Lawyers can profit from nonlegal services.

I am a lawyer with a master’s degree in clinical psychology and I see clients in the same office where I have my law practice. I keep my psychology books and papers separate from my legal practice, but I use the same office and, in fact, the same desk and chair when I see my clients. Is this impermissible?

No. There is nothing impermissible about a lawyer providing nonlegal services. Lawyers are allowed to have multiple careers at the same time.

The only problem with having multiple careers is the standard to which the lawyer will be held. The legal profession and the Rules of Professional Conduct create a very high standard of ethics for a practicing attorney. Further, the standard is based on a professional model and not on a business model. If an attorney is conducting a nonlegal business and is held to that kind of standard, he or she may not be competitive in the business.

As a result, Rule of Professional Conduct 5.7 was adopted several years ago and deals with nonlegal services by a lawyer. This rule attempts to provide some guidance to a lawyer handling a nonlegal business. Under Rule 5.7(a), if a lawyer provides nonlegal services to someone and those services are not distinct from legal services, the Rules of Professional Conduct will apply. Classic examples include a lawyer who is also running a title insurance company or doing accounting or financial planning out of a law office.

Rule 5.7(b) notes that a lawyer who provides nonlegal services distinct from legal services is also subject to the Rules of Professional Conduct if the lawyer knows or reasonably should know that the recipient believes he or she is receiving the protection of an attorney-client relationship.

Rule 5.7(d) has a safety valve. If the lawyer is providing nonlegal services that are distinct or the lawyer is an owner of an entity providing nonlegal services and the lawyer makes reasonable efforts to avoid any misunderstanding by the person receiving the nonlegal services, then the lawyer would not be bound by the Rules of Professional Conduct.

Obviously, if the lawyer is providing nonlegal services that are not distinct from legal services, then the lawyer is subject to the Rules of Professional Conduct. This is an important distinction, because lawyers who are providing nonlegal services indistinct from legal services are going to have to be held to a much higher standard than nonlawyers working in the same area.

The purpose for this rule is to prevent any misunderstanding and to protect the attorney-client relationship if the client believes there is one. But if the nonlegal services are distinct from the legal services, a lawyer can protect him or herself by explaining the difference and that there is no attorney-client relationship for the nonlegal services.

If that is fully explained to the client, then the Rules of Professional Conduct don’t necessarily apply. But there can be nothing that could suggest to the client that the nonlegal services are really an extension of the legal services.

A wise lawyer trying to expand his or her economic horizons by engaging in nonlegal activity should carefully review Rule 5.7 and take the appropriate steps to ensure that the higher standards of a lawyer do not apply to the nonlegal services that are distinct from legal services.

The best way to ensure that the services are distinct is to have the services rendered from a different location. It is very difficult if a lawyer is doing tax preparation in his or her office not to have that viewed as part of the legal practice. That is clearly an indistinct aspect and the Rules of Professional Conduct would apply.

There is an old opinion by the Pennsylvania Bar Association in which a collection company set up by a lawyer did not have to comply with the Rules of Professional Conduct because that collection company had an office in a separate location from the law office and the lawyer did not hold him or herself out as a lawyer in the collection business. Whether that opinion would be changed at all in view of the adoption of Rule 5.7 is unknown.

Because many lawyers are tempted to branch out into nonlegal businesses because of the economic problems in the practice of law, lawyers should look at Rule 5.7 and make the appropriate adjustments to remain competitive in the nonlegal services.

But there is great potential for problems. Many lawyers remember the old adage that a lawyer is a lawyer 24 hours a day. Despite the general public’s distaste for lawyers, people respect individual lawyers and go to them because of that respect. It is important not to violate people’s trust when conducting nonlegal business.

Rule 5.7 should be complied with so there is no confusion. If a lawyer wishes to make fees in nonlegal practice, the lawyer must remain competitive and know when the Rules of Professional Conduct apply.

Lawyers can be disciplined for misconduct in their personal lives.

As a lawyer, can I be disciplined for misconduct in my personal life involving a personal loan arrangement where I was misleading on the document?

Approximately 40 years ago, there was a very famous disciplinary decision that raised this very issue. The lawyer had been misleading on his personal mortgage application. The lawyer raised the defense that this had nothing to do with the practice of law and was his personal mortgage and therefore he should not have been disciplined. The Pennsylvania Supreme Court rejected that argument in a written opinion. Any person who is a lawyer must always be honest and that is the basic rationale behind disciplining a lawyer for activity outside the practice of law.

If a person licensed to practice law in a personal, non-law-related matter lies, steals or is criminally convicted, clearly the Office of Disciplinary Counsel and the Pennsylvania Supreme Court has jurisdiction over that lawyer. Rule of Professional Conduct 8.4(c) states it is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation. The rule does not limit this to representing a client or the practice of law.

Honest lawyers do not act dishonestly in their private lives.

It is clear that a lawyer can be disciplined for misconduct in his or her personal life or non-law-related activity. Being criminally convicted or presenting false information in non-law-related matters can potentially result in very serious discipline, if not disbarment. Whether lawyers like it or not, they are bound by the Rules of Professional Conduct in their entire lives, particularly on issues of honesty, trustworthiness, fitness and complying with laws and regulations.  •

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pa. 19381.