Ethics Forum: Questions and Answers on Professional Responsibility

Samuel C. Stretton.

A lawyer cannot use a virtual office to avoid disclosing his permanent location.

I want to expand my practice by advertising in several geographical areas. My primary office is located in the eastern part of Pennsylvania in an urban area. I am very interested in advertising in western Pennsylvania. Can I use a virtual law office as my office in western Pennsylvania if my main office is in eastern Pennsylvania?

This question is an interesting one. After advertising was allowed in 1978, lawyers started to become very creative. It wasn’t uncommon for lawyers to rent a small office in various counties throughout Pennsylvania, use local phone numbers and have every call forwarded back to their office say in Philadelphia or Pittsburgh. In the early years before everyone started doing it, this was a fairly effective way of getting business.

The Pennsylvania Rules of Disciplinary Enforcement stopped that kind of practice because it was, to some extent, misleading.

The Pennsylvania Rules of Professional Conduct 7.2 states: “All advertisements and written communications shall disclose the geographic location, by city or town, of the office in which the lawyer or lawyers who will actually perform the services advertised principally practice law. If the office location is outside the city or town, the county in which the office is located must be disclosed.”

Comment 11 further expands on this concept. It notes that the purpose of the rule is to “rectify situations in which a person seeking legal services is misled into concluding an advertising lawyer has his or her primary practice in the client’s hometown, when, in fact, the advertising lawyer’s primary practice is located elsewhere.”

Therefore, it would appear that the virtual law office would not work under Rule 7.2, not because it is a virtual law office, but because the lawyer’s primary office is in eastern Pennsylvania.

On the other hand, if the virtual law office was the lawyer’s primary location, perhaps it could be allowed. Rule 7.2 was written long before virtual offices were being utilized.

There is an interesting opinion by the Pennsylvania Bar Association’s Legal Ethics Committee titled Formal Opinion 2010-200, which speaks about having virtual law offices.

The opinion allows a lawyer to have a virtual law office in Pennsylvania. Of interest is the fact that the attorney doesn’t have to list their real address in their advertisements or letterhead from the virtual law office. An attorney, according to the opinion, doesn’t even have to meet with clients at the address listed in the advertisements.

The opinion is clear that a lawyer cannot suggest that they perform their legal services in their virtual law office if they do not actually do that. The opinion suggested that the lawyer should list in the advertisement where their services will be performed. Of further interest is the fact that the opinion does not allow a lawyer to suggest that his fees would not be as much as a lawyer who is running a traditional law office.

The opinion is an interesting one, but perhaps eight or nine years after it was written in 2010, they should revise it. The problem is virtual offices can be used to mislead people. On the other hand, with modern technology, the location of a lawyer who actually performs the legal work doesn’t seem as important as it once was 10 or 20 years ago when the computer and internet didn’t really exist, or were not being used regularly.

To answer the question, the lawyer with his main office in eastern Pennsylvania cannot use their virtual office in western Pennsylvania to mislead anyone as to where they primarily perform their work, or have their major office. Rule 7.2 requires the principal location to be so noted. Of course, the same rule applies to the nonvirtual office. If a lawyer has an office in Philadelphia and opens up a satellite office in Pittsburgh, the lawyer has to decide which office is going to be their principal office, and again, that depends on where the lawyer actually spends most of their time. Therefore, the answer to the question is no, a lawyer cannot use a virtual office to avoid the requirements of disclosing their permanent location as required under Rule 7.2, but it is hoped that the rules will someday reflect virtual offices.

Lawyers cannot provide investment assistance because the lawyer is not licensed.

I am a Philadelphia practicing lawyer. I am also knowledgeable in investments. May I assist a client in investing their monies?

The answer is most likely no. In 2015, the Pennsylvania Supreme Court adopted a new Rule of Professional Conduct titled Rule 5.8. That rule is very specific that a lawyer shall not broker, offer to sell, sell or place any investment product, unless separately licensed to do so. Therefore, the rule is very specific that a lawyer cannot do so without being licensed. Under Rule 5.8(b), a lawyer cannot recommend or offer an investment product to a client or any person with whom the lawyer has a fiduciary relationship or invest funds belonging to such person in an investment product.

Many lawyers, particularly older lawyers, are used to being a jack of all trades, but there is concern for conflicts and competence which helps to explain Rule 5.8. This rule now places strict rules when a lawyer provides investment services and advice.

Comment to Rule 5.8 notes problems with conflicts of interest.

“Clients who place their trust in their lawyer and assume or expect that the lawyer will protect them from harm are likely to feel deceived if substantial sums of money are lost on investments pursued at the lawyer’s recommendation or prompting and the lawyer or a person related to the lawyer either receives compensation or a pecuniary benefit from a person other than the client or has an ownership interest in the entity that sponsors, insures, underwrites, manages, or issues the investment product, even when the reason for the loss is limited to unexpected market conditions.”

Therefore, to answer the question, lawyers cannot provide investment assistance since the lawyer is not licensed. The second part of the rule concerning investments, where a lawyer has a conflict of interest, is also extremely important. The days of the lawyer who is also a real estate broker or insurance agent selling their products to their legal clients are over.

The problem is a real conflict of interest. A lawyer cannot have other people invest in these organizations where the lawyer is making money or having an interest. Sometimes, that may place a lawyer at a disadvantage with nonlawyer competition. The purpose of Rule 5.8 is to protect a client’s funds and avoid any conflict of interest.

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, Pennsylvania, 19381.