Can a law firm pay a real estate agency an annual fee and offer the agency's customers discounted legal services in exchange for the agency promoting the firm?
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This page answers the general question as of 2002. Ezel answers yours: whether it's allowed on your facts, under the current Ohio Rules of Professional Conduct, with citations.
Currency note
The Board withdrew this opinion on August 7, 2020 in Advisory Opinion 2020-09, so it is not current guidance; it is indexed here as historical research only.
This opinion also issued in 2002, before Ohio's adoption of the Ohio Rules of Professional Conduct (effective February 1, 2007). The DR 2-103, DR 3-103, DR 5-101, and DR 5-104 provisions discussed here are now addressed by Ohio Prof. Cond. R. 7.2, 5.4, 1.7, and 1.8. Treat this page as historical context, not current guidance. Verify against current rules and Opinion 2020-09 before relying on anything here.
Plain-English summary
The Board addressed a proposed business agreement in which a law firm would pay an annual fee to a real estate agency and offer discounted legal services to the agency's customers, and in exchange the agency would promote the firm as a service provider in a real estate benefits program. The Board concluded the arrangement was improper under several disciplinary rules.
The Board treated the payment to the agency, coupled with the agency's promotion of the firm, as giving something of value in exchange for the recommendation of the firm's services, contrary to DR 2-103(B) and the related limits in DR 2-103(C). It also found the arrangement to be a prohibited business relationship and to create conflicts: DR 3-103(A) (forming a business relationship with a non-lawyer touching on the practice of law), DR 5-101(A)(1) (the lawyer's own financial interest affecting professional judgment), and DR 5-104(A) (a business transaction with differing interests). The combination of the fee paid to the agency and the discounted services tied to the agency's promotion drove the Board's conclusion that the program was improper.
Common questions
Q: Could an Ohio firm join a real estate benefits program that promoted the firm in exchange for a fee?
A: No. The opinion concluded the arrangement was improper, treating the fee and discounted services tied to the agency's promotion as paying for recommendations under DR 2-103(B) and (C).
Q: What conflict-of-interest rules did the opinion apply?
A: The opinion applied DR 3-103(A) (business relationship with a non-lawyer), DR 5-101(A)(1) (the lawyer's financial interest affecting judgment), and DR 5-104(A) (business transaction with differing interests).
Q: Is this opinion still current?
A: No. The Board withdrew it on August 7, 2020 in Opinion 2020-09, and it predates Ohio's 2007 Rules of Professional Conduct.
Background and rules framework
The opinion interprets former Ohio Code of Professional Responsibility DR 2-103(B) and (C) (giving value for recommendations of employment), DR 3-103(A) (business relationships with non-lawyers), DR 5-101(A)(1) (financial interests affecting judgment), and DR 5-104(A) (business transactions with a client). Those subjects are now addressed by Ohio Prof. Cond. R. 7.2, 5.4, 1.7, and 1.8 (Model Rules 7.2, 5.4, 1.7, and 1.8).
Citations and references
Rules of Professional Conduct:
- Former Ohio Code of Professional Responsibility DR 2-103(B), DR 2-103(C), DR 3-103(A), DR 5-101(A)(1), DR 5-104(A)
See also
- Ohio BPC Op. 2000-001: Accepting a Referral Fee From a Financial Services Group
- Ohio BPC Op. 2002-002: Referring Clients to Lenders Tied to a Consulting Company
- Ohio BPC Op. 1991-007: For-Profit Lawyer Referral Service and Joint Advertising
Source
- Landing page: https://ohioadvop.org/advisory-opinion-index/
- Original PDF: https://www.ohioadvop.org/wp-content/uploads/2017/04/Op-02-001-1.pdf
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
The Supreme Court of Ohio
BOARD OF COMMISSIONERS ON GRIEVANCES AND DISCIPLINE
41 SOUTH HIGH STREET-SUITE 2320, COLUMBUS, OH 43215-6104
(614) 644-5800 (888) 664-8345 FAX: (614) 644-5804
www.sconet.state.oh.us
OFFICE OF SECRETARY
OPINION 2002-1
Issued February 1, 2002
Withdrawn by Adv. Op. 2020-09
[CPR Opinion-provides advice under the Ohio Code of Professional Responsibility which is superseded
by the Ohio Rules of Professional Conduct, eff. 2/1/2007.]
