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An unacceptable conflict of interest is created if an attorney who is not licensed as a real estate broker claims or accepts a commission for participating as a broker in the purchase or sale of real estate if the attorney also represents one of the parties in the transaction. That conflict, however, may be overcome if the brokerage activities are incidental to the legal services rendered and do not generate any entitlement to compensation.
An ethics complaint before the District XIII Ethics Committee (DEC) was filed against respondent, Lee B. Roth, a member of the New Jersey bar since 1962 and a well-respected authority on real estate law. The DEC found that respondent's conduct in representing a client as both an attorney and real estate broker reflected adversely on his fitness to practice law in violation of Disciplinary Rule (DR) 1-102(A)(6), which provided that "a lawyer shall not engage in any other conduct that adversely reflects on his fitness to practice law." The DEC based that conclusion on what it characterized as respondent's attempt to receive a broker's commission without having performed any brokerage services, the conflict of interest posed by the broker/attorney arrangement, and the "unseemly appearance" created by the arrangement. The matter was appealed to the Disciplinary Review Board (DRB), which determined that the DEC's conclusions were supported by clear and convincing evidence and further determined that respondent, not having a broker's license, was not entitled to seek a commission. The DRB recommended the imposition of discipline. Respondent appealed the DRB’s decision.
The court disagreed with the DRB holding that although a conflict of interest was created, discipline was not warranted in this case. The court first held that because respondent did not hold a brokerage license under N.J. Stat. Ann. §§ 45:15-1 to -42, he was required to confine any broker's services performed to those that were ancillary, and subordinate to the legal services performed for his client. It followed, that respondent could not be independently compensated for his brokerage services, regardless of his intent to profit. Therefore, respondent acted improperly as an attorney and in a manner that reflected adversely on the legal profession under Model Code of Professional Responsibility, DR 1-102(A)(6). However, respondent acted in the good-faith belief that his conduct did not violate disciplinary standards because there were no relevant opinions and no clear legislative or regulatory mandate. Under these circumstances, there was no reason grounded in the public's confidence in the legal profession to impose formal discipline.