Ethics Counsel

Ethics Opinion No. 249

Adopted May 11, 1967


This Committee’s opinion was requested with respect to the following specific questions:

“1. Is the real estate sales, management, or brokerage business the type of business which is so closely associated with the practice of law as to inherently constitute or readily become a means of indirect solicitation of law business or a feeder to a law practice for any lawyer associated with such real estate business?

“2. Is the real estate sales, management and brokerage business so closely related to the practice of law, although theoretically and professedly a distinct collateral occupation, as to inevitably violate the Canons precluding advertising and solicitation? Is such result affected by, or dependent upon, whether the real estate business and law practice are carried on from the same office, separate offices, adjoining offices, or any other arrangement?

“3. May a lawyer hold himself out to the public as being engaged in the active practice of law and also, at the same time, from the same or separate offices, hold himself out as engaged in the real estate business with or without advertising for the latter business?

“4. Is a person who is licensed to practice law and who is also actively engaged in the real estate sales, management or brokerage business, prohibited from actively practicing law regardless of the degree to which he holds himself out to the public as a lawyer; in other words, must he choose to engage in one or the other occupation but not both?”


Generally speaking, answers to your questions involve the principles of Canon 27, relating to advertising and solicitation. Depending upon the particular circumstances involved, there might also be involved one or more of Canons 47 (aiding unauthorized practice), 35 (intermediaries), 34 (division of fees), 33 (partnerships with nonlawyers where practice of law is involved), 38 (compensation, commissions and rebates), and many others. We will, for purposes of this Advisory Opinion, however, limit our discussion to application of the principles of Canon 27, believing that this is your desire and because to do otherwise would unduly lengthen the discussion and require prolix statements and hypothetical facts.

In discussing the difficulties encountered by this Committee and similar committees of other bar groups in applying the principles of Canon 27 to the conduct of practicing lawyers of independent businesses, particularly in or from their law offices and in the same community, Henry S. Drinker stated in Legal Ethics, pages 221, 222, italics added:

“A difficult question, which has given rise to some difference of opinion in the Committees, is as to the propriety of a practicing lawyer also carrying on another business, either from his law office or elsewhere.

“There is, of course, nothing in the Canons to prevent this as to an occupation entirely distinct from and unrelated to his law practice. Thus, no one would dispute the right of a lawyer to be a teacher, or a violinist or doctor or a farmer, or to sell rare postage stamps, provided he in no way used such occupation to advertise, or as a feeder to his law practice. …”

“Where, however, the second occupation, although theoretically and professedly distinct, is one closely related to the practice of law, and one which normally involves the solution of what are essentially legal problems, it is inevitable that, in conducting it, the lawyer will be confronted with situations where, if not technically, at least in substance, he will violate the spirit of the Canons, particularly that precluding advertising and solicitation. The likelihood of this is the greatest when the collateral business is one which, when engaged in by a lawyer, constitutes the practice of law, and when it is conducted from his law office. Thus there is apparently no doubt as to the impropriety of conducting, from the same office, a supposedly distinct and independent business of collection agent, stock broker, estate planning, insurance adjusters bureau, tax consultant, or mortgage service, or to organize and operate under a trade name, even though in an adjacent office a corporation conducting servicing business–drafting charters and other corporate papers. … *”

In American Bar Association Professional Ethics Committee’s Opinion 57 (March 19, 1932) it was held that it was inconsistent with Canon 27 for a lawyer to engage in a business of such nature or so conducted as to be inconsistent with his duties as a member of the Bar, and it was stated that such an inconsistency arises, “when the business is one that will readily lend itself as a means for procuring professional employment for him, is such that it can be used as a cloak for indirect solicitation on his behalf, or is of a nature that, if handled by a lawyer, would be regarded as the practice of law.” (Italics added.)

The Opinion further stated that, to avoid the proscribed inconsistencies with the duties of a lawyer, it was in any event always desirable and usually necessary that the lawyer keep the business entirely separate and apart from his practice of the law and that in all cases he must conduct the business in accordance with the standards of conduct required of him as a lawyer.

In American Bar Association Professional Ethics Committee’s Opinion 57, the Committee concluded that the business of adjusting insurance claims was of such a nature that the solicitation of business for it may “readily” become a means of indirect solicitation of business for any lawyer engaged in it, since the services performed by the lawyer were, when done by him, legal services, even though a layman might lawfully render the same service, and that, accordingly, a lawyer could not engage in the practice of law and also engage in the business of an insurance adjuster.

In American Bar Association Professional Ethics Committee’s Opinion 31, March 2, 1931, this Committee stated that a lawyer should not under any circumstances, as employee or otherwise, engage in the “corporation service” business because his legal skills necessarily would have to be applied and because the solicitation of corporation service business necessarily resulted in solicitation by him or his employer of work which, at least when the lawyer did it, constituted the practice of law.

