Can a New Jersey lawyer represent a buyer or seller in a real estate deal when the lawyer's spouse is the listing or selling broker, if the client consents after full disclosure?

Plain-English summary

The inquiry concerned a lawyer representing a party to a real estate matter where the lawyer's spouse (or the spouse of one of the lawyer's partners) is the realtor or salesperson whose firm listed or sold the property. The Committee restated its earlier rulings. In Opinion 312 it had held that where the lawyer's spouse was the listing or selling agent, it was improper for the lawyer to represent either party; in Opinion 341 it had held that where the spouse-realtor did not obtain the listing and did not make the sale, there was no impropriety.

The Committee explained the rationale as an inherent conflict of interest: the lawyer's duty of unswerving allegiance to the client may conflict with the spouse's interest in a commission or other benefit that accrues if the deal goes through, and the realtor-spouse's interest is in effect the interest of the attorney-spouse. The opinion noted that under Opinion 312 the client's consent could not cure the impropriety, and that the better course was for the lawyer to avoid putting himself in a position where the client might conclude he had not been well represented.

The new wrinkle in this inquiry was a suggestion that representation should be allowed where the client has a long-standing relationship with the lawyer, at least with full disclosure of the marital relationship. The Committee rejected the distinction. It concluded that the lawyer whose spouse stands to win or lose in the performance of the lawyer's duty to a client undertakes the representation at his peril even when the client, after full disclosure, consents, citing Bartels v. Romano and Goodwin Motors v. Mercedes. The Committee adhered to Opinions 312 and 341 on both the conflict issue and the solicitation or steering issue.

Currency note

This opinion was issued in 1983, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could a New Jersey lawyer represent a buyer or seller when the lawyer's spouse was the listing or selling broker?

A: No. The opinion concluded that representation of either party was improper when the lawyer's spouse listed or sold the property, because the spouse's commission interest was in effect the lawyer's own interest.

Q: Did the client's informed consent cure the conflict?

A: No. The opinion reaffirmed Opinion 312's view that consent could not cure the impropriety, and held the lawyer undertook the representation at his peril even after full disclosure and consent.

Q: What if the spouse-realtor did not list or sell the property?

A: Then there was no impropriety. The opinion adhered to Opinion 341, which permitted the representation where the spouse neither obtained the listing nor made the sale.

Q: Did a long-standing prior relationship with the client change the result?

A: No. The Committee declined to make a distinction favoring the case of a long-standing prior relationship and adhered to its earlier opinions.

Background and rules framework

The opinion was decided under the conflict-of-interest principles then governing New Jersey lawyers, before the 1984 adoption of the Rules of Professional Conduct. In current terms the question maps onto RPC 1.7 (concurrent conflicts arising from a lawyer's personal interest) and RPC 1.8 (a lawyer's business and financial interests adverse to a client). The Committee treated the realtor-spouse's commission as the lawyer's own interest and held that interest non-consentable on these facts.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NJ RPC 1.7 (concurrent conflicts of interest, including personal-interest conflicts)
• MR 1.8 / NJ RPC 1.8 (lawyer's financial interest adverse to a client)

Cases:

• Bartels v. Romano, 171 N.J. Super. 23 (App. Div. 1979)
• Goodwin Motors v. Mercedes, 172 N.J. Super. 263 (App. Div. 1980)

Other opinions cited:

• NJ ACPE Opinion 312, 98 N.J.L.J. 646 (1975) (spouse as listing/selling agent bars representation; consent does not cure)
• NJ ACPE Opinion 341, 99 N.J.L.J. 610 (1976) (no impropriety where spouse did not list or sell)

See also

• NJ ACPE Op. 513: Attorney-Shareholder of a Title Insurance Company
• NJ ACPE Op. 514: Broker's Commission to the Purchaser's Attorney
• NJ ACPE Op. 547: Sewerage Authority Counsel Whose Partner Sues the Authority

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp518-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

111 N.J.L.J. 513, May 19, 1983

OPINION 518

Conflict of Interest Steering - Attorney, Spouse of a Real Estate Salesperson

This inquiry concerns the propriety in representing parties to a real estate matter where the spouse of the attorney [or of his partners, etc.] is the realtor or sales person whose firm has listed or made the sale of the property to be dealt with by the attorney.

In our Opinion 312, 98 N.J.L.J. 646 (1975) we held that where the spouse of an attorney was the listing or selling agent it was improper for that attorney to represent either party to the transaction. This was reaffirmed in our Opinion 341, 99 N.J.L.J. 610 (1976) where we held that where the attorney's spouse-realtor did not obtain the listing and did not make the sale, there was no impropriety in that attorney's representation of either party to the sale.

In both of the above Opinions we discussed the matter of solicitation or steering. In Opinion 312, supra, we held that an attorney may represent a client who has been referred to him by the agency in which his spouse is employed, provided that client asks the agency for a reference. We also held that when a client asks an attorney to recommend a realtor, the attorney may refer the client to his spouse and her employing agency; and, if a sale develops, he may represent that client, provided the spouse was not the listing or selling broker.

The rationale behind these Opinions deals with inherent conflict of interest where the attorney's duty of unswerving allegiance to the client may conflict with the interest of his spouse in a commission or other benefit that will accrue to the spouse if the deal goes through. The interest of the realtor-spouse is in effect an interest of the attorney-spouse. In Opinion 312, supra, we held that the consent of the client could not cure the impropriety; that the better course is for the attorney to avoid putting himself in the position where his client may conclude that he had not been well represented.

In the present inquiry it is suggested that where a client has a long-standing relationship with an attorney. The representation of that client should not be precluded because the attorney's spouse is the listing or selling broker and a fortiori where there is a full disclosure to the client of the espousal relationship.

Although the concept that husband and wife are "one person" may well be outmoded for many purposes, we still are of the opinion that the attorney whose spouse stands to win or lose in the performance of that attorney's duty to a client undertakes such representation at his peril even when the client, after full disclosure, gives consent. See Bartels v. Romano, 171 N.J. Super 23 (App Div. 1979), Goodwin Motors v. Mercedes, 172 N.J. Super 263 (App. Div. 1980).

Accordingly, we find no reason to make a distinction favoring the case where the client has had a long-standing prior relationship with a law firm. We hold to the views expressed in Opinions 312 and 341, supra, both on the issue of conflict and that of solicitation.