Dual Representation in Real Estate Transactions

Let’s say your current client wants to sell a piece of real property to a friend or business associate with whom he has an excellent relationship. The proposed transaction is straightforward, your client and the buyer are comfortable with the deal terms, and neither party expects any dispute to arise out of the transaction. The parties need an attorney to draw up the contract and closing documents. Your client has agreed to cover all legal fees, and he’d rather not pay for two lawyers. Under Washington law, could you agree to represent both the seller and the buyer in this circumstance? And maybe more importantly, should you?

The question is governed by RPC 1.7, the full text of which is here. Subsection (a) prohibits lawyers from representing a client “if the representation involves a concurrent conflict of interest.” Subsection (b), however, provides:

Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a  lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing (following authorization from the other client to make any required disclosures).

Plainly, dual representation in the above hypothetical would involve a concurrent conflict of interest under RPC 1.7(a). But assuming your present client and the buyer would consent to dual representation under RPC 1.7(b)(4), would it be possible to meet the other requirements of subsection (b)?

Theoretically, in the right circumstance, the answer may be yes—as long as you reasonably believe you’ll be able to provide competent and diligent representation to each client, and each client gives informed consent to the dual representation. The language of RPC 1.7(b) supports this conclusion and, although (somewhat surprisingly) there doesn’t seem to be any Washington authority directly on point, some cases from other jurisdictions are in accord.[1]

But the circumstances in which you could properly represent both a seller and a buyer in a real estate transaction are very limited. In McNair v. Rainsford, for example, the South Carolina Supreme Court held that “‘[w]hile in many situations an attorney’s representation of both a buyer and seller in a real estate transaction may create a conflict of interest, … if the parties have already agreed on the basic terms of the agreement and the attorney acts primarily as a “scrivener” he may normally represent both parties after obtaining their consent.’ ”[2] Other cases similarly suggest that dual representation in a real estate transaction may only be appropriate where the attorney is merely documenting a previously-negotiated deal.[3]

Moreover, it appears that in the vast majority of cases in which an attorney’s dual representation of a seller and a buyer in a real estate transaction was challenged, the attorney was found to have violated the pertinent rules of ethics, generally because he didn’t adequately disclose to his clients what conflicts of interest could arise in the course of the representation, and why they should retain independent counsel.[4] So even if dual representation in the above hypothetical might be notionally permissible, attorneys who attempt the feat frequently end up in hot water.

Finally, by agreeing to represent the seller and buyer in a real estate deal, you’d be increasing your chances of violating other duties. Suppose, for example, the seller (your trusted longtime client) were to give you information relating to the transaction that you didn’t independently verify and that turned out to be false. You’d then be in breach of the obligations of competence and diligence owed to your other client under RPCs 1.1 and 1.3, and you could be facing a malpractice lawsuit.

All things considered, although RPC 1.7 might not altogether preclude attorneys from representing both parties to a real estate transaction, the wiser course most often may be to avoid this type of dual representation—or at least to approach it with prudence. As former University of Washington law professor Robert H. Aronson wrote in a 1977 article:

An obvious conflict exists when an attorney attempts to represent both buyer and seller, particularly if he has had a long-standing relationship with one of them. In such cases, the attorney must not represent both. However, if the parties have already agreed on the basic terms of the agreement and the attorney acts primarily as a “scrivener,” he may normally represent both parties after obtaining their consent. The lawyer should disclose in advance the full significance of the representation of conflicting interests, including the pitfalls that may arise in the course of the transaction which might mandate or make it desirable that one or both parties obtain independent counsel. Both parties must consent to the attorney’s possible withdrawal from representation of one but not both parties. The decision as to whom the attorney will represent in such an event should be made at the outset.

* * *

It is of the utmost importance that the attorney representing both parties to a transaction reflect upon the rationales behind conflict of interest proscriptions. It is not sufficient that the attorney believes himself able adequately to represent potentially differing interests, or even that all parties have consented. The possibility of subconsciously favoring the interests of either party, the appearance of impropriety that may arise from even the slightest dissatisfaction, the likelihood of receiving confidential information from one party that is damaging or helpful to the other, and the possibility that a court will subsequently disagree with the attorney’s decision that he was able adequately to represent both interests—all dictate extreme caution in these situations.[5]

—Duncan Manville

[1] See Attorney and Client: Conflict of Interest in Real-Estate Closing Situations, 68 A.L.R.3d 967 (1978) (citing cases); McNair v. Rainsford, 499 S.E.2d 488, 496 (S.C. 1998); Blevin v. Mayfield, 11 Cal. Rptr. 882, 884 (Cal. Ct. App. 1961).

[2] 499 S.E.2d at 496, quoting Beal v. Mars Larsen Ranch Corp., 586 P.2d 1378, 1384 (Idaho 1978).

[3] See, e.g., Blevin, 11 Cal. Rptr. at 884 (approving dual representation where buyer and seller had already reached agreement before attorney was hired, and attorney’s only service was that of scrivener).

[4] See, e.g., In re Murphy, 473 P.3d 886, 895–96 (Kan. 2020) (attorney’s perfunctory engagement agreement did not satisfy consultation and consent requirements of Kansas RPC 1.7); State Supreme Court Bd. Of Prof. Ethics & Conduct v. Wagner, 599 N.W.2d 721, 729 (Iowa 1999) (attorney’s disclosures to client were inadequate where attorney did not advise client regarding possible conflicts of interest and why independent counsel was recommended); In re Shannon, 876 P.2d 548, 558 (Ariz. 1994) (same; court observed that “[a] mere mention of the possibility of a conflict of interest, without more, is not sufficient to meet the requirements of the ethical rules”).

[5] Robert H. Aronson, Conflict of Interest, 52 U. Wash. L. Rev. 807, 826–27 (1977)