Can a lawyer give a client a benefit, like rent-free office space, in exchange for the client hiring the lawyer for its legal work?

Plain-English summary

A mortgage company proposed to engage a lawyer to handle all of its mortgage closings in a geographic area, on the condition that the lawyer provide the company with rent-free office space in the lawyer's office. The lawyer asked whether this was ethical.

The committee interpreted DR 2-103(B), which bars a lawyer from compensating or giving anything of value "to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment." A literal reading might treat the would-be client as such a "person or organization," but the committee rejected that reading. The most natural reading is that the forbidden recipient is someone other than the client who employs the lawyer, and lawyers are in any event supposed to give value, their counsel and representation, to the clients who hire them. The rule's purpose is to prohibit the long-condemned use of "runners" to solicit employment; that evil is absent when the lawyer gives something of value directly to the client. Economically, the arrangement just reduces the lawyer's fee by the fair rental value of the space, and nothing in the Code bars a lawyer from reducing a fee to obtain employment.

The committee answered the question in the affirmative but limited its opinion to the precise question asked. It did not reach the separate bar on financial inducements to a client in a litigated matter (DR 5-103(B); Judiciary Law section 488(2)), the various issues that could arise from the lawyer/client landlord-tenant relationship (DR 3-102, DR 4-101, DR 5-104(A)), or how the value of the office space might affect the mortgage company's legal fee where that fee is paid by the borrower (DR 1-102(A)(4); N.Y. State 626). The committee also noted that giving something of value to an officer or employee of an entity client, rather than to the entity itself, in order to obtain the entity's employment would be prohibited by DR 2-103(B).

Currency note

This opinion was issued in 1992, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. The provisions on paying for recommendations cited here have since been recast in Rule 7.2. 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 give a client free office space in exchange for the client's legal work?

A: Yes. The committee held that furnishing rent-free office space to a client in consideration of the client's employment of the lawyer is not prohibited by DR 2-103(B) or any other provision of the Code.

Q: Doesn't the rule bar giving "anything of value" to obtain employment?

A: The committee read DR 2-103(B) to reach value given to someone other than the client (the "runner" problem), not value given directly to the client itself, since lawyers are expected to provide value to the clients who hire them.

Q: Would the answer change if the value went to an officer of a company client?

A: Yes. The committee noted that giving something of value to an officer, employee, or anyone other than the entity itself, in order to obtain the entity's employment, would be prohibited by DR 2-103(B).

Background and rules framework

The opinion interpreted DR 2-103(B) (no compensating a person or organization to recommend or obtain employment), and distinguished DR 5-103(B) (the separate bar on financial inducements to a client in a litigated matter). The closest Model Rule analogues are Rule 7.2 (a lawyer may not give anything of value for a recommendation, with narrow exceptions) and Rule 1.8 (business dealings between a lawyer and client).

Citations and references

Rules of Professional Conduct:

• MR 7.2 (giving value to recommend a lawyer; exceptions)
• MR 1.8 (lawyer-client business transactions)
• NY DR 2-103(B); DR 5-103(B)

Statutes:

• N.Y. Judiciary Law sections 479, 481-82 (soliciting employment through runners)
• N.Y. Judiciary Law section 488(2) (financial inducement to a client in a litigated matter)

Other opinions cited:

• N.Y. State 563 (1984): a lawyer may reduce a fee to obtain employment
• N.Y. State 626 (1992): effect of the lawyer's arrangement on a fee paid by a third party

See also

• NY State Bar Op. 626: Real estate multiple representation and fees
• NY State Bar Op. 625: A 900-number legal message line and form-document fees
• NY State Bar Op. 636: Selling standard will forms to the public

Source

• Landing page: https://nysba.org/opinion-627/