Can a lawyer own and run an escrow business alongside a law practice?

Plain-English summary

A lawyer planned to buy the assets, name, and book of business of an escrow company licensed under RCW 18.44 and to operate the escrow business as a limited liability company, while continuing a general law practice as a sole proprietorship. He intended to run the escrow business as part of the performance of his professional duties as a lawyer, so that under RCW 18.44.021 he would not be regulated under RCW 18.44, and he recognized that operating the escrow business would be subject to the Rules of Professional Conduct. He asked whether he could practice law as a sole proprietor (or another business form) and also have a PLLC doing escrow work, with both together treated as his law practice under the RPCs.

The committee answered yes. It said a lawyer may provide non-legal services in the course of a law practice, but the provision of those services will be subject to the requirements and obligations of the Rules of Professional Conduct, a point the inquirer accepted. The committee added that the legal form the lawyer adopts, whether a sole proprietorship or a PLLC, does not affect his obligations under the Rules of Professional Conduct.

Currency note

This opinion was issued in 2004, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. The 2006 revisions reorganized the rules, including provisions on entity form and on services a lawyer provides in connection with a law practice. 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 Treat this page as historical context, not current guidance.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 mentioned here.

In practice

Under the Washington rules as they stood at the time of the opinion, the committee resolved two points. First, a lawyer may provide non-legal services, here escrow services, in the course of a law practice, but those services are subject to the RPCs. Second, the lawyer's choice of business entity does not change those obligations: whether the lawyer uses a sole proprietorship, a PLLC, or another form, the duties under the RPCs are the same. The committee framed both the law practice and the escrow business, taken together, as the lawyer's practice for purposes of the rules.

Common questions

Q: Can a lawyer run an escrow business on the side of a law practice?

A: The committee said yes; a lawyer may provide non-legal services such as escrow work in the course of a law practice, but those services are subject to the Rules of Professional Conduct.

Q: Does putting the escrow business in a separate PLLC change the lawyer's duties?

A: No. The committee said the legal form the lawyer adopts, a sole proprietorship or a PLLC, does not affect the lawyer's obligations under the RPCs.

Q: Are the non-legal escrow services exempt from the ethics rules?

A: No. The committee said the provision of non-legal services in the course of a law practice is subject to the requirements and obligations of the Rules of Professional Conduct.

Background and rules framework

The opinion addresses a lawyer's provision of non-legal (escrow) services in connection with a law practice and the lawyer's choice of business entity. The committee referred to the Rules of Professional Conduct generally rather than to a numbered rule, and to the escrow-licensing statute the inquirer relied on (RCW 18.44, including the RCW 18.44.021 exemption for services performed as part of a lawyer's professional duties). Its conclusion rests on the principle that non-legal services provided in the course of a law practice remain governed by the RPCs, and that entity form does not alter those duties.

Citations and references

Statutes:

• RCW 18.44 (escrow agent registration); RCW 18.44.021 (exemption for services performed in the course of a lawyer's professional duties), as relied on by the inquirer

See also

• WA Ethics Op. 1017: Lawyer Who Is Also a Broker
• FL Bar Ethics Op. 63-12: Lawyer in Outside Business
• AL Ethics Op. 1993-16: Law Firm as an LLC

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1300

Original opinion text

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

Advisory Opinion: 2053
Year Issued: 2004
RPC(s): RCW 18.44
Subject: Law practice/escrow agency

The inquirer plans to purchase an escrow company, licensed under RCW 18.44. He plans to purchase the assets, name and book of business of the escrow company and to operate the escrow business as a limited liability company, while he continues the general practice of law as a sole proprietorship. He plans to operate the escrow business as part of “the performance of his or her professional duties” as a lawyer and, thus under RCW 18.44.021, he will not be subject to regulation under RCW 18.44. He recognizes that his operation of the escrow business will be subject to the Rules of Professional Conduct.

The inquirer asks if he may practice law as a sole proprietor (or some other business organization) and also have a PLLC that does escrow work, both of which, together, would be considered his law practice under the RPCs?

The committee opined, yes. A lawyer may provide non-legal services in the course of a law practice, but the provision of those services will be subject to the requirements and obligations of the Rules of Professional Conduct. The inquirer accepts this fact. The legal form he adopts, be it a sole proprietorship or a PLLC does not affect his obligations under the Rules of Professional Conduct.