Ethics Advisory Opinion No. 02-04

Issued March 15, 2002
1 Issue:
May a lawyer, who is also a certified public accountant employed by an accounting firm, contemporaneously conduct from an office at the accounting firm public accounting services as an employee of the accounting firm and a law practice independent from the accounting firm without violating the Utah Rules of Professional Conduct?

2 Opinion: A lawyer who is a certified public accountant and employed by an accounting firm may not contemporaneously practice law and accounting from the offices of the accounting firm without violating Rule 5.4(b) of the Utah Rules of Professional Conduct. Accounting is a “law-related service,” and, when accounting services are provided by an active lawyer, the lawyer is subject to the Utah Rules of Professional Conduct while engaged in either profession. The lawyer is, therefore, prohibited by Rule 5.4(b) from forming a business association with a non-lawyer to provide the accounting services when the lawyer is contemporaneously engaged in the practice of law.
3 Factual Background: A lawyer (“Lawyer”) who is also a certified public accountant (“CPA”) is employed by an accounting firm owned by other CPAs (“Accounting Firm”). Lawyer is an employee of Accounting Firm, but does not have an ownership interest in the firm. Lawyer desires to conduct the professional practices of accounting and law from his office at Accounting Firm. Lawyer will pay Accounting Firm rent for the fair market value of office space, computer and furniture, receptionist and other Accounting Firm resources used by Lawyer in the legal practice, calculated on an hourly basis. Lawyer will develop his own clients, but may accept referrals from CPAs employed by Accounting Firm. Lawyer will directly and separately bill clients for legal services performed, and will not pay any referral fees to Accounting Firm. Lawyer will maintain confidentiality of law client files by maintaining these files separately from the accounting files of Accounting Firm.
4 Analysis: In the Committee’s prior opinions, we have found that, under certain circumstances, a lawyer engaged in a law-related occupation will be subject to the Utah Rules of Professional Conduct while engaged in either occupation.1These opinions are consistent with opinions issued by the American Bar Association prior to its adoption of ABA Model Rule 5.7 in 1994.2
5 Model Rule 5.7 addresses circumstances under which a lawyer who provides “law-related services” is subject to the ABA Rules of Professional Conduct. Under the rule, if the services are not provided in circumstances that (a) are distinct from the lawyer’s provision of legal services to clients, or (b) are provided by a separate entity, but the lawyer fails to take reasonable measures to assure that persons obtaining the law-related services know that the services of the separate entity are not legal services and that the protections of the attorney-client relationship do not exist.3
6 The Utah Supreme Court has not adopted Model Rule 5.7. While the Committee has noted that Model Rule 5.7 is consistent with its analysis in prior opinions,4 the Committee has not endorsed the rule, as the decision to adopt any new rule is exclusively within the purview of the Utah Supreme Court.5
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Ethics Advisory Opinion No. 98-08

(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…)