Can a tax lawyer buy a nonlawyer's tax preparation business, and what solicitation and conflict limits apply afterward?
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This page answers the general question as of 2024. Ezel answers yours: whether it's allowed on your facts, under the current Oregon Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer who represents clients in tax matters wants to buy the tax preparation business of a licensed nonlawyer tax consultant. The opinion asks whether the lawyer may make the purchase, and answers yes.
The opinion explains that neither the Oregon RPCs nor ORS chapter 9 prohibits lawyers from purchasing businesses (noting that RPC 1.17 separately governs the sale or purchase of a law practice). The first limit is on solicitation: under Oregon RPC 7.3 and RPC 8.4(a)(1) (misconduct committed through the acts of another), the lawyer may not use the acquisition to solicit clients improperly. For example, the lawyer could not make it an expressed or implied condition of the purchase that the tax consultant solicit clients for the lawyer (RPC 7.2). Without endorsement or influence from the lawyer, the tax consultant may inform their own clients of a possible need for legal services and of the lawyer's availability to do the work.
The second limit is on conflicts. If the lawyer's clients are also clients of the tax preparation business, the lawyer may need to determine whether the lawyer's business interest in the tax business creates a conflict under Oregon RPC 1.7(a)(2) (personal-interest conflict) or Oregon RPC 1.8(a) (business transaction with a client). If so, the lawyer may have to obtain informed consent in writing under RPC 1.7(b)(4) or 1.8(a)(3), or withdraw if the conflict is not waivable.
In practice
The opinion holds that, under the Oregon rules, a lawyer may buy a nonlawyer tax business, with two operating limits: no improper solicitation through the acquisition or the consultant, and a conflict check under RPC 1.7(a)(2) or 1.8(a) where the lawyer's clients overlap with the business's clients. The analysis turns on whether the purchase is used to solicit, and on whether the lawyer's pecuniary interest in the business creates a significant risk of materially limiting a representation. Verify the current text of Oregon RPC 7.2, 7.3, 1.7, and 1.8 before relying on any specific point.
Common questions
Q: Can I, as a lawyer, buy a nonlawyer's tax preparation business?
A: Yes. The opinion concludes neither the RPCs nor ORS chapter 9 prohibits a lawyer from purchasing a business.
Q: Can I have the tax consultant funnel clients to my law practice as part of the deal?
A: No. The opinion concludes the lawyer may not make it an expressed or implied condition of the purchase that the consultant solicit clients for the lawyer, under RPC 7.3, 7.2, and 8.4(a)(1).
Q: What if my law clients are also the tax business's clients?
A: The opinion concludes the lawyer may have to determine whether the lawyer's business interest creates a conflict under RPC 1.7(a)(2) or 1.8(a), and obtain written informed consent or withdraw if it is not waivable.
Background and rules framework
The opinion interprets Oregon RPC 7.3 (solicitation) and 7.2 (advertising; payment for recommendations), corresponding to Model Rules 7.3 and 7.2; Oregon RPC 8.4(a)(1) (misconduct through the acts of another), corresponding to Model Rule 8.4; and Oregon RPC 1.7(a)(2) and 1.8(a) (personal-interest conflicts and business transactions with a client), corresponding to Model Rules 1.7 and 1.8.
Citations and references
Rules of Professional Conduct:
- Oregon RPC 7.3 / Model Rule 7.3 (solicitation of clients)
- Oregon RPC 7.2 / Model Rule 7.2 (advertising; payment for recommendations)
- Oregon RPC 8.4(a)(1) / Model Rule 8.4 (misconduct through the acts of another)
- Oregon RPC 1.7(a)(2) / Model Rule 1.7 (personal-interest conflicts)
- Oregon RPC 1.8(a) / Model Rule 1.8 (business transactions with a client)
Other opinions cited:
- OSB Formal Ethics Op. No. 2005-2 (rev 2021) (cross-referrals and solicitation)
- OSB Formal Ethics Op. No. 2006-176 (rev 2015) (lawyer acting in multiple roles)
See also
- OSB Ethics Op. 2005-2: Cross-Referrals, Office Sharing with a Nonlawyer
- OSB Ethics Op. 2005-101: Lawyer as Mediator, Trade Names, and Fee Division with a Nonlawyer
Source
- Landing page: https://www.osbar.org/ethics/toc.html
- Original PDF: https://www.osbar.org/_docs/ethics/2005-106.pdf
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