Can a lawyer negotiate an employment contract to become a corporation's full-time legal counsel and take part of the pay in company stock?

Plain-English summary

A lawyer negotiated with corporate management over an employment contract to serve as legal counsel, where part of the lawyer's compensation would be shares in the publicly traded corporation. The committee was of the opinion that negotiations to work out an employment contract for the full-time job of legal counsel for a corporation did not violate RPC 1.8.

The committee explained that it appeared to be an arm's length transaction, and that it did not appear the lawyer was in any way giving legal advice to the corporation in the course of those negotiations.

Currency note

This opinion was issued in 1986, before the 2006 revisions to the Washington Rules of Professional Conduct. RPC 1.8 on conflicts arising from transactions with a client was later renumbered and amended. Treat this page as historical context, not current guidance.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 take stock as part of the pay for a full-time corporate counsel job?

A: Per the opinion, negotiating such an employment contract did not violate RPC 1.8 on the facts described, where part of the compensation was shares in the corporation.

Q: Why did the committee find no violation of RPC 1.8?

A: The committee explained that it appeared to be an arm's length transaction, and that it did not appear the lawyer was giving legal advice to the corporation in the negotiations.

Q: Was the lawyer acting as the corporation's lawyer during the negotiation?

A: Per the opinion, no. The committee was of the opinion that it did not appear the lawyer was in any way giving legal advice to the corporation in working out the employment contract.

Background and rules framework

The opinion applies Washington RPC 1.8, corresponding to Model Rule 1.8, to a lawyer negotiating an employment contract to become a corporation's full-time legal counsel. The committee's analysis turned on two facts it identified: that the negotiation was at arm's length, and that the lawyer was not giving legal advice to the corporation during it.

Citations and references

Rules of Professional Conduct:

• Washington RPC 1.8 (conflicts of interest; transactions with a client), corresponding to Model Rule 1.8.

See also

• WSBA Ethics Op. 1044: a deed of trust taken to secure future fees
• WSBA Ethics Op. 1021: a mortgage company staff attorney handling a real estate closing
• WSBA Ethics Op. 1017: a lawyer who is also a real estate broker and the fee agreement

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=156

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion: 1045
Year Issued: 1986
RPC(s): RPC 1.8
Subject: Conflict of interest; negotiation of employment contract for legal services

A lawyer negotiated with corporate management over an employment contract to serve as legal counsel. The contract provided that part of the lawyer's compensation would be shares in the publicly traded corporation. The Committee was of the opinion that negotiations as described by you in working out an employment contract for the full time job of legal counsel for a corporation does not violate RPC 1.8. It appeared to be an arm's length transaction, and it did not appear that you were in any way giving legal advice to the corporation.