Concept
The Ancillary Services Problem
Law-related services and when the Rules of Professional Conduct apply (Rule 5.7(a))
Law-Related Services and Rule 5.7
The Ancillary Services Problem
A lawyer who sells financial planning, title work, or consulting alongside a law practice raises a question the Rules must answer: do the lawyer's professional obligations follow into the side business? Rule 5.7(a) says they do in defined circumstances. A lawyer is subject to the Rules of Professional Conduct with respect to law-related services, as defined in paragraph (b), if the services are provided in one of the situations the rule lists.1 Paragraph (a) sets the conditions for coverage, and paragraph (b) supplies the definition on which it depends.2 Two features of that opening sentence organize everything that follows. Coverage attaches only to a defined category, so the first question in any problem is whether the service is a law-related service. Coverage also turns on the circumstances in which the services are delivered, so holding a license does not by itself carry the Rules into a side business.
The Rules reach these businesses because of what the customer is likely to believe. A person who buys a service from a lawyer, or from a company the lawyer controls, sees a lawyer across the table and may expect what lawyers owe their clients: confidentiality, loyalty, and freedom from conflicts of interest. The Kansas Supreme Court called the "principal culprit" here "the possibility that the person for whom the law-related services are performed fails to understand that the services may not carry with them the protections normally afforded as part of the client-lawyer relationship."3 If the Rules stopped at the door of the law office, a lawyer could attract customers with professional credibility and then disclaim every protection by calling the work a mere business. Rule 5.7 closes that gap.
The expectation of protection has limits. A lawyer who sells a house or a used car to a stranger has not created an attorney-client relationship, because the transaction has nothing to do with legal work and the seller's professional career is irrelevant to it. Customers of an independent non-legal business that the lawyer keeps scrupulously separate from the practice stand in the same position.4 The line between those cases and the ancillary ones depends on how the service connects to the practice and whether the recipient is told what the service is. The sections below take that inquiry one step at a time.
Rule 5.7(a) reaches the second lawyer through two listed circumstances. In the first, the lawyer provides the law-related services in circumstances that are not distinct from the lawyer's provision of legal services to clients.5 In the second, an entity the lawyer controls, individually or with others, provides the services in other circumstances, and the lawyer fails to take reasonable measures to assure that the recipient knows the services are not legal services and that the protections of the client-lawyer relationship do not exist.6 Later sections treat each trigger separately. For now, notice that both track the confusion problem. The first covers services tangled up with the law practice itself, and the second covers a separate business whose customers were never told what they were not getting.
The Rules do not treat every dealing between a lawyer and a customer alike. A lawyer who does business with an existing client already carries special duties of disclosure and fair dealing. A lawyer who deals with a person with whom there is no professional relationship does not take on professional responsibilities to that person merely by doing so.7 Rule 5.7 fills the space between those two situations: the recipient is not a client, yet the lawyer's role may lead the recipient to expect protection. The next question in any analysis is whether the service is a law-related service at all, because paragraph (a) applies only to that category.