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                                         1998 N.J.L.J. 646
                                        July 24, 1975

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court


OPINION 312

Attorney Husband of
Real Estate Salesperson


    An attorney has posed questions to this Committee which arise from the fact that his wife is employed as a salesperson for a real
estate agency.
    The essential facts are these. The inquirer is a partner in a law firm having a general practice, whose offices are located some 12 miles from the office of a real estate agency where the inquirer's wife is employed. In the course of her work she has obtained listing agreements from clients, of the law firm. On occasion these have resulted from a recommendation by the inquirer. Also the attorney on occasion represents purchasers who have purchased their home through the attorney's wife. In such instances, both seller and purchaser are fully aware that the attorney's wife negotiated the sale. Occasionally, the broker by whom the wife is employed also recommends the inquirer as an attorney.
    The inquirer asks the following questions:
    1.    May he represent any party to a transaction where his wife has been the listing or selling agent?

    2.    May he recommend his wife and her employing agency when asked by a client for such a recommendation?

    3.    May the agency recommend him as an attorney when requested to do so by a client of the agency?

    There are two problems presented by these questions:

    1.    Do any of the foregoing circumstances amount to solicitation or advertising by the attorney?

    2.    Is there any conflict of interest involved?

    The answers from various bar associations dealing with problems arising out of situations where the attorney himself is engaged in an independent business have not been wholly consistent. The rule is clear that a lawyer has the right to engage in an independent business provided he does not use such occupation to advertise or as a feeder for his law practice. It is the application of this rule that has not been consistent.
    This Committee held in Opinion 23, 87 N.J.L.J. 19 (1964), that a lawyer who is also a certified public accountant may so identify
himself and practice both professions from the same office. It has also been held that a lawyer may conduct an independent real estate business in another county. See Drinker, Legal Ethics 221 (1953).
The American Bar Association has struggled with this problem for several years. See Informal Opinion 775 (1965). There the Committee, after reviewing its several previous opinions, stated the following conclusions:
        (1)    If a separate business is clearly not necessarily the practice of law when conducted by a lawyer, and

        (2)    If it can be conducted in accordance with and so as not to violate the Canons, and


        (3)    If it is not used or engaged in in such a manner as to directly or indirectly advertise or solicit legal matters for the lawyer as a lawyer, and

        (4)    If it will not "inevitably serve" as a feeder to his law practice, and

        (5)    It is not conducted in or from a lawyer's law office, except in cases where the volume of the law practice and business is so small that separate quarters for either is not economically feasible and where, even in such cases, there is no indication on the shingle, office, door, letterhead or otherwise that the layover engages in any activity therein except the practice of law,

    it is not necessarily a violation of the Canons for a practicing lawyer to in such a business activity.

    In the situation presented here it is not the lawyer who is conducting the real estate business, but his wife. It is clear that unless the employment of the attorney's wife by the real estate agency is a bar, there is nothing unethical in the agency's recommending the attorney to a client. It is also clear that listings obtained by the agency from the attorney, whether or not
sales develop, would not bar the attorney from representing a party to the transaction, again unless the wife's employment is a bar. And certainly the attorney may perform a service for his client by recommending a real estate agency and thereafter, should a sale develop, represent the client in the transaction.
    It is our opinion that the fact of the wife's employment by the real estate agency should not prevent the attorney from recommending the agency or the agency recommending the attorney to a client. While it would be only natural for the wife to recommend her husband as an attorney or the husband to recommend the real estate agency, it does not seem to us that this would constitute the use of the agency for the solicitation of legal matters or to serve as a feeder. Accordingly, the answer to questions #2 and #3 is in the affirmative.
    The answer to question #1, however, must be in the negative because of the inherent conflict of interest present. ABA Comm. on
Professional Ethics Informal Opinion 775, supra, has this to say about representation of a client where the attorney is also the broker. Also the lawyer would be required, without exception, to refuse to act as a lawyer in connection with a transaction initiated by him as a broker, and he should be most hesitant to act as a lawyer for a person he first had contact with while acting as a broker. While it is the wife who is the broker or the employee of the broker in this case, nevertheless there is an inherent conflict present since it is to the wife's interest to have the transaction completed and the broker's commission paid even though she is on a salary basis, and circumstances might arise that would persuade the attorney that the transaction should not be completed. Accordingly, it would be improper for the husband-attorney to represent either the seller or the purchaser in a transaction where the agency by whom the wife is employed is the selling agency. While DR 5-101 provides that the attorney may accept employment where his personal interest may be involved with the consent of his client after full disclosure, we believe that the better rule is that in circumstances such as these the attorney, even with full disclosure, should not put himself in a position where the client might conclude that the attorney had not represented him with undivided loyalty. We see nothing wrong, however, with an attorney representing a client where the agency has merely been the listing broker and has no connection otherwise with the ultimate sale.

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