Can a lawyer join a real estate broker's program that selects the lawyer to represent both the home buyer and the lender at a reduced flat fee?

Plain-English summary

A real estate brokerage and an affiliated mortgage banker marketed a "Home Buyers Program" that offered buyers reduced closing costs by having a single attorney, selected by the broker, represent both the purchaser and the lender for a fixed fee the purchaser paid. The committee was asked whether a lawyer could participate, and concluded the lawyer could not.

The committee found two problems. First, the broker's marketing was an improper third-party solicitation under DR 2-103(C), which bars a lawyer from requesting a person or organization to recommend the lawyer's services other than by permitted advertising. By seeking admission to the program, the attorney was in effect asking the broker to promote the attorney's services, and the brochure did just that by praising the participating attorneys.

Second, the arrangement created a conflict the committee held could not be cured by consent. While dual representation of a mortgagor and mortgagee is not a per se violation and can be permissible with full disclosure and consent (citing N.Y. State 199, 576, 162 and 8), those opinions did not control here. The attorney was approved, promoted, and recommended by the broker and continued in the program only at the broker's sufferance, so DR 5-101(A) was implicated. Drawing on the conflict-of-interest concerns the Court of Appeals described in Greene v. Grievance Committee, the committee concluded the attorney's personal financial incentive to secure an enforceable contract and close the transaction was great enough that it was not obvious the attorney could adequately represent both the purchaser and the lender. Because that "obviousness" test could not be met, the DR 5-101(A) conflict was non-consentable, and participation in the program was impermissible. The committee declined to opine on the separate questions of law under Judiciary Law section 479 and the First Amendment.

Currency note

This opinion was issued in 1997, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. 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 Treat this page as historical context, not current guidance.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: Why was the broker's marketing a problem?

A: The opinion concluded it was an improper third-party solicitation under DR 2-103(C): by joining the program the lawyer was in effect asking the broker to recommend the lawyer's services, and the brochure promoted the participating attorneys.

Q: Isn't representing both the buyer and the lender allowed?

A: The opinion noted that dual representation of a mortgagor and mortgagee is not a per se violation and can be permissible with full disclosure and consent, but it held that the broker-driven program presented a different and non-consentable conflict.

Q: Why couldn't the client's consent cure the conflict?

A: The opinion concluded that the lawyer's financial stake in the broker's continued approval, and the incentive to close the deal, made it not "obvious" the lawyer could adequately represent both clients, so the DR 5-101(A) conflict could not be waived.

Background and rules framework

The opinion interpreted DR 2-103(A) and (C) (solicitation), DR 5-101(A) (the lawyer's own interests), and DR 5-105(A) and (C) (multiple representation) of New York's former Code. The Model Rule analogues are Rule 1.7 (conflicts of interest, including personal-interest conflicts) and Rule 7.3 (solicitation of clients). New York replaced the Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

• MR 1.7 (conflict of interest; current clients)
• MR 7.3 (solicitation of clients)
• NY DR 2-103(A), (C); DR 5-101(A); DR 5-105(A), (C)

Cases:

• Greene v. Grievance Comm. for Ninth Judicial District, 54 N.Y.2d 118 (1981), broker-referral conflict potential

Other opinions cited:

• N.Y. State 621 (1991): lawyer may not refer a real estate client to a lawyer-owned abstract company
• N.Y. State 467 (1977): repeated broker referrals are not a per se DR 5-101(A) violation
• N.Y. State 199 (1971), 576 (1986): dual representation of mortgagor and mortgagee

See also

• NY State Bar Op. 738: Referring clients to a lawyer-owned title abstract company
• NY State Bar Op. 731: Paying employees to solicit for a lawyer-owned title agency
• NY State Bar Op. 705: Accepting cases from a tax-reduction company

Source

• Landing page: https://nysba.org/opinion-694/