In American Bar Association Professional Ethics Committee’s Opinion 225, July 12, 1941, stated with respect to a collection agency which solicited business, (a) that a practicing lawyer cannot participate in the collection activities or management of such an agency, and if he does, he must withdraw from the practice of law and cease to hold himself out as a lawyer, (b) that a practicing lawyer who has a financial interest in such an agency may not accept, through the agency, employment to represent, as a lawyer, the owner of a claim whose business was solicited by the agency, even though the lawyer does not participate in the collection activities or management of the agency, but (c) that there was no impropriety on the part of a practicing lawyer in owning a financial interest in a collection agency if his name were not used in connection with it and nothing was done to create the impression that the agency enjoyed the benefit of his legal advice or professional responsibility, so long as he in no wise participated in its activities and did not accept professional employment through the agency.

In Opinion 234, February 21, 1942, the Professional Ethics Committee of the American Bar Association frowned upon a lawyer’s engaging in the business of an “income tax service” company which would “fill out” income tax returns and solicit business by advertising. The Committee was influenced by several facts, including (1) the proposed aggressive advertising for and solicitation of business, (2) the absence of any suggestion in the name of the operation (“Income Tax Service”) that its service would be limited to the “non-legal” phases of preparing tax returns, and (3) the fact that it was to be conducted from the lawyer’s own law office. The Committee concluded that all of this “would inevitably result in the association becoming a soliciting feeder to the lawyer’s law practice”.

The same Committee also has held that a lawyer may not practice law, and, at the same time, engage in the business or practice of accounting in partnership with a non-lawyer (Opinion 269, June 21, 1945), and further held in Opinion 272, October 25, 1946, that a lawyer may not, without offending Canon 27, at the same time hold himself out both as a lawyer and as a certified public accountant, even from different locations, because a majority of the Committee were of the opinion that “accounting activities will inevitably serve as a feeder to his law practice.”

The basic criteria in this area apparently has changed over the years from the earlier tests set forth in Opinion 57 of whether the business or activity is such that it will “readily lend itself” or “can be used” as a feeder to a law practice, to the test used in Opinion 234 and Opinion 272, of whether business or other activity “will inevitably serve” as a feeder to a law practice.

In American Bar Association Professional Ethics Committee’s Informal Decision 709, it was held that a lawyer who was also a licensed real estate broker in Maryland should not collect both legal fees and a broker’s commission in connection with a transaction which had its origins in a purely legal matter. The basis for the opinion was that the services rendered were essentially legal services and only incidentally involved functions as a broker and in addition, the conclusion that

“A real estate brokerage business is so closely related to the practice of law that, when engaged in by a lawyer it constitutes the practice of law.”

Informal Decision 726 of the American Bar Association, the Professional Ethics Committee approved the conduct of a title abstracting business by lawyers on the grounds that both lawyers or laymen were historically entitled to engage in that business, but admonished that the business must not be designed or used in such a manner as to directly or indirectly advertise or solicit legal matters for its lawyer-stockholders.

In Formal Opinion 304 of the American Bar Association, the Committee found nothing improper in the conduct by lawyers of a title insurance or title guaranty fund so long as the lawyers connected with it and also practicing for private legal clients were not named in the advertising and did not publicly promote the use of the title insurance or guaranty.

In Informal Decision 682 of the American Bar Association Professional Ethics Committee, while expressing “grave doubts as to whether a lawyer could, without violating the Canons, practice law and conduct a real estate business at the same time, particularly from the same office,” the Committee nevertheless refused to condemn doing it because of its belief that it possibly could be done without violating the Canons, so long as the lawyer did not, by engaging in the real estate business, either advertise his law practice or use the business as a feeder.

This Committee’s present opinion, based upon opinions cited herein is that:

(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, it is not necessarily a violation of the Canons for a practicing lawyer to engage in such a business activity. The Committee is of the doubtful opinion that the real estate brokerage business can qualify under these present criteria. The Committee recognizes, however, that this is a most difficult problem of legal ethics and admonishes that a practicing lawyer who also engages in the business of a real estate broker must use the most scrupulous care to so conduct the real estate business as to avoid offending the ethics of our profession and to keep his legal and real estate activities segregated and separate. The real estate business must not be used or permitted to directly or indirectly advertise him as a lawyer or to solicit legal employment for him. Under no circumstances should the real estate business be conducted in or adjacent to the lawyer’s law office; nor may advertising and solicitation of real estate business be conducted in the lawyer’s name, but instead would have to be conducted under corporate or other name not including the name of the lawyer. Since the real estate business is so close to the practice of law in many respects, we do not believe that under any circumstances would it be ethical for a lawyer to divide real estate commissions earned as a result of his efforts with a non-lawyer, or to engage in it with a non-lawyer, because of Canons 33 and 34 and, possibly, Canon 47. 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.

See Informal Decision No. 775 of the Professional Ethics Committee of the American Bar Association, Advisory Opinion No. 208, 232, 238, the Legal Ethics Committee of the Oklahoma Bar Association and opinions and canons cited herein.