In recent years, accounting firms have been encroaching on work that law firms traditionally performed.
If other industries are coming for the law, why shouldn’t lawyers offer complimentary non-legal services through ancillary businesses? Some already are.
Below are some of the issues that lawyers must consider if they plan to offer law-related services in addition to practicing law. (Remember, always check your jurisdiction’s rules and opinions)
Can Lawyers Offer Law-Related Services to Their Clients?
Generally, yes. Most, if not all, jurisdictions allow lawyers to offer law-related services either through their law firm or through ancillary businesses.
Most jurisdictions similarly define “law-related services” as “services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlawyer.” (e.g., Georgia; North Carolina)
Do Legal Ethics Rules Apply to Ancillary Businesses?
Some jurisdictions have held that all legal ethics rules apply to lawyers’ conduct when they are actively engaged in the practice of law and also engaged in a second profession or law-related business. (e.g., Georgia)
Other jurisdictions say it depends on how the law-related services are delivered. For example, in North Carolina, if the services “are not distinct from the provision of legal services, the law firm will be subject to all of the Rules of Professional Conduct with respect to the provision of the law-related services.”
Most jurisdictions would probably agree that even if the legal ethics rules do not apply to the services provided by the law-related business, the Rules still will apply to the lawyer’s own actions as a lawyer. (e.g., Oklahoma)
Can Non-Lawyers Be Co-Owners in Ancillary Businesses?
Generally yes, but not if the ancillary business practices law in any way. (e.g., Oklahoma; Arizona; Boston Bar)
Can the Ancillary Business Operate Out of the Same Office as the Law Firm?
Generally yes, as long as appropriate measures are undertaken to ensure the separateness and independence of the two services. (e.g., Arizona; North Carolina)
Can the Law Firm and Ancillary Business Advertise Jointly?
Some say yes, with certain restrictions. (e.g., North Carolina)
Others say no. (e.g., Arizona)
Can a Law Firm Offer Ancillary Business Services to Clients and Vice Versa?
Generally yes, if proper disclosures are made. (e.g., North Carolina; New York).
General rules to follow:
- If your professional judgment on behalf of the client might be adversely affected by a personal interest in making a profit, then you should not refer the client to your ancillary business. (e.g., North Carolina)
- Determine whether the services offered in the ancillary business are in the client’s best interest. (e.g., North Carolina; Florida)
- Prior to recommending ancillary services, fully disclose personal interest in the business. (e.g., North Carolina)
- Disclose to the client in writing that they have every right to seek services from another provider and obtain the written consent to any dual role. (e.g., Arizona)
- If you provide law-related services through a separate entity, make reasonable efforts to inform the clients of the law-related services that they are not receiving legal services and are not protected by the attorney-client relationship. (e.g., Oklahoma; Florida)
In addition, most jurisdictions prohibit a lawyer from entering into a business transaction with a client unless:
- the transaction and terms are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
- the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction;
- the client gives informed consent, in writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction. (North Carolina; Florida; Georgia)
Lastly, lawyers can’t use an independent, ancillary business as a “feeder” for their law firm. (e.g., Arizona; Florida)