Can a South Carolina lawyer let a real estate seller pay the lawyer's fee for buyers who use the lawyer's firm to close, and recommend that arrangement to developer clients?
Apply this to your situation
This page answers the general question as of 1997. Ezel answers yours: whether it's allowed on your facts, under the current South Carolina Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer represented a real estate developer-seller who wanted to structure sales contracts so that buyers who used the lawyer's firm for both sides of the closing and for title insurance would have their attorney's fees and title premiums paid by the seller, while buyers using another attorney bore their own costs. The lawyer asked whether the arrangement was proper and whether he or she could recommend it to other developer clients.
The committee concluded there was nothing per se improper. It relied on Rule 1.8(f), which expressly contemplates a lawyer being paid by someone other than the client, subject to three requirements: the client (here, the buyer) must consent after consultation, with the lawyer explaining the entire transaction and disclosing any past or present representation of the seller and possible conflicts (written consent being best); there must be no interference with the lawyer's independent judgment on the buyer's behalf or with the lawyer-buyer relationship; and the buyer's confidences must be protected under Rule 1.6.
The committee added that all of Rule 1.7's requirements had to be met: the lawyer had to reasonably believe representing the developer would not affect the relationship with the buyer and vice versa, the buyer's representation could not be materially limited by obligations to the developer or the lawyer's own interests, and consultation had to cover the implications, advantages, and risks of common representation. If a conflict arose, the lawyer should withdraw from representing either party. Finding nothing per se improper, the committee concluded the lawyer could recommend the arrangement to other developer clients if the lawyer believed it served their best interest.
Currency note
This opinion was issued in 1997, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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: Could a real estate seller pay the buyer's closing-attorney fee?
A: The committee concluded yes, under Rule 1.8(f), which contemplates a lawyer being paid by someone other than the client, so long as its conditions and the conflict and confidentiality rules are satisfied.
Q: What conditions did the committee attach to the seller paying the buyer's fee?
A: The buyer had to consent after a full consultation that disclosed the lawyer's representation of the seller and any conflicts; the payment could not interfere with the lawyer's independent judgment or the lawyer-buyer relationship; and the buyer's confidentiality had to be maintained under Rule 1.6.
Q: Could the lawyer recommend this fee structure to other developer clients?
A: Yes. Finding nothing per se improper, the committee concluded the lawyer could recommend the arrangement to other developers if the lawyer believed it served their best interest.
Q: What if a conflict developed between the seller and the buyer?
A: The committee stated that if any conflict arose, the lawyer should withdraw from representing either party.
Background and rules framework
The opinion applied South Carolina RPC 1.8(f) (a lawyer may accept payment from a third party only with the client's informed consent, no interference with the lawyer's judgment, and protection of confidences), RPC 1.7 (concurrent conflicts of interest), and RPC 1.6 (confidentiality), each corresponding to the like-numbered Model Rule. The arrangement implicated the lawyer's simultaneous relationships with the paying seller-developer and the buyer-client.
Citations and references
Rules of Professional Conduct:
- South Carolina RPC 1.8(f) / Model Rule 1.8: payment of a lawyer's fee by a third party.
- South Carolina RPC 1.7 / Model Rule 1.7: concurrent conflicts of interest.
- South Carolina RPC 1.6 / Model Rule 1.6: confidentiality of information.
See also
Source
- Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-97-01/
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 97-01
I have been approached by a potential seller of various lots and parcels of real estate who would like to structure the contract to encourage potential purchasers to use my firm for real estate closings. Accordingly, a structure is being proposed where if the purchaser of the seller's real estate will utilize my firm for both sides of the closing transaction and for title insurance, my client will pay for the attorney's fees and title insurance premiums associated with such representation. However, if any prospective purchaser intends to use any other attorney, then the purchaser will be responsible for the cost incurred with such other attorney. However, the contract will also provide that the purchaser shall pay for the state and county transfer fees associated with this transaction.
Questions:
1) Is this arrangement proper? 2) Would it be improper of me to recommend or promote that my real estate developer clients utilize such a contract?
Summary:
There is nothing wrong with the seller's paying your fee, so long as you comply with the requirements of Rule 1.8 (f), maintain any confidentiality under Rule 1.6, and any conflict is avoided under Rule 1.7. You may give any other clients you have such legal advice as you deem proper.
Opinion:
Rule 1.8 (f) expressly envisions situations wherein a lawyer may be paid by one other than the client. The requirements are clear:
(1) The client must consent after consultation. You must discuss the proposed arrangement with your client. You must explain the entire transaction. You must reveal your past or present representation of the Seller and discuss any possible conflicts. Obtaining consent in writing would be best.
(2) There must be no interference with you independent judgment on behalf of the purchaser or with your relationship with the purchaser.
(3) The confidentiality of the purchaser must be maintained.
All the requirements of Rule 1.7 must be met. You must reasonably believe that representation of the developer will not affect the relationship with the purchaser, and vice versa. Your representation of the purchaser must not be materially limited by any past, present or continuing obligation to the developer, or by your own interests. Consultation with the purchaser must include an explanation of the implications of the common representation and any advantages and risks involved. If any conflict arises, you should withdraw from representation of either party.
There is nothing per se improper concerning the proposed arrangement. Consequently, you may recommend such an arrangement to other developers you may represent if you believe it to be in their best interest.
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