FLORIDA BAR ETHICS OPINION
May 1, 1997
Advisory ethics opinions are not binding.
An attorney may not ethically act as “closing agent” for a transaction where material terms of the
contract have not been agreed to or have not been discussed by the parties.
Rule 4-1.7(a), Rule 4-1.7, Rule 4-1.7(b), Model Rule 1.7(b), Model Rule 2.2,
The Florida Bar v. Reed, 644 So.2d 1355 (Fla. 1994), The Florida Bar v.
Belleville, 591 So.2d 170 (Fla. 1991), The Florida Bar v. Teitelman, 261 So.2d
140 (Fla. 1972), People v. McDowell, 718 P.2d 541 (Colo. 1986), Stark Co. Bar
Ass’n v. Ergazos, 442 N.E.2d 1286 (Ohio 1982), Baldasarre v. Butler, 625 A.2d
458 (N.J. Sup. Ct. 1993)
65-34, Maine Ethics Opinion 106, Connecticut Informal Opinion 91-14, New
York State Opinion 611, Massachusetts Bar Opinion 1990-3, West Virginia
Opinion 89-1, Maryland Bar Opinion 84-85
A member of The Florida Bar has requested an advisory ethics opinion as to whether he
can represent both buyer and seller in the closing of the sale of a business in Florida, acting as
“closing agent” for the transaction. The inquirer had been requested by a licensed business
broker to act as a “closing agent” for the sale and transfer of business assets. The member
explains that the majority of these sales are a sale of assets only and not of a corporate entity.
The business brokers envision a “closing agent” as an attorney who will prepare all closing
documents and other instruments that may be required by the terms and conditions of the
transaction. The buyer and seller would each agree to pay 50% of the closing agent’s fees and
expenses. The inquiring attorney asks whether it would be ethically permissible for him to act as
a “closing agent” under the circumstances set forth above.
The member has particular concerns regarding the financing of these transactions. He
would be required to prepare promissory notes and security agreements which, although
somewhat standardized documents, must be negotiated between buyer and seller as to interest
rate, payment terms, and especially as to the extent of the security given to the seller for the
financing and the terms and conditions imposed upon the purchaser in the event of a default.
Under these circumstances, could one attorney handle such negotiations and drafting for both
parties as part of acting as “closing agent” for the sale of a business?
Rule 4-1.7(a), Florida Rules of Professional Conduct generally provides that attorneys
may not represent a client if the representation of that client will be directly adverse to the
interests of another client, unless:
(1) the lawyer reasonably believes the representation of that client will not
adversely affect the lawyer’s responsibilities to and relationship with the other
(2) each client consents after consultation.
As set forth in the Comment to Rule 4-1.7, loyalty to a client prohibits an attorney from
undertaking representation directly adverse to that client or another client’s interests without the
affected client’s consent. A client may consent to representation where there is some conflict or
potential conflict after full disclosure and consent of the affected clients. However, as stated in
the Comment, “when a disinterested lawyer would conclude that the client should not agree to
the representation under the circumstances, the lawyer involved cannot properly ask for such
agreement or provide representation on the basis of the client’s consent.”
The Comment to Rule 4-1.7 specifically addresses common representation of multiple
parties to a negotiation, such as the question now before the Committee:
For example, a lawyer may not represent multiple parties to a negotiation
whose interests are fundamentally antagonistic to each other, but common
representation is permissible where the clients are generally aligned in interest
even though there is some difference of interest among them.
Court decisions from Florida and other states are useful in determining the types of
transactions in which the parties are “fundamentally antagonistic” such that common
representation is not possible. In The Florida Bar v. Reed, 644 So.2d 1355 (Fla. 1994) the Court
found an attorney’s attempt to represent both buyer and seller of the same property and to
assume multiple roles in the transaction to be unethical and suspended the attorney for six
months. Similarly, in The Florida Bar v. Belleville, 591 So.2d 170 (Fla. 1991), the Court found
it improper for the attorney representing the buyer in a real estate transaction to ask the seller to
pay all or part of his fees. The attorney was disciplined for improper representation of
conflicting interests. See also The Florida Bar v. Teitelman, 261 So.2d 140 (Fla. 1972) (attorney
reprimanded for representing mortgage and title companies in real estate closings, but charging
unrepresented sellers a portion of his attorney’s fee); Florida Ethics Opinion 65-34 (seller’s
attorney who prepares all documentation in sale of property may not charge buyer for a portion
of the attorneys’ fees when the buyer did not employ the attorney or agree to pay him a fee;
attorney erred in not explaining adverse nature of transaction and attorney’s loyalty to seller).
