Pennsylvania Code › Title 204 - JUDICIAL SYSTEM GENERAL PROVISIONS › Part V - PROFESSIONAL ETHICS AND CONDUCT › Subpart A - PROFESSIONAL RESPONSIBILITY › Chapter 81 - RULES OF PROFESSIONAL CONDUCT › Subchapter A - RULES OF PROFESSIONAL CONDUCT › LAW FIRMS AND ASSOCIATIONS › Rule 5.7 - Responsibilities Regarding Nonlegal Services

Current through Register Vol. 54, No. 28, July 13, 2024
(a) A lawyer who provides nonlegal services
						to a recipient that are not distinct from legal services provided to that
						recipient is subject to the Rules of Professional Conduct with respect to the
						provision of both legal and nonlegal services.
(b) A lawyer who provides nonlegal services
						to a recipient that are distinct from any legal services provided to the
						recipient is subject to the Rules of Professional Conduct with respect to the
						nonlegal services if the lawyer knows or reasonably should know that the
						recipient might believe that the recipient is receiving the protection of a
						client-lawyer relationship.
(c) A
						lawyer who is an owner, controlling party, employee, agent, or is otherwise
						affiliated with an entity providing nonlegal services to a recipient is subject
						to the Rules of Professional Conduct with respect to the nonlegal services if
						the lawyer knows or reasonably should know that the recipient might believe
						that the recipient is receiving the protection of a client-lawyer
						relationship.
(d) Paragraph (b) or
						(c) does not apply if the lawyer makes reasonable efforts to avoid any
						misunderstanding by the recipient receiving nonlegal services. Those efforts
						must include advising the recipient that the services are not legal services
						and that the protection of a client-lawyer relationship does not exist with
						respect to the provision of nonlegal services to the recipient.
(e) The term "nonlegal 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 nonlawyer.
Comment:
(1) For many years, lawyers have provided to
						their clients nonlegal services that are ancillary to the practice of law.
						Examples of nonlegal services include providing title insurance, financial
						planning, accounting, trust services, real estate counseling, legislative
						lobbying, economic analysis, social work, psychological counseling, tax return
						preparation, and patent, medical or environmental consulting. A broad range of
						economic and other interests of clients may be served by lawyers participating
						in the delivery of these services.
The Potential for
						  Misunderstanding
(2) Whenever a lawyer directly provides
						nonlegal services, there exists the potential for ethical problems. Principal
						among these is the possibility that the person for whom the nonlegal services
						are performed may fail to understand that the services may not carry with them
						the protection normally afforded by the client-lawyer relationship. The
						recipient of the nonlegal services may expect, for example, that the protection
						of client confidences, prohibitions against representation of persons with
						conflicting interests, and obligations of a lawyer to maintain professional
						independence apply to the provision of nonlegal services when that may not be
						the case. The risk of such confusion is especially acute when the lawyer
						renders both types of services with respect to the same matter.
Providing Nonlegal Services that Are Not
						  Distinct from Legal Services
(3) Under some circumstances, the legal and
						nonlegal services may be so closely entwined that they cannot be distinguished
						from each other. In this situation, confusion by the recipient as to when the
						protection of the client-lawyer relationship applies is likely to be
						unavoidable. Therefore, Rule
						5.7(a) requires
						that the lawyer providing the nonlegal services adhere to all of the
						requirements of the Rules of Professional Conduct.
(4) In such a case, a lawyer will be
						responsible for assuring that both the lawyer's conduct and, to the extent
						required by Rule
						5.3, that of nonlawyer employees,
						comply in all respects with the Rules of Professional Conduct. When a lawyer is
						obliged to accord the recipients of such nonlegal services the protection of
						those Rules that apply to the client-lawyer relationship, the lawyer must take
						special care to heed the proscriptions of the Rules addressing conflict of
						interest (Rules
						1.7 through
						1.11, especially Rules
						1.7(b) and
						1.8(a), (b) and
						(f)), and to scrupulously adhere to the
						requirements of Rule
						1.6 relating to disclosure of
						confidential information. The promotion of the nonlegal services must also in
						all respects comply with Rule
						5.8 relating to prohibitions and
						restrictions on dealing in investment products, and with Rules
						7.1 through 7.3, dealing with
						advertising and solicitation.
