Ezel / Ethics Opinions / NYSBA
NYSBA April 28, 1977

Can a lawyer keep accepting client referrals from the same real estate broker?

Short answer: The opinion concluded that it is not per se improper for a lawyer to accept repeated referrals from a real estate broker, because the temptation to please a referral source is not enough to require declining the work; the lawyer must guard his independent judgment and advise a client to withdraw from a transaction when the client's interest requires it.

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This page answers the general question as of 1977. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.

Currency note: this opinion is from 1977
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 Not binding precedent.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 on this page) is the authoritative source for any reliance.

Plain-English summary

The committee addressed the concern that a lawyer who accepts repeated referrals from a real estate broker might compromise a client's interests to avoid upsetting a transaction the broker wants consummated. It was asked whether the Code prevents a lawyer from accepting repeated broker referrals, and concluded that it does not.

The committee set out the governing principles: Canon 5 requires a lawyer to exercise independent professional judgment for the client, EC 5-1 directs that judgment be exercised solely for the client's benefit free of compromising influences, and DR 5-107(B) bars a lawyer from letting a person who recommends, employs, or pays him direct or regulate his professional judgment. The Code also bars rewarding those who refer business (EC 2-8, EC 2-15; DR 2-103(C) and (D)). A lawyer is subject to the same considerations in dealing with real estate brokers as with anyone else who recommends his services.

The committee reasoned that although the lawyer who accepts repeated referrals may face somewhat greater temptation to avoid the Code's strictures, that factor is not enough to require declining clients the broker recommends; whether the broker refers one or several clients, the temptation to please him is substantially similar, and the broker's financial stake is no greater concern than that of other permitted referral sources. It therefore held the Code does not require refusing such referrals.

The committee added that, while not required to refuse, the lawyer should carefully examine his conduct and be especially wary of influences that could dilute his loyalty or independence, and that if he concludes the transaction is not in the client's best interest he must have no hesitancy in advising the client to withdraw.

Currency note

This opinion was issued in 1977, before New York replaced the Code of Professional Responsibility with the Rules of Professional Conduct in 2009 (a third party's interference with professional judgment is now governed by Rule 5.4(c), referrals by Rule 7.2, and conflicts by Rule 1.7). 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 accept many referrals from the same real estate broker?

A: Under this opinion, yes. The committee held it is not per se improper, finding the temptation to please a frequent referral source insufficient to require declining the work.

Q: Is a broker referral treated differently from other referrals?

A: No. The committee held a lawyer is subject to the same ethical considerations with real estate brokers as with anyone else who recommends his services.

Q: What must the lawyer do to stay within the rules?

A: Preserve independent judgment and not let the broker direct it (DR 5-107(B)), and, if the transaction is not in the client's interest, advise the client to withdraw without hesitation.

Background and rules framework

The opinion applies Canon 5 and EC 5-1 (independent professional judgment for the client), DR 5-107(B) (no third party directing the lawyer's judgment), and DR 2-103(C) and (D) (limits on rewarding referral sources). The current Model Rule analogues are Rule 5.4(c) (no interference with professional judgment by one who pays or refers), Rule 7.2 (referrals), and Rule 1.7 (conflicts).

Citations and references

Rules of Professional Conduct:

  • MR 5.4 (professional independence of a lawyer)
  • MR 1.7 (conflict of interest: current clients)
  • MR 7.2 (communications; referrals)
  • NY Canon 5; EC 5-1, EC 5-21; DR 2-103(C), DR 2-103(D), DR 5-107(B)

Other opinions cited:

  • N.Y. State 244 (1972); N.Y. State 242 (1972); N.Y. State 371 (1974): treating referral sources consistently
  • ABA 294 (1958)

See also

Source

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