Can a lawyer who is also a licensed real estate broker take a referral commission for sending a client to a realtor, and charge both legal and brokerage fees in the same matter?
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This page answers the general question as of 1986. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion E-86-3 addressed a lawyer who is also licensed as a real estate broker and asked under what circumstances the lawyer may take a commission for referring a current client to a realtor, and may be paid for both brokerage and legal services for the same client (for example, in a divorce or probate matter). The committee began by noting that nothing in the former Code of Professional Responsibility (SCR Chapter 20) expressly precludes a lawyer from acting as both lawyer and realtor in the same matter, and that the committee had previously acknowledged the propriety of dual practices and offered guidelines (citing its Formal Opinions E-82-11, E-83-14, and E-85-5).
On the first question, the committee concluded that although it is permissible for a lawyer to receive a referral fee from a realtor if the client expressly consents at the time of the referral, the arrangement is fraught with inherent conflicts of interest (citing former SCR 20.23(1) and (2), 20.24(1), and 20.27(1)). It stated that the client's consent to such a rebate must be based on full disclosure of all matters that could bear on the client's decision.
On the second question, the committee concluded that, with the client's informed consent, a lawyer may accept compensation for both the legal and brokerage services when the real estate transaction relates to other representation the lawyer is providing, but the total compensation for the combined services must be reasonable (citing former SCR 20.12(1) and (2) and Disciplinary Proceedings against Kinast). The committee added that the lawyer's conduct in providing both services remains governed by SCR Chapter 20, and it withdrew its earlier Memorandum Opinion 1/76.
Currency note
This opinion was issued in 1986, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it analyzes conduct under the former Code. The conflict-of-interest analysis is now found in SCR 20:1.7 / Model Rule 1.7 and SCR 20:1.8 / Model Rule 1.8, the fee-reasonableness requirement in SCR 20:1.5 / Model Rule 1.5, and law-related (ancillary) services in Model Rule 5.7. 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: Can a lawyer who is also a realtor accept a referral fee for sending a client to a realtor?
A: The committee concluded it is permissible only if the client expressly consents at the time of the referral based on full disclosure, while warning that the arrangement carries inherent conflicts of interest.
Q: Can the lawyer charge both legal fees and a brokerage commission in the same matter?
A: The committee concluded yes, with the client's informed consent, provided the total compensation for the combined services is reasonable.
Q: Does acting as a broker free the lawyer from the rules of professional conduct?
A: No. The committee concluded the lawyer's conduct in providing both legal and brokerage services remains governed by the Code of Professional Responsibility and other laws governing Wisconsin attorneys.
Background and rules framework
The opinion interpreted the former Code's conflict provisions (SCR 20.23, 20.24(1), 20.27(1)) and its fee-reasonableness provision (SCR 20.12), as applied to a lawyer who simultaneously serves a client as attorney and as real estate broker. Those concerns map onto today's conflict rules SCR 20:1.7 / Model Rule 1.7 and SCR 20:1.8 / Model Rule 1.8, the fee rule SCR 20:1.5 / Model Rule 1.5, and Model Rule 5.7 on law-related services.
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20.23, 20.24(1), 20.27(1) / Model Rule 1.7, Model Rule 1.8 (conflicts of interest) (former Code provisions)
- Wis. SCR 20.12 / Model Rule 1.5 (reasonable fees) (former Code provision)
Statutes:
- Wis. Stat. section 857.05(3) (probate; compensation)
Cases:
- Disciplinary Proceedings against Kinast, 121 Wis. 2d 25, 357 N.W.2d 282 (1984)
Other opinions cited:
- Wisconsin Formal Ops. E-82-11, E-83-14, E-85-5
- Illinois State Bar Association Committee on Professional Ethics Opinion 862
See also
- WI Ethics Op. EF-10-02: Ethical Responsibilities When Referral Fees Are Received
- WI Ethics Op. E-94-2: Disclosing a Referral Fee Markup
- WI Ethics Op. E-88-1: Law Degrees on an Accountant's Business Card
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-86-3.pdf
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