Can a lawyer form an escrow and closing company that has nonlawyer shareholders and owners?

Plain-English summary

The inquiry concerned a proposal to form a corporation to perform estate escrow and closing work, with nonlawyers as shareholders and owners. The committee enclosed its recently adopted Formal Opinion 187 on a related subject for guidance.

The committee was of the opinion that nothing in the Rules of Professional Conduct would prohibit the lawyer from establishing an escrow business partnership separate and apart from the law practice in which nonlawyers held an ownership interest. The committee emphasized that, if nonlawyers were to have an ownership interest, the escrow business would have to be entirely separate and apart from the law practice and not an extension of it.

Currency note

This opinion was issued in 1990, before the Washington State Bar Association's adoption of the 2006 revisions to the Washington 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 Treat this page as historical context, not current guidance.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: Can a lawyer co-own an escrow company with nonlawyers?

A: Under this 1990 opinion, yes; the committee was of the opinion that nothing in the rules prohibits establishing a separate escrow business with nonlawyer owners.

Q: What condition did the committee attach?

A: The escrow business must be entirely separate and apart from the law practice and not an extension of it.

Q: What related guidance did the committee point to?

A: The committee enclosed its recently adopted Formal Opinion 187 on a related subject.

Background and rules framework

At the time of this opinion, Washington's RPC 5.4(b) and (d) restricted partnerships and business organizations with nonlawyers where the activities constitute the practice of law, the subject the Model Rules place in Rule 5.4. The committee drew the line at separateness: a genuinely separate escrow business, not an extension of the law practice, may have nonlawyer owners.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 5.4 (professional independence; nonlawyer ownership)
• Washington RPC 5.4(b), 5.4(d)

Other opinions cited:

• WSBA Formal Opinion 187 (recently adopted, related subject)

See also

• WA Ethics Op. 1338: Lawyer Operating a Separate Escrow Business
• WA Ethics Op. 1358: Office Sharing With a Nonlawyer Claims Adjuster

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=444

Original opinion text

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

The Committee reviewed your inquiry concerning your proposal to form a corporation to perform estate escrow and closing work, in which nonlawyers would be shareholders and owners. First, the Committee directed that I send you a recently adopted Formal Opinion (187) on a related subject for your guidance. Further, the Committee was of the opinion that nothing in the Rules of Professional Conduct would prohibit you from establishing an escrow business partnership which was separate and apart from your law practice in which nonlawyers had an ownership interest. The Committee did want to emphasize that if nonlawyers were to have an ownership interest, the escrow business would have to be entirely separate and apart from your law practice and not an extension of it.