Can a lawyer own an escrow company with a non-lawyer, share office space with it, and let it refer customers to the law practice for related legal work?

Plain-English summary

The lawyer proposed to incorporate an escrow company with a non-lawyer, share office space between the law office and the escrow corporation, supervise the work of the non-professionals in the escrow corporation, and refer legal clients to the escrow corporation for services. The lawyer planned to post a written disclosure notice in the shared reception area describing the relationship, and not to advertise being a lawyer in any advertisements for the escrow business.

The committee concluded that there is nothing improper in establishing the escrow corporation and sharing space with the law office. Its concern ran the other direction: solicitation of legal employment for the law practice through the escrow business. The committee concluded that the escrow company could not refer customers to the lawyer for related legal business. It gave two reasons. One was the potential for improper solicitation. The other was a potential conflict of interest in representing customers on matters related to the escrow work the lawyer's corporation was also handling for them. Because an escrow officer owes an equal obligation to both parties to the transaction, the committee reasoned, the lawyer could not then undertake to represent either of them on related legal matters, since the lawyer's independent legal judgment would be adversely affected.

Currency note

This opinion was issued in 1985, before the 2006 revisions to the Washington Rules of Professional Conduct. Lawyer-advertising and solicitation rules in particular have changed since, both by rule amendment and by later court decisions. Treat this page as historical context, not current guidance.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 own an escrow company with a non-lawyer and share office space with it?

A: The committee concluded there is nothing improper in establishing the escrow corporation and sharing space with the law office.

Q: Can the escrow company send its customers to the lawyer for related legal work?

A: No. The committee concluded the escrow company could not refer customers to the lawyer for related legal business, citing the potential for improper solicitation and a potential conflict of interest.

Q: Why is representing the escrow customers a conflict?

A: The committee reasoned that as an escrow officer the lawyer owes an equal obligation to both parties to the transaction, so the lawyer could not then represent either of them on related legal matters because the lawyer's independent legal judgment would be adversely affected.

Background and rules framework

The opinion is indexed to Washington RPC 4.1 (truthfulness in statements to others), RPC 4.3 (dealing with an unrepresented person), RPC 5.4 (professional independence of a lawyer), and RPC 7.3 (direct contact with prospective clients / solicitation), which correspond to Model Rules 4.1, 4.3, 5.4, and 7.3. The committee approved the shared-space and ownership arrangement while drawing the line at referrals running from the escrow business into the law practice, framing the problem as one of solicitation and of the conflict that arises when a lawyer who serves both sides of an escrow then represents one of them in a related legal matter.

Citations and references

Rules of Professional Conduct:

• Washington RPC 4.1 (truthfulness in statements to others), corresponding to Model Rule 4.1.
• Washington RPC 4.3 (dealing with an unrepresented person), corresponding to Model Rule 4.3.
• Washington RPC 5.4 (professional independence of a lawyer), corresponding to Model Rule 5.4.
• Washington RPC 7.3 (solicitation / direct contact with prospective clients), corresponding to Model Rule 7.3.

See also

• WSBA Ethics Op. 1017: lawyer who also acts as a real estate broker
• CA COPRAC Op. 1999-154: dual practitioner offering legal and investment advisory services
• CA COPRAC Op. 1995-141: lawyer provision of non-legal services

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=49

Original opinion text

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

Advisory Opinion: 938
Year Issued: 1985
RPC(s): RPC 4.1; 4.3; 5.4; 7.3
Subject: Sharing space with lawyer-owned escrow company; referrals from escrow company

The Committee reviewed your proposal to incorporate an escrow company with a non-lawyer and share space with the escrow corporation and your law office. The Committee understood that you will supervise the work with the non-professionals in the escrow corporation, and refer your legal clients to the escrow corporation for services. You plan to post a written disclosure notice in the reception area commonly shared by the lawyer and the escrow company regarding the relationship between you and the escrow corporation. Further, the Committee understood that you will not advertise that you are a lawyer in any advertisements for your escrow business.

The Committee was of the opinion that there is nothing improper in establishing the escrow corporation and sharing space with your law office. The Committee was concerned regarding the question of solicitation of professional employment for your law practice from the escrow business. The Committee was of the opinion that the escrow company could not refer clients to you for related legal business, not only because there was potential for improper solicitation, but also because there would be a potential conflict of interest in representing the clients on matters related to the escrow work for which your corporation was also representing them. The Committee was of the opinion that since as an escrow officer you would owe an equal obligation to both parties to the transaction, you could not then undertake to represent either of them on related legal matters because your independent legal judgment would be adversely affected.