SYLLABUS: It is improper under DR 2-103(B), DR 2-103(C), DR 3-103(A), DR 5-
101(A)(1), and DR 5-104(A) of the Ohio Code of Professional Responsibility for a law
firm to enter a business agreement to pay an annual fee to a real estate agency and to
offer discounted legal services to customers of the real estate agency in exchange for the
real estate agency promoting the law firm as a service provider in a real estate benefits
program.
OPINION: This opinion addresses the propriety of a law firm entering a business
agreement with a real estate agency to promote the law firm as a service provider in a real
estate benefits program.
Is it proper under the Ohio Code of Professional Responsibility for a law
firm to enter a business agreement to pay an annual fee to a real estate
agency and to offer discounted legal services to customers of the real
estate agency in exchange for the real estate agency promoting the law
firm as a service provider in a real estate benefits program?
A law firm has been approached by a real estate agency to enter a business agreement to
participate in a real estate benefits program. Under the agreement, the real estate agency
would agree to market and advertise the law firm as a service provider in its real estate
benefits program. To become a service provider in the real estate benefits program, the
law firm would agree to pay the real estate agency an annual fee and to offer a discount
of certain legal services to customers of the real estate benefits program. The company
labels the agreement as a “strategic partnership agreement” between the real estate
agency and the law firm.
A variety of service providers would enter into similar agreements with the real estate
agency and would be listed in the agency’s service provider directory. The categories in
the service provider directory include appliances, appraisers, automobile, contractors,
designers, home products, home services, inspections, legal services, lenders and
financial, movers and storage, outdoor products, outdoor services, personal services, pest
control, temporary housing, title companies, travel, and utilities. It is anticipated that one
or more law firms would participate as providers of legal services.
Op. 2002-1 2
The real estate benefits program is comprised of a concierge program, a relocation
program, and employee benefits program. The real estate agency promotes the law firm
and other service providers through service provider directories, through informational
mailings, and through live presentations offered through the real estate benefits program.
Through its concierge program, potential or actual customers who contact the real estate
agency or visit the agency’s Web site are given access to a printed or online service
provider directory. The directory lists the name and address of the service providers and
gives a description of the discount, if any. Access to the service provider directory
appears to be a free service offered by the real estate agency to potential and actual
customers of the real estate agency.
Through its relocation program, the agency mails relocation packages to individuals
moving to the geographic area of the real estate agency and includes a copy of the service
provider directory. The agency also makes presentations to corporate relocation
executives and in the presentations includes information about the service providers.
Through its employee benefits program, the agency sells an employee benefits program
to companies. Companies purchase the program from the agency as a way of offering
employee benefits. To market the program, the real estate agency makes presentations to
the companies and to human resource benefits personnel. The presentations include
information about the service providers. The agency invites service providers to
participate in employee seminars for member companies who have purchased the
program.
In addition, the real estate agency agrees to invite service providers to attend a minimum
of one meeting of the real estate agency per year to distribute materials and inform agents
of special promotions. The agency agrees that its staff will distribute literature or
promotional items of the service provider to the real estate agents’ mail boxes. The real
estate agency agrees that the benefits of the real estate benefit program would be
available to employees of the service providers at no charge.
The proposed agreement between the real estate agency and the law firm does not
obligate the law firm to use the services of the real estate agency, nor does it obligate the
law firm to recommend law firm clients to the real estate agency. The law firm and other
service providers must agree not to enter other programs that offer services at discounts
to local companies as part of a benefits package.
Under the proposed agreement, the law firm would offer $100 off attorney fees in real
estate closings for customers in the concierge program. The law firm would offer $100
off attorney fees in real estate closings or free initial consultation for other legal services
to recipients of the employee benefits program.
