Can a South Carolina lawyer draft a condo sales contract that charges buyers a $250 fee waived only if they use the seller's lawyer to close, and then represent those buyers?

Plain-English summary

A lawyer's client, a condominium seller, asked the lawyer to draft a sales contract requiring buyers to pay the seller an extra $250 at closing to offset the cost of dealing with multiple unfamiliar closing firms, with the $250 waived if the buyer used the seller's attorney, who was already familiar with the project. The lawyer asked whether drafting that provision, or representing buyers at the closings, was ethical.

The committee concluded it was not unethical. On Rule 8.4, it reasoned that if offering the inducement violated a criminal statute the lawyer's drafting could be misconduct, but it was unaware of any statute prohibiting the seller from offering it, so no Rule 8.4 violation arose. On Rule 7.3, it found it debatable whether any direct solicitation had occurred: the contract was between seller and buyer, the lawyer was not a party or named in it, and the lawyer had no assurance of being designated the closing attorney, so the drafting did not constitute a direct solicitation subject to Rule 7.3.

The committee added two conditions. Because the lawyer would represent buyers while apparently continuing to represent the seller, the representation was subject to the conflict rules, specifically Rule 1.7, and it cited prior committee opinions on multiple representation in real estate. And if the seller would pay the lawyer's fee for representing a buyer, the lawyer had to comply with Rule 1.8(f).

Currency note

This opinion was issued in 1997, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 the lawyer draft a contract steering buyers to the seller's closing lawyer?

A: The committee concluded yes. It found no statute making the $250 inducement criminal under Rule 8.4, and concluded the drafting was not a direct solicitation under Rule 7.3 because the lawyer was not a party to the contract and had no assurance of being the closing attorney.

Q: Did the contract amount to prohibited solicitation by the lawyer?

A: The committee concluded it did not. The contract ran between seller and buyer, the lawyer was neither a party nor named, and the lawyer had no assurance of being designated, so the drafting did not constitute a direct solicitation subject to Rule 7.3.

Q: What must the lawyer watch if he also represents the buyers?

A: The committee stated that representing buyers while continuing to represent the seller is subject to Rule 1.7's conflict rules, and that if the seller pays the buyer's legal fee the lawyer must comply with Rule 1.8(f).

Background and rules framework

The opinion applied Rule 8.4 (misconduct, including criminal acts reflecting on fitness), Rule 7.3 (direct contact with prospective clients), Rule 1.7 (concurrent conflicts of interest in multiple representation), and Rule 1.8(f) (payment of a lawyer's fee by a third party), each corresponding to the like-numbered Model Rule. The committee treated the criminality of the inducement as a substantive-law question outside its purview.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 8.4 / Model Rule 8.4: misconduct.
• South Carolina RPC 7.3 / Model Rule 7.3: direct contact with prospective clients.
• South Carolina RPC 1.7 / Model Rule 1.7: concurrent conflicts of interest.
• South Carolina RPC 1.8(f) / Model Rule 1.8: payment of a lawyer's fee by a third party.

Other opinions cited:

• S.C. Bar Ethics Adv. Ops. 95-04, 94-08, 91-30, 86-08, 86-09, 78-16: multiple representation in real estate closings.

See also

• SC Bar Ethics Op. 97-01: Seller-Paid Closing Fees
• SC Bar Ethics Op. 97-05: Direct-Mail Solicitation

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-97-19/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

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 97-19

Attorney's client, Seller, has requested that Attorney draft a sales contract to be used for the sale of condominium units which will include the following provision:

Purchaser and Seller acknowledge that Purchaser may use any law firm it desires to use in the closing of the purchase of its unit. Purchaser further acknowledges that at the completion of the building which contains the unit Seller must provide information for and attend numerous closings with several different law firms who represent the various purchasers in the building. These other law firms are generally not familiar with [Name of Project] and the issues which have to be addressed at closing. Purchaser also acknowledges that having to deal with several different law firms in this manner will increase Seller's cost through additional time and inconvenience to Seller in closing the sale of units. In order to compensate and reimburse Seller for this additional cost, Purchaser shall pay to Seller at closing the additional sum of $250.00 at closing. Provided, however, in the event Purchaser chooses to use the Seller's attorneys as its closing attorneys, Seller will waive this $250.00 in light of the fact that Seller's attorneys are more familiar with [Name of Project] and the issues which need to be addressed at closing.

Questions:
Is it ethical for Attorney to participate in the drafting of a contract containing this provision or to represent purchasers at the unit closings?

Summary:
Drafting the contract and representing the unit purchasers is not unethical, provided Attorney complies with Rule 1.7 before engaging in representation of multiple parties.

Opinion:
Seller is offering a financial inducement for condominium purchasers to use Seller's attorney as the closing attorney. Taking the contract provisions at face value, the underlying motive is that closings will occur more easily and smoothly if one attorney, Seller's attorney, handles all of them. If offering such an inducement were to violate any criminal statute, the attorney's involvement in drafting the contract arguably could be construed as a violation of Rule 8.4 of the Rules of Professional Conduct. Rule 8.4 provides in part that it is professional misconduct for a lawyer to commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects. Although this question is one of substantive law, the Committee is unaware of any statute that would prohibit the Seller offering such an inducement, and therefore Attorney would not violate Rule 8.4 by assisting Seller in drafting this provision of the contract.

We are assuming for purposes of this opinion that Attorney, who is drafting the contract, will be the closing attorney for the Seller and the purchasers at the unit closings (conceivably, Seller could have a second attorney which Seller uses for unit closings). Under these circumstances, Attorney will benefit from the financial inducement in the contract in that some purchasers presumably will use Attorney for closings instead of selecting another attorney. Under Rule 7.3(c), a written communication from a lawyer soliciting professional employment from a prospective client known to be in need of legal service in a particular matter, and with whom the lawyer has no family or prior professional relationship, must contain certain notices and disclosures as set forth in Rule 7.3(c). The facts raise the question of whether Attorney has violated Rule 7.3 concerning direct contact with prospective clients by participating in the drafting of a contract provision which Attorney knows will result in purchasers seeking representation from Attorney for unit closings.

We note that while the contract contains a financial inducement to use Seller's attorney, it is debatable whether a direct solicitation has actually been made by Attorney. The contract is between Seller and the unit purchaser; Attorney is not a party to the contract and is not named in the contract. Attorney has no assurances at the time the contract is drafted that Attorney will be designated by Seller as the closing attorney for the unit closings. Under these circumstances, the Committee's opinion is that the drafting of the contract does not constitute a direct solicitation subject to Rule 7.3.

We note that Attorney's acceptance of representation of the purchaser, when Attorney apparently will continue to represent Seller, is subject to the conflict of interest rules, specifically Rule 1.7. The issues raised by multiple representation in a real estate setting have been addressed in previous opinions of the committee. See, e.g., S.C. Bar Ethics Adv. Ops. # 95-04, 94-08, 91-30, 86-08, 86-09 and 78-16.

Also, if Seller will be paying Attorney's legal fees with respect to Attorney's representation of a purchaser, Attorney must comply with Rule 1.8(f).