Opinion 87-14
(July 1987)

Your request for guidance from the Professional Guidance Committee, made in your letter, dated May 4, 1987, was considered at both the May 18, 1987 and June 15, 1987 Committee meetings. Specifically, as both an attorney admitted to the Bar in Pennsylvania and a Certified Public Accountant, you want to know if you can be in-house counsel for your employer (an accounting firm), draft wills and trusts for the clients of the accounting firm, and represent firm clients in probate and estate administration. In addition, you ask if any of the foregoing are made impermissible by virtue of the fact that you are a shareholder in the employer corporation.

As a licensed attorney and employee of the accounting firm you may certainly act as its in-house counsel. Inherent in that position however is the potential for conflict of interest problems. The Committee has considered this issue in its past Opinion 86-108, a copy of which is enclosed for your information. Briefly stated, as in-house counsel, you must always be vigilant of potential conflicts of interest and the proper way of dealing with them as outlined in DR5-105; and, you must always maintain your independent judgment as required under DR5-101A.

Monitoring and addressing these conflict of issue problems is also pertinent with regard to performing legal services for the clients of the accounting firm. In general, in-house counsel may have outside practices (if their employer permits) but it is necessary that those services constituting the practice of law be performed in the capacity of an attorney for the client and not as an employee of the corporation. In your specific case, your employer desires that you perform these legal services for the firm clients, yet you cannot permit your employer's influence to affect or cloud your independent judgment. Regarding this issue, DR5-104(A) provides:

A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure.

Although your relationship with the client starts out as a business one, once you perform legal work for that client the provisions of the rules are applicable, and you must comply with it.

Practically speaking, this means if a firm client has a claim adverse to the firm, and you have also performed legal work for that client, you might have to take a position adverse to that of your employer (See Opinion 86-108).

If you do legal work for firm clients, you must be careful not to share the legal fees you receive for this work with the firm. This is specifically prohibited by DR3-102(A) which states: A lawyer or law firm shall not share legal fees with a non-lawyer.

The rule has three exceptions, none of which apply in your present situation.

There are several disciplinary rules which might be interpreted to prohibit your being in-house counsel, an officer and/or shareholder of the corporation, and attorney for firm clients and outside clients as well. DR3-103(A) provides that [a] lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law. DR5-107 (C) provides a lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:

(1) a non-lawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;

(2) a non-lawyer is a corporate director or officer thereof; or,

(3) a non-lawyer has the right to direct or control the professional judgment of a lawyer.

The Committee is making an important distinction, specifically that legal services you perform for clients are not being performed in your capacity within the corporation, but rather independently as an attorney, with the duties and obligations of independence and loyalty to the client that apply therein. As such, the prohibitions under DR5-107 do not apply here, as that rule applies only where the corporate entity is formed for the purposes of making a profit in legal services, not in non-law areas, as is the case with your accounting firm. DR3-103 is covered by this view as well, since you as an independent individual, not as a representative of the corporation, are performing the legal services. As such, the Committee is of the opinion that being a shareholder and/or an officer of the corporation is permissible as long as you are aware of the potential conflicts in that situation both in terms of (1) your personal interest as a stockholder versus your independent judgment in advising your employer as in-house counsel, and (2) the best interests of your outside client (who may also be a firm client) versus your own interests as a stockholder/officer and as an employee of the accounting firm.

Most recently, the Maine Board of Bar Overseers Professional Ethics Committee, in their Opinion 79 (issued May 6, 1987) addressed the issue of the dual practice of law and accounting. They found it to be prohibited, because the legal services provided to the clients were not done so independently, but rather as part of the primary functions of the business entity. A synopsis of that opinion is enclosed for your information.

In conclusion, the issue you have raised presents a number of considerations which you must confront before acting in a dual capacity. Although we cannot provide you with a definitive answer, we hope this opinion will raise your awareness of the problems so that you will proceed with the appropriate caution needed.

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.