Opinion #101. Referral of Real Estate Transactions by One Attorney-Spouse to the Other

Issued by the Professional Ethics Commission

Date Issued: January 17, 1990

Facts

Lawyer A and Lawyer B are husband and wife and have separate law practices but are located in the same building. Lawyer A is also a shareholder in and a broker for a real estate corporation. From time to time, Lawyer A refers prospective buyers or sellers of real estate to Lawyer B for legal representation in transactions in which he is involved either as a broker or as a lawyer.

Questions Presented

Lawyer B wishes to know whether she is prohibited from representing the buyer or seller in these circumstances, and if not, whether she has any obligation to disclose to the buyer or seller her relationship to Lawyer A. Lawyer B also asks whether the result would be any different if Lawyer A and Lawyer B were to form a partnership.

Opinion

The questions presented by this Request are substantially addressed by two Opinions of the Grievance Commission of the Overseers of the Bar.[1] In Opinion No. 3, the Grievance Commission discussed the problem of the application of the Maine Bar Rules to situations in which two married lawyers were on opposite sides of a matter. In Opinion No. 12, the Grievance Commission addressed, inter alia, the question of the ethical propriety of one lawyer representing both the buyer and seller in a real estate transaction.

In Opinion No. 3, the Grievance Commission concluded that before married spouses could oppose each other in a particular matter, they are required by Rule 3.4(a) to disclose their relationship to their respective clients. Next, the Commission advised that since the independent exercise of professional judgment by each lawyer is very likely to be affected by their relationship, “the preferred practice” would be for each lawyer to obtain the written consent, pursuant to Rule 3.4(f), of his or her client before accepting employment. Finally, the Commission advised that even if full disclosure is given and written consent may be obtained, it may very well be, depending on the facts of the case, that both lawyers could not accept employment on the opposite sides of a matter because the nature of their relationship would inevitably result in a conflict of interest within the meaning of Rule 3.4(b). Thus, the Commission concluded that “[a]lthough not necessarily prohibited by the Maine Bar Rules, the representation of differing interests by lawyers who are husband and wife . . . should probably be avoided in most instances.” Grievance Comm’n of Bd. of Bar Overseers, Formal Opinion No. 3 at 4 (1979).

In Opinion No. 12, the Grievance Commission was faced with a series of questions concerning the ethical propriety of a lawyer representing both a buyer of real estate and a bank which is financing the transaction. In the course of its extensive discussion of the issues raised by this situation, the Commission observed the following concerning the propriety of a lawyer representing both the buyer and seller in the transaction, for example, by preparing the deed on behalf of both:

It is, however, doubtful that the seller could be added to the roster of clients in such circumstances. Representation of the seller introduces responsibilities that go beyond preparation of a deed and harbors the distinct possibility of conflict of interest in connection with the title examination. Grievance Comm’n of Bd. of Bar Overseers, Formal Opinion 12 at 6‑7.(footnote omitted).

Thus, representation of a buyer and seller by the same lawyer in a real estate transaction would in all likelihood violate Rule 3.4(b). Moreover, the violation is not likely to be cured by reference to Rule 3.4(d), which authorizes multiple employment when it is “obvious” that lawyer can “adequately represent” the interest of each party. As the Commission observed:

The adequate representation that must be obvious is not merely capable representation. It is representation in which the lawyer’s independent professional judgment in behalf of one client is not adversely affected by representation of another client. Formal Opinion 12, supra at 5.

Applying these principles to the questions presented, the Professional Ethics Commission is of the view, first, that if Lawyers A and B are partners, they may not represent both the buyer and seller in a real estate transaction. See Opinion No. 12. If they are not partners, consistent with Opinion No. 3, it is not necessarily prohibited in every case for them to represent both the buyer and seller in a transaction because they are married, provided that the interests of the two lawyers are disclosed and the clients consent, although Opinion No. 3 cautions against such practice.[2] Moreover, it may be that, depending on the facts of an individual case, the interest of Lawyer B in seeing a transaction completed may be strong enough to constitute a conflict of interest within the meaning of Rule 3.4(b) and that it may not be “obvious” within the meaning of Rule 3.4(d) whether the nature of the transaction is such that Lawyer B can adequately represent a client referred to her by her husband. As the Grievance Commission repeatedly emphasized, each transaction would have to be evaluated on its facts, and the Ethics Commission can do no more in these circumstances than alert the lawyers in question to the dangers presented by the rules.


Footnotes

[1] At the time of the promulgation of the Maine Bar Rules, November 1, 1978, the Grievance Commission was entrusted with the responsibility both of resolving disputes as to past behavior of lawyers and of rendering advice as to their future conduct. On February 15, 1985, this latter function was transferred to the newly‑established Professional Ethics Commission. The determinations of the Grievance Commission prior to 1985 are therefore precedent for Ethics Commission Advisory Opinions.

[2] It makes no difference whether Lawyer A is functioning only as a real estate agent in referring clients to Lawyer B. The “interests” of Lawyer B which are the subject of Rules 3.4(a), 3.4(b), 3.4(d) and 3.4(f) are implicated in these circumstances by the fact of the marital relation and not by the fact that Lawyer A happens to be a lawyer. In addition, even when functioning as a real estate broker, Lawyer A remains subject to the Maine Bar Rules and must disclose his relationship with Lawyer B when recommending her to clients. See, generally, Grievance Comm’n of Bd. of Bar Overseers, Formal Opinion No. 5.


Enduring Ethics Opinion