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Legal Memorandum: Lawyer's Non-legal Services in NY

Issue: If a law firm cannot ethically represent the buyer in a transaction, could it charge a finder’s fee from the buyer as well as the seller, effectively acting as a broker? If not, can a company owned by the law firm or one of its partners do so?

Area of Law: Ethics & Professional Responsibility
Keywords: Non-legal services; Finder's fee; Conflict of interest
Jurisdiction: New York
Cited Cases: None
Cited Statutes: 19 N.Y. Comp. Codes R. & Regs. tit. 19, § 175.7; N.Y. State Bar Ass'n Op. 752, Op 755; Disciplinary Rules of New York's Code of Professional Conduct DR 5-101(A), DR 5-104(A)
Date: 07/01/2008

Disciplinary Rules of New York’s Code of Professional Conduct address such questions.  The N.Y. State Bar Association’s Committee on Professional Ethics (the Committee) made clear in Opinion 752 that a lawyer is barred from “acting as a broker and a lawyer in the same transaction.”  N.Y. State Bar Ass’n Op. 752 (2002).  The prohibition against a lawyer acting as a broker and a lawyer in the same transaction governs the individual’s or company’s role as lawyer, not the lawyer in his or her non-legal role.  That is, it is “the effect on the exercise of legal judgment that [is] the concern, just as with any other personal conflict created by the lawyer’s own financial, business or personal interests under DR 5-101(A).”  N.Y. Op. 752. 

The Committee’s focus on the lawyer’s provision of non-legal services in Opinion 752 was confirmed in another of its opinions two months later.  In Opinion 755, the Committee expressly concluded that DR 5-104(A), which relates to business transactions between a lawyer acting as a lawyer and his or her client, does not apply to the lawyer’s relationship with that client when the lawyer is acting in his or her role as owner of a non-legal ancillary business.  N.Y. Op. 755.  In Opinion 755, the Committee “consider[ed] the extent to which the rules on business transactions between lawyers and clients and the rules on in-person solicitation apply to reciprocal referral arrangements between lawyers and ancillary businesses if the notice provisions of DR 1-106 are […]

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