(5)
						Rule 5.7(a) applies
						to the provision of nonlegal services by a lawyer even when the lawyer does not
						personally provide any legal services to the person for whom the nonlegal
						services are performed if the person is also receiving legal services from
						another lawyer that are not distinct from the nonlegal services.
Avoiding Misunderstanding when a Lawyer
						  Directly Provides Nonlegal Services that Are Distinct from Legal
						  Services
(6) Even
						when the lawyer believes that his or her provision of nonlegal services is
						distinct from any legal services provided to the recipient, there is still a
						risk that the recipient of the nonlegal services will misunderstand the
						implications of receiving nonlegal services from a lawyer; the recipient might
						believe that the recipient is receiving the protection of a client-lawyer
						relationship. Where there is such a risk of misunderstanding, Rule
						5.7(b) requires
						that the lawyer providing the nonlegal services adhere to all the Rules of
						Professional Conduct, unless exempted by Rule 5.7(d).
Avoiding Misunderstanding when a Lawyer Is
						  Indirectly Involved in the Provision of Nonlegal
Services
(7) Nonlegal services also may be provided
						through an entity with which a lawyer is somehow affiliated, for example, as
						owner, employee, controlling party or agent. In this situation, there is still
						a risk that the recipient of the nonlegal services might believe that the
						recipient is receiving the protection of a client-lawyer relationship. Where
						there is such a risk of misunderstanding, Rule
						5.7(c) requires
						that the lawyer involved with the entity providing nonlegal services adhere to
						all the Rules of Professional Conduct, unless exempted by Rule 5.7(d).
Avoiding the Application of Paragraphs (b) and
						  (c)
(8) Paragraphs
						(b) and (c) specify that the Rules of Professional Conduct apply to a lawyer
						who directly provides or is otherwise involved in the provision of nonlegal
						services if there is a risk that the recipient might believe that the recipient
						is receiving the protection of a client-lawyer relationship. Neither the Rules
						of Professional Conduct nor paragraphs (b) or (c) will apply, however, if
						pursuant to paragraph (d), the lawyer takes reasonable efforts to avoid any
						misunderstanding by the recipient. In this respect, Rule
						5.7 is analogous to Rule
						4.3(c).
(9) In taking the
						reasonable measures referred to in paragraph (d), the lawyer must communicate
						to the person receiving the nonlegal services that the relationship will not be
						a client-lawyer relationship. The communication should be made before entering
						into an agreement for the provision of nonlegal services, in a manner
						sufficient to assure that the person understands the significance of the
						communication, and preferably should be in writing.
(10) The burden is upon the lawyer to show
						that the lawyer has taken reasonable measures under the circumstances to
						communicate the desired understanding. For instance, a sophisticated user of
						nonlegal services, such as a publicly-held corporation, may require a lesser
						explanation than someone unaccustomed to making distinctions between legal
						services and nonlegal services, such as an individual seeking tax advice from a
						lawyer-accountant or investigative services in connection with a lawsuit.
The Relationship Between Rule
						  5.7 and Other Rules of
						  Professional Conduct
(11) Even before Rule
						5.7 was adopted, a lawyer
						involved in the provision of nonlegal services was subject to those Rules of
						Professional Conduct that apply generally. For example, Rule
						8.4(c) makes a
						lawyer responsible for fraud committed with respect to the provision of
						nonlegal services. Such a lawyer must also comply with Rule
						1.8(a). Nothing
						in this rule is intended to suspend the effect of any otherwise applicable Rule
						of Professional Conduct such as Rule
						1.7(b), Rule
						1.8(a) and Rule 8.4(c).
(12) In
						addition to the Rules of Professional Conduct, principles of law external to
						the Rules, for example, the law of principal and agent, may govern the legal
						duties owed by a lawyer to those receiving the nonlegal
						services.