(Approved September 11, 1998)
Question: May a law firm wholly own an accounting-practice subsidiary that is staffed by employees other than the firm’s lawyers and would perform services for the lawyer’s clients and others?
Response: Yes, although the law firm will be subject to the Utah Rules of Professional Conduct with respect to the provision of these law-related services in certain circumstances.
Analysis: In 1994 the American Bar Association addressed the general issue of attorneys who are involved with “law-related” services, such as those raised in this inquiry. After much debate, the ABA determined that it was not unethical for lawyers to offer non-legal services in conjunction with their law practices, but that the lawyers should be subject to the Rules of Professional Conduct with regard to those services.1
Model Rule 5.7 provides that a lawyer is subject to the Rules of Professional Conduct if the lawyer provides the law-related services in circumstances that are not distinct from the legal services offered or when the lawyer controls the entity that provides the law-related services and has not made reasonable efforts to inform clients that they are not receiving legal services and thus are not protected by an attorney-client relationship.
Although the Utah Supreme Court has not adopted Model Rule 5.7, its provisions are not inconsistent with the existing Utah Rules of Professional Conduct and our Ethics Advisory Opinions. Rules 5.1 and 5.3, for example, provide that a lawyer is responsible for the ethical conduct or misconduct of lawyers and non-lawyers whom the lawyer directs or controls in the context of offering legal services. Rule 8.4(a) prohibits a lawyer from directing others to do what the lawyer cannot ethically do herself. The controlling concept is that the lawyer is responsible for the ethical conduct or misconduct of others when the lawyer is in control of their actions, and cannot abrogate that responsibility merely by delegating the action to a non-lawyer.
Several Utah Ethics Advisory Opinions conclude that a lawyer is held to the ethical standards of a lawyer when performing non-legal services.2Utah Ethics Opinion 1513in particular holds that the Rules of Professional Conduct will apply to a lawyer acting as an appraiser, unless the lawyer makes clear to the client, in writing, that she is not providing legal services and that an attorney-client relationship is not established.
One basis for those opinions is that a lay person receiving advice and service from a lawyer may not distinguish between legal and non-legal services and may expect to receive the protections of an attorney-client relationship-protections of confidences and against conflicts, for example.
That a lawyer is responsible for the ethical conduct or misconduct of those whom she controls and is held to the standards of the Rules of Professional Conduct when acting as a non-lawyer under certain circumstances are the concepts that underlie Model Rule 5.7.
Other states that have not adopted Model Rule 5.7 have allowed lawyers to provide law-related services under strict guidelines designed to protect the clients receiving the non-legal services.4While we may not agree with the particular restrictions imposed, we agree with the prevailing concern of protecting the clients receiving the law-related services. (more…)