Can a lawyer employed by a county Department of Social Services bid to buy real property the department is selling at public sale?

Plain-English summary

A lawyer employed by a county Department of Social Services asked whether they could bid to buy real property held by the Department and sold at a public sealed-bid sale. Because the Department is a public body that cannot consent to a conflict of interest (citing N.Y. State 450), the committee framed the question under DR 5-104(A): whether the lawyer and the client have differing interests and whether the client expects the lawyer to exercise professional judgment on its behalf.

The committee found differing interests inherent in the transaction. The lawyer's interest is to buy at the lowest price, while the Department, by Social Services Law section 106, must sell to the highest "responsible" bidder and retains discretion to reject all bids and to decide who is responsible. Because that statutory scheme confers discretion at several stages (which property to list, how the sale is conducted, whether a bidder is responsible, and the settlement of claims), the lawyer may be called on to exercise professional judgment over the very sale in which the lawyer is bidding. The committee also relied on DR 4-101(B)(2) and (3): an appraisal of the property, not made available to the public, would be accessible to the lawyer, and is secret information of advantage to the lawyer that the public-body client cannot consent to having used.

Quoting N.Y. City 525 on the intense scrutiny any lawyer-purchase of client property receives, and invoking Canon 9's concern with the appearance of impropriety (the public may perceive that a Department lawyer had access to non-public information or influence over the sale), the committee concluded the lawyer may not bid without the client's consent, and that consent is impossible here. The question was answered in the negative.

Currency note

This opinion was issued in 1988, before New York replaced the Code of Professional Responsibility with the Rules of Professional Conduct in 2009 (business transactions with a client now appear at Rule 1.8(a) and confidentiality at Rule 1.6). It was later modified by N.Y. State 629. 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 Treat this page as historical context, not current guidance.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: Can a government agency's lawyer buy property the agency is selling?

A: Not on these facts. The committee held that a Department of Social Services lawyer may not bid on department property, because the lawyer's interest in a low price conflicts with the Department's statutory duty to sell to the highest responsible bidder, and the public body cannot consent.

Q: Why does it matter that the client is a public body?

A: Because a public body cannot consent to a conflict. The committee held that DR 5-104(A) would otherwise let a client consent after full disclosure, but a public agency cannot give that consent, so the transaction is barred.

Q: What role did the appraisal play?

A: A decisive one. The committee held that the lawyer's access to a confidential appraisal not available to the public is secret information of advantage to the lawyer under DR 4-101(B), and the public-body client cannot consent to its use.

Background and rules framework

The opinion interpreted DR 5-104(A) (business transactions with a client where interests differ), DR 4-101(B)(2) and (3) (use of client confidences and secrets to the client's disadvantage or for the lawyer's advantage), and Canon 9 (appearance of impropriety). The closest Model Rule analogues are Rule 1.8(a) (business transactions with a client) and Rule 1.6 (confidentiality of information).

Citations and references

Rules of Professional Conduct:

• MR 1.8(a) (business transactions with a client)
• MR 1.6 (confidentiality of information)
• NY DR 5-104(A); DR 4-101(B)(2), (3); Canon 9

Statutes:

• N.Y. Social Services Law section 106 (disposition of real property acquired by a public welfare official; sale to the highest responsible bidder)

Cases:

• Goodman v. Fisher, 205 Misc. 896, 131 N.Y.S.2d 184 (Sup. Ct. 1954): public-auction and sealed-bid sale formats

Other opinions cited:

• N.Y. State 450 (1976): a public body cannot consent to a conflict of interest
• N.Y. City 525 (1940); ABA Informal Op. 677 (1963): scrutiny of a lawyer's purchase of property from a client
• N.Y. State 629: later modifies this opinion

See also

• NY State Bar Op. 629: Lawyer conflicts among governmental entities
• NY State Bar Op. 1055: A city lawyer buying tax-foreclosed property from the city
• NY State Bar Op. 1272: Conflict for a part-time Department of Social Services lawyer

Source

• Landing page: https://nysba.org/opinion-588/