Ezel / Ethics Opinions / NYSBA
NYSBA 2017-04-04

Can a lawyer who earns a broker's commission in a real estate deal also act as the buyers' attorney, even if the legal work is pro bono and the buyers are long-time clients and friends?

Short answer: No. A lawyer who takes a commission as broker in a real estate transaction may not also serve as a lawyer to a party in that transaction. The conflict is per se nonconsentable, and offering the legal work pro bono does not cure it; if anything, a zero legal fee makes the commission's pull on the lawyer's judgment stronger.
Currency note: this opinion is from 2017
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

NY State Bar Ethics Opinion 1117: Serving as both broker and lawyer in one deal

Short answer: A lawyer who is also a licensed real estate broker and would receive a commission may not serve as the lawyer for a party in the same real estate transaction. The conflict is per se nonconsentable, and the fact that the legal services would be provided free of charge does not change the result.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

View original opinion

Plain-English summary

The inquirer is both an attorney and a licensed real estate broker. A married couple, long-time clients and friends, ask the inquirer to act as both their broker and their attorney in buying real estate. As broker, the inquirer would earn a commission from the seller (a percentage of the price); as attorney, the inquirer would work pro bono because the buyers have limited resources.

The committee applies Rule 1.7(a)(2): a personal-interest conflict arises when a reasonable lawyer would conclude there is a significant risk that the lawyer's professional judgment will be adversely affected by the lawyer's own financial or other personal interests. Citing a long line of opinions (N.Y. State 1013, 933, 919, 753), the committee reaffirms that a lawyer may not act as attorney for a party to a real estate transaction in which the lawyer is also the broker, because a broker paid only if the deal closes cannot be fully independent in advising the client. This is a per se nonconsentable conflict, so the client cannot waive it. The committee notes the per se rule does not apply to non-standard broker compensation, such as a flat fee not contingent on closing, or where the broker credits the entire commission to the client; but here the inquirer would keep a usual commission.

The pro bono nature of the legal work does not help. Per N.Y. State 916, a lawyer may not offer free legal services as an add-on to being the broker, and (per N.Y. State 1015) when the legal fee is zero, the relative importance of the commission, the only way the lawyer makes money, only grows, heightening the risk to independent judgment. The committee rejects the inquirer's proffered distinctions: that the clients (not the lawyer) requested both services, and that the seller (not the buyer) pays the commission. A large commission is a large commission regardless of who asked or who pays. Citing N.Y. State 1043, the committee adds that the client's benefit from free services does not remedy the conflict. While a strong friendship might in theory counterbalance the financial interest, the Rule's test is objective, not subjective, and that objective test supports the per se nonconsentable rule.

In practice

Under this opinion, a New York lawyer who will earn a standard, closing-contingent broker's commission cannot also represent a party to that real estate transaction as a lawyer. The conflict is treated as per se nonconsentable, so client consent, however informed, cannot authorize the dual role, and the client's friendship with or trust in the lawyer is irrelevant under the Rule's objective test. Doing the legal work for free does not cure the conflict and arguably worsens it, because the commission becomes the lawyer's only compensation and its influence on the lawyer's judgment is greater. The per se rule does not reach non-standard broker arrangements, such as a flat fee that is not contingent on closing, or crediting the full commission to the client.

Common questions

Q: Can a lawyer-broker represent the buyer as attorney if the buyer asks for both services?

A: No. The dual role is a per se nonconsentable conflict under Rule 1.7, so it does not matter that the clients requested both services or that they are long-time clients and friends (Opinion 1117 ¶¶ 5-7, 9-10, 12).

Q: Does providing the legal services for free avoid the conflict?

A: No. A lawyer may not offer free legal services as an add-on to being the broker, and a zero legal fee makes the commission relatively more important, increasing the risk to the lawyer's independent judgment (¶ 8).

Q: Is there any version of broker compensation that avoids the per se rule?

A: Yes. The per se rule does not apply where the broker is paid a flat fee not contingent on closing, or credits the entire commission to the client; other conflicts in those arrangements may be waivable (¶ 7, nn. 1-2).

Background and rules framework

The opinion applies Rule 1.7 (Model Rule 1.7) on concurrent conflicts, specifically the Rule 1.7(a)(2) personal-interest conflict and the Rule 1.7(b) consent standard, which the committee finds cannot be satisfied for the lawyer-broker dual role because the conflict is nonconsentable. The analysis turns on the objective "reasonable lawyer" and "reasonably believes" standards in the Rule.

Citations and references

Rules of Professional Conduct:

  • New York Rule 1.7(a)(2) (Model Rule 1.7): significant-risk personal-interest conflict
  • New York Rule 1.7(b) (Model Rule 1.7): consent; here unavailable because the conflict is nonconsentable

Other opinions cited:

  • N.Y. State 753 (2002); 919, 933, 1013 (2012-2014): per se bar on lawyer-broker dual role
  • N.Y. State 916 (2012): no free legal services as an add-on to brokerage
  • N.Y. State 1015 (2014): heightened risk when the commission dwarfs the legal fee; flat-fee exception
  • N.Y. State 1043 (2015): client's benefit from free services does not cure the conflict

See also

Source