BARRISTER'S BRIEFING: Serving as Broker and Lawyer Simultaneously in NYS is Prohibited

Some New York State real estate brokers also happen to be attorneys-at-law. These members should refrain from performing both roles simultaneously for a real estate client. A 2017 decision from the New York State Bar Association’s Committee on Professional Ethics reaffirmed the traditional prohibition on this practice.

Opinion 1117 issued last April states that a lawyer who receives a broker’s commission in a real estate transaction may not also serve as the lawyer for the buyers, even if the buyers are long-time clients (or friends) and have requested both kinds of services. The conflict of interest in this type of dual representation is not waivable. It is a “personal interest” conflict in which the lawyer would have a personal stake in their advice rendered. Therefore, an attorney may not ethically act as both a real estate broker and attorney to:

Rule 1.7 of the New York Rules of Professional Conduct (the “Rules”) sets forth the general provisions on conflicts of interest. A lawyer with a conflict of interest under Rule 1.7(a) may not represent a client unless the conflict is waivable and is properly waived by the client under Rule 1.7(b). One kind of conflict, a “personal interest” conflict, arises when a reasonable lawyer would conclude that “there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial, business, property or other personal interests.” Rule 1.7(a)(2).

Such personal interest conflicts are generally present when a lawyer provides brokerage services as well as legal services in the same transaction. However, such a personal interest conflict is non-waivable in such a scenario. The rationale being that an attorney may proceed to closing on a transaction that may not be in the best interest of his client for the sake of earning a separate real estate commission.

The full text of the decision can be found at https://www.nysba.org/ethics.

Editor’s Note: The foregoing is for information purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.

Leon Cameron, Esq.
Leon Cameron, Esq., is Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.