It is the Board’s view that a lawyer’s participation in the proposed agreement would
violate DR 2-103(B), DR 2-103(C), DR 3-103(A), DR 5-101(A)(1), and DR 5-104(A).
DR 2-103(B) A lawyer shall not compensate or give any thing of value to
a person or organization to recommend or secure the lawyer’s employment
by a client, or as a reward for having made a recommendation resulting in
Op. 2002-1 3
the lawyer’s employment by a client, except that the lawyer may pay the
usual and reasonable fees or dues charged by any of the organizations
listed in DR 2-103(D) [a legal aid office or public defender office; a
military legal assistance office; a lawyer referral service that complies
with DR 2-103(C), or any bona fide organization that recommends,
furnishes, or pays for legal services to its members or beneficiaries and
satisfies the conditions in DR 2-103(D)(4)(a through g)].
DR 2-103(C) A lawyer shall not request a person or organization to
recommend or promote the use of the lawyer’s services or those of the
lawyer’s partner or associate, or any other lawyer affiliated with the
lawyer or the lawyer’s firm, as a private practitioner, except that: [a
lawyer may request referrals from and participate with lawyer referral
services that conform to the conditions in DR 2-103(C)(1)(a through j) and
a lawyer may cooperate with legal service activities of offices or
organizations enumerated in DR 2-103(D)].
DR 3-103(A) A lawyer shall not form a partnership with a non-lawyer if
any of the activities of the partnership consist of the practice of law.
DR 5-101(A)(1) Except with the consent of the client after full disclosure,
a lawyer shall not accept employment if the exercise of professional
judgment on behalf of the client will be or reasonably may be affected by
the lawyer’s financial, business, property, or personal interests.
DR 5-104(A) A lawyer shall not enter into a business transaction with a
client if they have differing interests therein and if the client expects the
lawyer to exercise his [her] professional judgment therein for the
protection of the client, unless the client has consented after full
disclosure.
First, the proposed agreement violates DR 2-103(B) and DR 2-103(C). Under DR 2-
103(B) a lawyer shall not compensate or give any thing of value to a person or
organization to recommend or secure the lawyer’s employment by a client, or as a reward
for having made a recommendation resulting in the lawyer’s employment by a client.
The only exceptions to the rule are that lawyers may pay fees and dues to a legal aid
office or public defender office; a military legal assistance office; a lawyer referral
service that complies with DR 2-103(C), or any bona fide organization that satisfies the
conditions in DR 2-103(D)(4)(a through g). A real estate agency does not fit within the
exceptions.
Under DR 2-103(C), a lawyer is prohibited from requesting that an organization promote
the lawyer’s services. The only exceptions to the rule permit participation and
cooperation with a lawyer referral service that complies with the rule, a legal aid office or
public defender office, a military legal assistance office, or any bona fide organization
that satisfies the conditions in DR 2-103(D)(4)(a through g). A real estate agency does
not fit within the exceptions.
Op. 2002-1 4
An agreement by a law firm to pay an annual fee to a real estate agency for promoting the
law firm as a service provider in its real estate benefits program is the giving of a thing of
value to an organization to recommend or secure a lawyer’s employment. Likewise, a
law firm’s agreement to reduce attorney fees for certain legal services to customers of the
real estate benefits program is the giving of a thing of value.
This view is consistent with the Board’s view in Op. 88-012 (1988). In Op. 88-012, the
Board advised that DR 2-103(C) prohibits an attorney from providing a free consultation
to a surviving spouse or surviving children as part of a funeral package offered by a
funeral director. The Board stated that even if the lawyer did not request the funeral
director to recommend his or her services, the lawyer’s one hour of free consultation was
compensation to the funeral director for recommending the lawyer’s services because the
legal services add to the value of the funeral package.
Further, the recommendations by the real estate agency of the lawyer’s services are not
disinterested recommendations for the law firm has paid for inclusion as a recommended
service provider. As noted in Ethical Consideration 2-8, disinterested recommendations
do not serve the public.
