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Lawyers who also act separately as parenting coordinators, accountants, valuators and other non-legal service providers need to know which Rules of Professional Conduct apply to them and when. This article offers guidance to such practitioners.

Rule of Professional Conduct 5.7

Rule of Professional Conduct 5.7 speaks directly to the responsibilities of a lawyer when not engaged directly in the practice of law. Rule 5.7, first adopted in 1996 and most recently amended in 2004, reads as follows:

(a) A lawyer shall be subject to the Rules of Professional Conduct with respect to the provision of law-related services, as defined in paragraph (b), if the law-related services are provided:

(1) by the lawyer in circumstances that are not distinct from the lawyer's provision of legal services to clients; or

(2) in other circumstance by an entity controlled by the lawyer individually or with others if the lawyer fails to take reasonable measures to assure that a person obtaining the law-related services knows that the services are not legal services and that the protections of the client-lawyer relationship do not exist.

(b) The term “law-related services” denotes 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 non-lawyer.

Rule 5.7, in keeping with the consumer protection goal of the professional conduct rules, aims to protect clients (and others interacting with the lawyer in a non-client capacity) who may be unaware of the nature of their relationship with the lawyer by extending the reach of the Rules of Professional Conduct beyond the practice of law. Importantly, this extension under Rule 5.7 extends the Rules of Professional Conduct in full to a lawyer’s non-legal business, including rules relating to confidentiality, conflicts of interest, advertising and so forth.

Applying the Rules to “off-duty” lawyers

Rule 5.7(a) delineates two types of circumstances in which lawyers are subject to the Rules of Professional Conduct when not directly engaged in the practice of law. Subsection (1) relates to law-related services indistinct from the legal services provided to the client. For example, if a lawyer gives some amount of business advice to a client in conjunction with legal advice, the two services are viewed as indistinct, and a client must be able to reasonably rely on the protections of the lawyer-client relationship in both instances. Another example would be a lawyer serving as a parenting time coordinator. Coordination of parenting time is a non-legal service that does not require a law license. When provided by a lawyer who also handles dissolutions and custody issues, the coordination of parenting time may appear to clients as a law-related service indistinct from the legal services provided by the lawyer. A parenting time coordinator may also set up a separate business entity through which to offer services, implicating the provisions of subsection (2).

Performing non-legal services through a separate entity

Subsection (2) relates to the more complicated situation where a lawyer performs non-legal services through a separate entity where there is risk of confusion as to the nature of the services being provided. Comment 9 to Rule 5.7 gives the following examples of non-legal services: “providing title insurance, financial planning, accounting, real estate counseling, legislative lobbying, economic analysis, social work, psychological counseling, tax preparation, and medical or environmental consulting.” A layperson providing such services would obviously not be subject to the Rules of Professional Conduct. However, there is a risk of confusion when these services are provided by a lawyer—a consumer may be unaware that he or she is not privy to confidentiality, privilege or protection from conflicts of interest. Thus, the rule seeks to offer more robust protections to consumers where this risk is present.

There is, however, an exception to Subsection (2). If a lawyer takes reasonable measures to ensure that the consumer knows that the law-related services being provided are not legal services and that the protections of the lawyer-client relationship do not apply, the lawyer is excused from strict adherence to the Rules of Professional Conduct.

Operating a non-legal business

The Indiana Supreme Court in Matter of Schneider, 710 N.E.2d 178 (Ind. 1999), addressed a situation in which a lawyer operated both a law practice and an accounting practice. The lawyer used a single letterhead for both practices identifying him as both an attorney and a certified public accountant. The letterhead denoted his law practice as “Professional Services Group” and listed five additional members (two attorneys and three CPAs), despite the fact that none were employed by the law practice. The letterhead also proclaimed: “WE HELP YOU CREATE AND PRESERVE WEALTH.”

The court found that the lawyer’s use of one letterhead for both his law and accounting practices, which included the names of individuals not employed by his law practice, was misleading and “would understandably create confusion regarding the identity and responsibility of those practicing law or performing services in support of the law practice.” Id. at 180 (emphasis added). The court found a similar risk of confusion with regard to the title “Professional Services Group” and the use of the statement “WE HELP YOU CREATE AND PRESERVE WEALTH.” Although no Rule 5.7 violation was charged, Schneider highlights the advertising restraints placed on lawyers in the operation of a non-legal business. When operating a non-legal business such as an accounting practice, the Rules of Professional Conduct place the burden on the attorney to ensure that communications to clients and potential clients do not create any confusion as to the nature of the services being provided or the benefits a client can expect to receive from these services.

Serving as an expert witness

The American Bar Association Standing Committee on Ethics and Professional Responsibility’s Formal Opinion 97-407 considers whether a lawyer serving as an expert witness for a represented party establishes a lawyer-client relationship with that party, or is providing a “law-related service” to the party within the purview of Model Rule 5.7. Finding first that no lawyer-client relationship is established in such scenarios, the committee addressed the “law-related service” question and found that serving as an expert witness does not constitute a “law-related service” for purposes of Rule 5.7. The committee emphasized the fact that Rule 5.7 was intended to address potential conflicts arising out of business activities ancillary to a law practice, not situations involving testimony as an expert witness. However, the committee noted the importance of appropriately defining the expert’s role up front in order to avoid any misunderstanding about the lawyer expert’s role or the protections offered through the lawyer expert’s services. This is most easily done through a written engagement letter accepted by both the engaging law firm and the client.

Defining the relationship

The upshot of Rule 5.7 and the committee’s formal opinion is to be mindful of what type of relationship is being created with a client or a consumer when providing services outside the practice of law. If the services provided are indistinct from the provision of legal services, then the Rules of Professional Conduct apply in full. If the services provided are “law-related services,” it is important to take reasonable measures to define the relationship so that the client or consumer has appropriate expectations as to the protections afforded by the relationship.

The Preamble to the Rules notes that “[l]awyers play a vital role in the preservation of society,” and describes a lawyer as a “public citizen.” As public citizens, lawyers must always be mindful of the further mandate of the Rules of Professional Conduct: “Whether or not engaging in the practice of law, lawyers should conduct themselves honorably.”