Ezel / Ethics Opinions / NYSBA
NYSBA 2023-01-13

Can a New York lawyer who works only as a real estate broker, and provides no legal services, accept referral fees from an investment advisor?

Short answer: Yes. The opinion concludes that a New York lawyer who provides only nonlegal real estate broker services, and gives the client a Rule 5.7(a)(4) written notice that the services are not legal services, may accept referral fees from a third-party investment advisor.
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 Not binding precedent.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.

NYSBA Ethics Opinion 1252: Referral Fees When the Lawyer Only Does Nonlegal Work

Short answer: The opinion concludes that a New York lawyer who provides only nonlegal services as a real estate broker, and who is not practicing law, may accept referral fees from a third-party investment advisor, because the conflict rules that ordinarily restrict referral fees apply only where there is a client-lawyer relationship.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's view of New York's 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.

Plain-English summary

The inquirer is a member of the New York bar but does not practice law; she works as a real estate broker. A financial advisor offered to pay her referral fees for any clients she sends to the advisor. The question is whether the committee's many opinions restricting lawyer referral fees apply to her.

The opinion explains that, in general, those prior opinions allow a lawyer to receive referral fees from a third-party service provider only where the personal conflict of interest can be cured by disclosure to and consent from the client, and that the committee has often found the conflict too great to be cured (citing N.Y. State 1086 (2016), which collects the opinions). The opinion frames the threshold question as whether the Rules apply to the inquirer at all given that she provides no legal services.

The opinion turns to Rule 5.7, which addresses nonlegal services. Because the inquirer provides no legal services, the opinion identifies Rule 5.7(a)(3) as the only potentially applicable provision: a lawyer affiliated with an entity providing nonlegal services is subject to the Rules as to those services if the recipient could reasonably believe they are the subject of a client-lawyer relationship. The opinion reasons that clients of a real estate broker would not typically believe a client-lawyer relationship exists, and that Rule 5.7(a)(4) lets the lawyer eliminate any presumption by informing the client in writing that the services are not legal services and that the protection of a client-lawyer relationship does not apply.

The opinion concludes that, in that case, the lawyer is excused from the Rules that depend on a representation, including the conflict rules in Rules 1.7 and 1.8, although Rules 1.9, 8.3, and 8.4 still apply because they govern lawyers regardless of a representation. The opinion therefore concludes the inquirer may accept the referral fees.

In practice

Under this opinion, a New York lawyer who provides only nonlegal real estate broker services, and who gives clients the written Rule 5.7(a)(4) notice that the services are not legal services and carry no client-lawyer protection, may accept referral fees from a third-party investment advisor. Per the opinion, the conflict rules in Rules 1.7 and 1.8 do not bar the fee because there is no representation, though Rules 1.9, 8.3, and 8.4 continue to apply.

Common questions

Q: Do the usual restrictions on lawyer referral fees apply to a lawyer acting only as a real estate broker?

A: Per the opinion, no, not the conflict-based restrictions, because Rules 1.7 and 1.8 depend on a client-lawyer relationship, and the inquirer provides only nonlegal services with no representation.

Q: What does the lawyer have to do to keep the nonlegal services outside the representation rules?

A: Per the opinion, give the client a written notice under Rule 5.7(a)(4) that the services are not legal services and that the protection of a client-lawyer relationship does not exist as to them.

Q: Are any Rules still in force when the lawyer provides only nonlegal services?

A: Per the opinion, yes. The opinion identifies Rule 1.9 (former-client confidences), Rule 8.3 (reporting misconduct), and Rule 8.4 (dishonesty and related conduct) as applying irrespective of whether the lawyer is representing a client.

Background and rules framework

The opinion interprets New York Rule 5.7 (responsibilities regarding nonlegal services), focusing on Rule 5.7(a)(3) and (a)(4), and explains why Rules 1.7 and 1.8 (conflicts of interest) do not apply absent a representation. These correspond to ABA Model Rules 5.7, 1.7, and 1.8.

Citations and references

Rules of Professional Conduct:

  • New York Rules of Professional Conduct 5.7(a)(3) & (a)(4), 1.7, 1.8, 1.9, 8.3, 8.4
  • ABA Model Rules 5.7, 1.7, 1.8 (analogues)

Other opinions cited:

  • N.Y. State 1086 (2016): collecting prior opinions on lawyer referral fees and conflicts

See also

Source