EC 2-8 Selection of a lawyer by a layman often is the result of advice and
recommendation of third parties–relatives, friends, acquaintances,
business associates, or other lawyers. A layman is best served if the
recommendation is disinterested and informed. In order that the
recommendation be disinterested, a lawyer should not seek to influence
another to recommend his [her] employment. A lawyer should not
compensate another person for recommending him [her], for influencing a
prospective client to employ him [her], or to encourage future
recommendations.
Second, the proposed agreement violates DR 3-103(A). Under DR 3-103(A), a lawyer
shall not form a partnership with a non-lawyer if any of the activities of the partnership
consist of the practice of law. The Board has consistently interpreted DR 3-103(A) to
apply not only to partnerships formed in accordance with state law, but also to business
relationships and associations between lawyers and non-lawyers. See e.g., Ohio SupCt,
Bd of Comm’rs on Grievances and Discipline, Op. 2000-1 (2000). The real estate agency
labels the agreement as a “strategic partnership agreement” even though there is no joint
ownership of a business, nor is there an agreement to share the business profits or losses.
Nevertheless, while the agreement may not be a partnership in the true legal sense of the
word, the proposed agreement between the lawyer and the real estate agency is a business
agreement that involves the practice of law and is prohibited under DR 3-103(A).
Third, the proposed agreement violates DR 5-101(A)(1). DR 5-101(A)(1) prohibits a
lawyer from accepting employment if the exercise of professional judgment on behalf of
the client will be or reasonably may be affected by the lawyer’s financial, business,
property, or personal interests. A law firm that pays a real estate agency for promoting
the services of the law firm as a recommended service provider has a business interest
that may reasonably affect the lawyer’s independent professional judgment. The law
firm may perceive subtle pressure to perform legal services to clients in a manner that
pleases the real estate agency to avoid any risk of being excluded as a service provider.
Op. 2002-1 5
Fourth, the proposed agreement violates DR 5-104(A). DR 5-104(A) prohibits a lawyer
from entering a business relationship with a client when there are differing interests
therein. As proposed, the law firm enters an agreement with a real estate agency. The
real estate agency offers a real estate benefits program to customers of the agency and to
companies that provide employee benefits. The customers of the real estate agency and
the employees of companies that purchase employee benefits are eligible for discounted
services from the law firm. Circuitously, the law firm is entering a business relationship
with clients. Differing interests exist. The client expects the lawyer to exercise
independent professional judgment free of compromise, but the lawyer may have
business or financial interests that influence his or her independent professional
judgment. The lawyer may be influenced by his or her interest in receiving as many
referrals as possible or in making enough money from the referrals to cover or exceed the
annual membership fee paid by the law firm to the real estate agency.
Both DR 5-101(A)(1) and DR 5-104(A) provide an exception when there is client
consent after full disclosure. Neither DR 2-103 nor DR 3-103 provides a similar
exception. Since all four rules apply to the question raised, the ethical conflict cannot be
alleviated through full consent and disclosure.
In addition to the above ethical issues, the lawyer’s participation might also violate rules
regulating lawyer advertising. This would depend upon the type and content of the
publicity provided. This issue is not addressed further herein.
In conclusion, the Board advises that it is improper under DR 2-103(B), DR 2-103(C),
DR 3-103(A), 5-101(A)(1), and 5-104(A) of the Ohio Code of Professional
Responsibility for a law firm to enter a business agreement to pay an annual fee to a real
estate agency and to offer discounted legal services to customers of the real estate agency
in exchange for the real estate agency promoting the law firm as a service provider in a
real estate benefits program.
Advisory Opinions of the Board of Commissioners on Grievances and Discipline are
informal, nonbinding opinions in response to prospective or hypothetical questions
regarding the application of the Supreme Court Rules for the Government of the
Bar of Ohio, the Supreme Court Rules for the Government of the Judiciary, the
Code of Professional Responsibility, the Code of Judicial Conduct, and the
Attorney’s Oath of Office.
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