Can an Oregon lawyer own an outside business that does deals with the lawyer's clients, and advise those clients on the deals?

Plain-English summary

In addition to a private law practice, the lawyer owns a real estate firm and a title insurance company that occasionally do business with the lawyer's clients. The opinion answers two questions: whether it is ethical for the lawyer to own other enterprises that may do business with clients, and whether the lawyer may advise clients about transactions with those enterprises. The answers are yes-qualified to both.

On the first question, the opinion concludes nothing in the rules of professional conduct per se prohibits a lawyer from engaging in other businesses (noting Oregon has not adopted ABA Model Rule 5.7 on law-related services). On the second, the opinion analyzes Oregon RPC 1.7 and RPC 1.8(a). Under RPC 1.7(a)(2), a conflict exists if there is a significant risk the representation would be materially limited by the lawyer's personal interest; the lawyer may proceed only with each affected client's informed consent confirmed in writing under RPC 1.7(b).

Under RPC 1.8(a), a lawyer may not enter a business transaction with a client or knowingly acquire an interest adverse to the client unless the terms are fair, reasonable, and fully disclosed in writing, the client is advised in writing to seek independent counsel, and the client gives informed consent in a signed writing to the essential terms and the lawyer's role. The opinion adds that even if interests are aligned at the outset, later shifts may trigger the informed-consent requirement, but with full-disclosure consent the lawyer may proceed.

In practice

The opinion holds that a lawyer's ownership of outside businesses is not itself prohibited, but that advising a client on a deal with the lawyer's own enterprise is governed by both RPC 1.7 (personal-interest conflict) and RPC 1.8(a) (business transactions with a client). The opinion treats the writing and informed-consent requirements of those rules as the conditions for proceeding, and notes the analysis can change as the parties' interests shift during the matter.

Common questions

Q: Can an Oregon lawyer run a side business like a real estate or title company?

A: Yes. The opinion concludes nothing in the rules per se prohibits a lawyer from engaging in other businesses.

Q: Can the lawyer advise a client on a deal involving the lawyer's own company?

A: Only with the protections of RPC 1.7 and 1.8(a). The opinion concludes the lawyer needs the client's informed consent, and for a business transaction with the client, fair and fully disclosed written terms, a written recommendation to seek independent counsel, and the client's signed informed consent.

Q: What if the lawyer and client interests are aligned at first?

A: The opinion concludes that shifts in the parties' relative interests may trigger the informed-consent requirement later, though with full-disclosure consent the lawyer may proceed.

Background and rules framework

The opinion interprets Oregon RPC 1.7 (current-client conflicts, including personal-interest conflicts) and RPC 1.8(a) (business transactions with a client), using the informed-consent definition in RPC 1.0(g). These track Model Rules 1.7, 1.8, and 1.0. The opinion notes Oregon has not adopted ABA Model Rule 5.7 on law-related services.

Citations and references

Rules of Professional Conduct:

• Oregon RPC 1.7 / Model Rule 1.7 (current-client and personal-interest conflicts)
• Oregon RPC 1.8(a) / Model Rule 1.8 (business transactions with a client)
• Oregon RPC 1.0(g) / Model Rule 1.0 (informed consent)

Cases:

• In re Spencer, 355 Or 679, 330 P3d 538 (2014)
• In re Griffith, 304 Or 575, 748 P2d 86 (1987)

See also

• ABA Formal Op. 00-416: Purchase of Accounts Receivable From a Client
• OSB Ethics Op. 2005-4: Advancing a Client's Living Expenses, Bail, and Costs

Source

• Landing page: https://www.osbar.org/ethics/toc.html
• Original PDF: https://www.osbar.org/_docs/ethics/2005-10.pdf