortgage money provided by a New York bank whose New York attorney draws the mortgage papers at a closing; a closing in New Jersey where the seller's attorney is a New York lawyer; or a closing at a title company where the title company prepares many of the papers and one party is unrepresented.

The Committee declined to decide whether all such situations actually involve the unauthorized practice of law, assuming for purposes of the opinion that some element of unauthorized practice is involved. It concluded that it is not unethical for the New Jersey attorney to continue to represent his client under these circumstances, because to hold otherwise would deprive the client of the legal representation he has sought.

The Committee added a qualification drawn from Opinion 61: where an attorney knows well in advance that certain persons are practicing law without authorization, he should avoid participation either by insisting that the other party be represented by a New Jersey attorney or, if time permits, by filing a complaint with the appropriate authority. In many cases, however, the attorney arrives at the closing unaware that the other party's representation will constitute unauthorized practice, and lawyers may even differ on whether particular conduct does so; in those circumstances the attorney would do his client a great disservice by refusing to participate, and it is not unethical for him to go forward.

Currency note

This opinion was issued in November 1969, before New Jersey's September 13, 1971 adoption of the Disciplinary Rules (Code of Professional Responsibility), so the Committee was applying the Canons of Professional Ethics and its own prior opinions. It also predates the 1984 Rules of Professional Conduct and all later revisions, as well as later developments on multijurisdictional practice. A lawyer's own obligations regarding unauthorized practice are now treated under RPC 5.5. 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: Must a New Jersey lawyer refuse to close a deal if the other side uses an out-of-state lawyer or a layman?

A: No. The Committee held it is not unethical to proceed, because refusing would deprive the lawyer's own client of the representation he sought.

Q: What should the lawyer do if he learns of the unauthorized practice well ahead of time?

A: The Committee said he should avoid participation by insisting the other party retain a New Jersey attorney or, if time permits, by filing a complaint with the appropriate authority.

Q: What if the lawyer only discovers the problem at the closing?

A: The Committee recognized that lawyers may differ on whether particular conduct is unauthorized practice and that refusing at that point would do the client a great disservice, so it is not unethical to go forward.

Background and rules framework

The opinion applied the Canons of Professional Ethics and Opinion 61 to a New Jersey lawyer transacting opposite a party represented by an out-of-state lawyer or a layman. It separated the lawyer's duty to his own client from any question of whether the other side's conduct was unauthorized practice. In current New Jersey terms, a lawyer's own duties concerning unauthorized and multijurisdictional practice are governed by RPC 5.5.

Citations and references

Other opinions cited:

• NJ ACPE Opinion 61, 87 N.J.L.J. 778 (1964)

See also

• NJ ACPE Op. 580: Practice of Law by Non-Lawyer Employees of County Welfare Agencies
• NJ ACPE Op. 299: An Attorney Practicing From a Client's Out-of-State Office
• NJ ACPE Op. 543: A New Jersey Attorney's Employment With an Out-of-State Firm

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp160-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

92 N.J.L.J. 726, November 6, 1969

OPINION 160

Unauthorized Practice Representing Other Party

We have been asked for our opinion as to whether it is ethical for a New Jersey attorney to participate in a transaction where he knows or has good reason to believe that the other party to the transaction will be represented in whole or in part by one not authorized to practice law in New Jersey, i.e., either an attorney not admitted to practice in this State or a layman.

This situation arises most frequently in matters involving real estate and there are many variations which may arise. We suggest only a few, in all of which the real estate is in New Jersey: the mortgage money is provided by a New York bank and the closing takes place at the bank with the bank's New York attorney drawing all mortgage papers; the closing takes place in New Jersey and the seller's attorney is a New York lawyer; the closing takes place at the office of the title company and many of the closing papers are prepared by the title company with one party unrepresented by a lawyer.

All lawyers will recognize these transactions as common occurrences. It is not the function of this Committee to say whether all these situations involve the unauthorized practice of law in New Jersey. For purposes of this opinion we assume that some element of the unauthorized practice of law is involved.

In our opinion it is not unethical for a New Jersey attorney to continue to represent his client under these circumstances. To hold otherwise would deprive the client of the legal representation he has sought. There may be an occasion such as that suggested in our Opinion 61, 87 N.J.L.J. 778 (1964), where the attorney knows well in advance that certain persons are practicing law without authorization. The attorneys should avoid participation in these transactions either by insisting that the other party be represented by a New Jersey attorney or, if time permits, by filing a complaint with the appropriate authority. In many cases, however, the attorney will come to the closing unaware that the representation of the other party will constitute the unauthorized practice of law. In fact lawyers may differ as to whether certain actions actually constitute the unauthorized practice of law. Clearly the attorney would do a great disservice to his client if he were to refrain from participating in the transaction at this point, and, accordingly, it is our opinion that it would not be unethical for him to do so.