LEO: Business Interest - Conflict of Interest  LE Op. 1198


Business Interest - Conflict of Interest - Disclosure: Attorney's

Ownership Interest in a Court Reporting Service.


February 22, 1989


You have asked the Committee to consider the ethical implications of a

client's employment of a court reporting service in which the client's

attorney has an ownership interest. You have advised that you are about to

become a limited partner in a company which provides court reporting,

photography and video taping services. The costs for services by this new

company are considerably less than the present market rate, and you would

like to give your clients the option to take advantage of the savings. You

have proposed to inform your clients, as well as other counsel, in writing,

of your partial-ownership interest in the firm to be used for court



The appropriate and controlling disciplinary rule relative to your

inquiry is DR:5-101(A), which provides that a lawyer shall not accept

employment if the exercise of his professional judgment on behalf of his

client may be affected by his own financial, business, property or

personal interest, except with the consent of his client after full and

adequate disclosure under the circumstances. In addition, the Committee

directs your attention to DR:5-104(A), which addresses the attorney's

business relations with a client where they have differing interests.

While the Committee has not opined on the propriety of an attorney who has

an ownership interest in a court reporting firm referring his clients to

that firm for their services, the Committee has previously opined that an

attorney cannot ethically nor legally undertake representation of a client

when the attorney has personal interests which are not compatible with

those of the client, unless the attorney fully discloses those interests

to his client, and the client consents to the representation. (See LE

Op. 187) In the Committee's view, if the attorney's disclosure is such

that his client is able to make an informed decision, then the disclosure

is adequate. Furthermore, any doubts regarding the sufficiency of the

disclosure must be resolved in favor of the client and against the

attorney, since it is the attorney who seeks to profit from the advice

given his client. Thus, under DR:5-101(A), the attorney's disclosure of

his ownership interest may specifically include commissions or fees,

directly or indirectly received, as a result of a client's employment of

the court reporting firm. (See: LE Op. 187.)


Committee Opinion February 22, 1989




See also LE Op. 1254, LE Op. 1311, LE Op. 1317, LE Op. 1345, and LE

Op. 1368.