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 97-34
Attorney plans to build a house. Attorney represents X, a residential building contractor, in pending divorce litigation. X, while working for another company, built a house for attorney 16 years ago. Attorney is familiar with X's building skills and would like to have X build the house. Attorney has requested bids from several builders and X's bid is in the mid-range of the bids received so far.
QUESTIONS:
Can Attorney enter into a contract with X to build attorney's home while attorney represents X in his divorce? If so, Attorney plans to have a written contract with X regarding the home construction and to refer X to other legal counsel of his choice to review the contract.
What other precautions should Attorney take to avoid ethical difficulties?
SUMMARY:
Attorney can enter into a contract with X to build attorney's home provided Attorney complies with the requirements of Professional Conduct Rule 1.8(a).
OPINION:
Rule 1.8(a) governs situations where a lawyer wishes to do business with a client. An attorney is not prohibited from entering into a business transaction that is fair and reasonable to a client provided: (1) the terms are fully disclosed and transmitted in writing to the client in a manner which he/she can reasonably understand; (2) the client is given a reasonable opportunity to seek the advice of independent counsel; and (3) the client consents in writing to those terms.
Assuming that the contract is fair and reasonable to X and that Attorney fully discloses all terms to X in writing, Attorney's plan of giving X the opportunity to seek independent counsel to review the contract before signing it appears to be sufficient to comply with the Rules.