UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 04-11
RULES 1.6, 1.7, 1.8, 5.3(b), AND 7.1-7.3
Facts
Lawyer is both a licensed attorney and real estate broker in South Carolina. Lawyer desires to open an office from which both his law office and his real estate practice, two distinct legal entities, would be operated. While the Lawyer would maintain an enclosed and secure office for himself, all other employees would be situated in partially enclosed cubicles in an office sharing arrangement. Access to the office would be through one central exterior door. The Lawyer would be the sole owner of both and does not contemplate doing real estate closings in the law practice. Use of one receptionist is contemplated for duties of a non-confidential basis. Distinct names of both businesses would be on the exterior of the building.
Questions
May a practicing lawyer operate his law practice and a separately licensed other business owned solely by the lawyer from the same office? May a receptionist be shared? Are there any ethical prohibitions or limitations in such an arrangement?
Summary
A lawyer may practice law and operate another business from the same location. The lawyer must ensure that his obligations under the Rules of Professional Conduct are met. A shared receptionist and open air office for a law practice and another business present significant ethical hazards for the lawyer.
Opinion
In SC Ethics Advisory Opinion 93-37, we stated that an attorney admitted to practice in South Carolina may engage in the simultaneous practice of another profession so long as he meets the requirements of both professions. It would stand to reason then that the Rules of Professional Conduct would not proscribe the operation of those businesses from the lawyer’s office. However, in SC Ethics Advisory Opinion 95-30, we referred to ABA Formal Opinion 91-360 which stated that, “the absence of a prohibition does not eliminate the risks which are inherent in conducting a law practice and [another] business simultaneously.”
The lawyer should give specific attention to maintaining confidences of clients (Rule 1.6), conflicts of interest (Rule 1.7), entering into a business transaction with a client (Rule 1.8) and advertising (Rules 7.1 – 7.3). However, the mere proximity of the activities does not, per se, create ethical violations.
Another real concern is the inadvertent creation of an attorney-client relationship (Rule 1.2). As noted by Professors Wilcox and Crystal in their scholarly Annotated South Carolina Rules of Professional Conduct 2002 Edition, “An attorney-client relationship may arise in a variety of situations even without an engagement agreement and even if the attorney fails to recognize the existence of the relationship.” While each business may have a separate and distinct sign on the exterior of the building, no such convenient means of distinction are embodied in the person of the lawyer. As such, the lawyer must be careful not to engage in any conduct that could cause the client of his real estate brokerage business to reasonably believe that the lawyer represented them as well.
The use of a single receptionist for two businesses and the use of the open layout of the office for support staff create risks for the lawyer. The inquirer has noted that there may be confidentiality and conflict of interest issues. These issues include access to legal files by non-law practice personnel, lack of privacy due to the partially enclosed cubicles, and the inadvertent publication of privileged information. All are real concerns which must be addressed, particularly in light of the lawyer’s responsibility under Rule 5.3(b) to take reasonable efforts to ensure that the conduct of a non-lawyer assistant is compatible with the professional obligations of the lawyer. The contemplated structure is fraught with the danger of breaches of confidentiality.