Ethics Committee Formal Opinion #1992‑93/12
Conflict of Interest: Lawyer and Real Estate Broker Who Are Spouses Participating in same Real Estate Transaction
June 9, 1993
A lawyer desiring to represent a client/buyer in a real estate transaction in which the lawyer’s spouse (or the spouse’s real estate firm) is the broker, is not directly prohibited under the Rules from doing so. But the lawyer should be extremely cautious and alert to the many potential ethical dilemmas that could result.
A lawyer who represents a buyer, and who has a conflict arising out of the lawyer’s spouse’s involvement, must at the very least, first disclose the potential conflicts with the client, discuss all of the possible “consequences” that could result, and after such consultation, obtain client’s knowing consent (Rule 1.7)
This conflict also arises when another member of the lawyer’s firm represents the buyer. (Rule 1.10(a); Rule 1.10(d))
The lawyer under these circumstances may also have to obtain the client’s written consent, after giving the client a reasonable opportunity to seek the advice of independent counsel, to the extent that the transaction may constitute a business transaction in which the lawyer (through the spouse) may be deemed to have a pecuniary interest adverse to the client (Rule 1.8(a)). This requirement does not arise when another member of the lawyer’s firm represents the buyer. (Rule 1.10(a))
The lawyer acting under these circumstances must also be cautious of the “harsh reality” analysis that might, at the outset, preclude the lawyer from even attempting to obtain the client’s consent (Rule 1.7(b)(1)).
In reality, the possibility that the lawyer’s representation of the buyer/client may be so materially limited by the lawyer’s responsibility to his or her spouse and by the lawyer’s own interests that undertaking such representation is unadvisable.
May Lawyer X, or any member of Lawyer X’s firm, represent a buyer in a transaction in which Lawyer X’s spouse’s real estate company was the listing/selling broker?