Can a lawyer's partners or associates represent a party to a real estate deal that earns the agency a commission when the lawyer's commission-paid wife works there but did not handle that deal?

Plain-English summary

This opinion revisited the Committee's Opinion 312, which had held it unethical for an attorney to represent any party to a transaction where his salaried real estate salesperson wife had been the listing or selling agent, because she had an interest in completing the deal and collecting the commission while circumstances might persuade the attorney that the transaction should not be completed. The new inquiry asked about a different compensation structure: a wife paid by commission on her own sales, rentals, and exclusive listings, with no part of her pay in salary. Specifically, the Committee was asked whether the attorney's partners or associates could represent a party to a transaction on which the agency earned a commission but the wife had not made the sale or rental, had not obtained the listing, and would receive no financial benefit.

The Committee reaffirmed that, as in Opinion 312, the circumstances did not amount to solicitation or advertising. On the conflict-of-interest question, it found nothing in the circumstances presented that would result in a conflict of interest. While it acknowledged that the agency benefits from completing all transactions, and the agency's continued viability benefits the wife, it concluded that these results are too indirect and too remote to create a conflict where the wife had no connection with the transaction and received no financial benefit from it.

Currency note

This opinion was issued in 1976, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. Personal-interest conflicts of this kind are now analyzed under RPC 1.7. Treat this page as historical context, not current guidance.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's firm handle a deal the agency where the lawyer's spouse works will earn a commission on?

A: Under this opinion, yes, where the spouse had no connection to that transaction and receives no financial benefit from it.

Q: How does this differ from Opinion 312?

A: In Opinion 312 the wife was the listing or selling agent on the very transaction; here she had no part in the deal and no benefit, so the Committee found the link too remote to be a conflict.

Q: Did the commission-based pay structure create a problem?

A: No. The Committee held that the indirect benefit to the wife from the agency's general viability was too remote to amount to a conflict where she had no role in the specific transaction.

Background and rules framework

The opinion distinguished its Opinion 312 and applied a personal-interest conflict analysis to a lawyer whose commission-paid spouse worked at the agency but had no role in the transaction. In current New Jersey terms, the conflict question is governed by RPC 1.7.

Citations and references

Rules of Professional Conduct:

• Personal-interest conflict principles as in effect 1976; now MR 1.7 / NJ RPC 1.7

Other opinions cited:

• NJ ACPE Opinion 312, 98 N.J.L.J. 646 (1975)

See also

• NJ ACPE Op. 346: A Board Negotiator Whose Wife Teaches for the Board
• NJ ACPE Op. 358: Suing an Estate the Lawyer Administered

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp341-1.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.

99 N.J.L.J. 610, July 8, 1976

OPINION 341

Conflict of Interest
Attorney Husband of Real Estate Salesperson

This Committee's Opinion 312, 98 N.J.L.J. 646 (1975), dealt with the ethical problems confronting an attorney whose wife was a salesperson employed by a real estate agency. Her compensation from the agency was solely in the form of salary paid her. We there held that it would be unethical for the attorney to represent any party to a transaction where his wife had been the listing or selling agent. The rationale of that opinion is that there is an inherent conflict where the wife is the selling or listing broker because, even though she is on a salary basis, it is to her advantage to have the transaction completed and the brokerage commission paid while circumstances might arise that would persuade the attorney that the transaction should not be completed.

We are now asked what our opinion would be where the wife's compensation is in the form of commissions on sales or rentals made by her and on exclusive listings obtained by her and no part of her compensation is in the form of salary. Specifically, we are asked whether the partners or associates of the attorney might represent any party to a transaction in which the real estate agency is entitled to a commission but in which the wife did not make the sale or rental or obtain the exclusive listing and from which she will receive no financial benefit.

We indicated in Opinion 312 that two questions were posed by the circumstances, one having to do with solicitation and advertising and the other having to do with conflict of interest. We concluded that the circumstances present did not amount to soliciting or advertising, and we reach the same conclusion here. As to the conflict of interest, there appears to be nothing in the circumstances presented by this inquiry that would result in a conflict of interest. While it might be said that the real estate agency benefits from the completion of all transactions and accordingly the continued viability of the agency benefits the wife, nevertheless we conclude that these results are too indirect and too remote where the wife has had no connection with the transaction and receives no financial benefit from it.