Opinion 89-16
(June 1989)

You have asked the Committee for an opinion concerning the ethical propriety of your representation of the sellers of a piece of real estate and the business contained therein where the buyer of the property and the business are not represented by counsel. Although you characterize the principals as buyer and seller, you describe the transactions as a transfer of assets of the business and the lease of the real estate. You have delineated certain impediments to the consummation of the transaction, including a possible cloud on the title held by seller and a lawsuit filed by the buyer seeking a rescission of the agreement of sale. You have indicated that both the impediment and the lawsuit have been resolved and the parties wish to complete the originally agreed upon transaction. As the Committee understands it you ask whether or not you have any conflict in proceeding to settlement with or without the participation of an attorney representing the buyer's interest.

Questions of conflict involve the duty of a lawyer to his own client. In the situation which you have described, it appears that the only goal of your client at this point is to complete the sale/lease of his property, and your participation in a settlement which concludes that process does not present any conflict of interest. You do not suggest that you now or in the past have represented any interest which would act, defeat or undermine your client's objectives. Similarly, the impediments which have arisen since the original agreement was signed do not constitute ethical conflicts. The Committee expresses no view on whether these problems are, in fact, resolved or whether settlement relieves you of any responsibility to your client should title not be clear or should the lawsuit filed be for something other than rescission. The Committee does believe however, that as an element of the technically still pending lawsuit was for damages against both you and the seller, that a potential conflict of interest situation is present. Provided you comply with the requirements of Rules 1.7b l & 2, the Committee does not feel that this poses any impediment to your representation of the sellers at the settlement. Your disclosure to the client under Rule 1.7b 1 should include an explanation of the fact that although the matter appears to be settled it is still actually pending and as such, since you are a codefendant that there is the possibility of some liability on your part to them in the event of a bad result in the case. In addition, you should take care (and inform them that you are doing so) not to act in their representation at the settlement in such a fashion as to insulate yourself from liability on the lawsuit to their disadvantage. As Rule 1.7 of the Rules of Professional Conduct make clear it is loyalty to your client which must be uppermost regarding this issue.

Your letter alludes to concern over that aspect of the settlement which involves dealing with an unrepresented party. While that does not constitute a conflict, the Rules do require you to proceed with caution. Rule 4.3 specifically states:

Rule 4.3 Dealing with Unrepresented Person and Communicating with One of Adverse Interest

(a) In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested.
 
(b) During the course of a lawyer's representation of a client, a lawyer shall not give advice to a person who is not represented by a lawyer, other than the advice to secure counsel, if the interests of such person are or have a reasonable possibility of being in conflict with the interests of the lawyer's client.

(c) When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer should make reasonable efforts to correct the misunderstanding.

As your letter suggests, you appear to have made efforts to satisfy the requirements of the Rule and have evidence that the buyer has engaged counsel with respect to the issue of this transaction.

In sum, the Committee believes that your participation in a real estate closing, as you have described it, on behalf of the seller presents no issues of conflicts of interest and will not violate Rule 4.3 as long as you give no legal advice to the party which is making the purchase.

 

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.