Ethics opinions and caselaw from other states dealing directly with the ethics of an
attorney acting as closing agent for the sale of a business have found an irreconcilable conflict
between the interests of buyers and sellers of businesses, prohibiting dual representation of both
parties by the same lawyer. Maine Bar Ethics Opinion 106, May 25, 1990, ruled that an attorney
or law firm may not act as escrow agent or closing agent for both parties involved in sale of a
business. A Maine firm had attempted to act as a neutral “closing agent” in the sale of a
business, telling both parties it would not ‘represent’ either of them, but would draft documents
to complete the sale. The committee found that the attorneys involved had improperly
represented two parties with conflicting interests and that disclosure could not cure the violation.
Accord, People v. McDowell, 718 P.2d 541 (Colo. 1986) (held unethical for attorney to represent
both buyer and seller in sale of a business; court found attorney would be unable to maintain
independent professional judgment required by Model Rule 1.7(b) [Florida Rule 4-1.7(b)]; Stark
Co. Bar Ass’n v. Ergazos, 442 N.E.2d 1286 (Ohio 1982)(lawyer could not ethically represent
buyer and seller of business where the parties had conflicting interests regarding assumption of
existing debts of the business). See also, Baldasarre v. Butler, 625 A.2d 458 (N.J. Sup. Ct.
1993) (attorney cannot represent both buyer and seller in “complex commercial real estate
transaction;” consent of clients is immaterial; conflict cannot be waived).
Other state bar ethics opinions have only allowed one attorney to close a sale of business
transaction between buyer and seller where there was little or no adversity between the parties
and buyer and seller have already agreed to all critical terms of financing and security
agreements. Connecticut Bar Informal Opinion 91-14. The Connecticut opinion allowed one
attorney to draft the sales contract and handle the closing of the sale of a business between two
longstanding clients, where both parties agreed to the dual representation. However, the opinion
deals with the very narrow factual situation where both buyer and seller are long time clients of
the same attorney and relies upon Model Rule of Professional Conduct 2.2, allowing an attorney
to act as intermediary between two clients under certain specified circumstances.
Other state bar opinions allowing dual representation of buyer and seller at a closing, deal
only with sales of real estate, not sales of entire businesses. See, New York State Bar
Association Opinion 611(attorney may represent both buyer and seller in same real estate
transaction if the parties are in agreement on price, time, manner of payment and security; if the
parties’ interests diverge, attorney must withdraw); Massachusetts Bar Association Opinion
1990-3 (lawyer may represent both borrower and lender in real estate purchase, provided that
there are no apparent disputes or conflicts between the parties and both parties consent in writing
after full disclosure); West Virginia State Bar Opinion 89-1(lawyer may represent multiple
parties in same real estate transaction if full disclosure to all parties and written consent; lawyer
may not represent any of the parties in subsequent litigation relating to the transaction);
Maryland State Bar Opinion 84-85 (attorney may represent all parties to a real estate closing,
with proper disclosures and waivers as to all parties).
It is an unavoidable fact that the sale of a business, even in the friendliest of
circumstances, is by its very nature an adversarial process. The buyer is relying upon sales and
profit figures produced by the seller as well as projections of future profits based upon those
figures. Security and financing are critical issues in any business purchase and, particularly in
the case of smaller businesses, such transactions are often financed by the seller. The closing
often includes the transfer of licenses or applications by the new owners for special licenses,
zoning changes, and so forth. Such closings often include assumption of existing debts of the
selling corporation and representations by the seller as to other actual and potential claims
against the seller. Such transactions are fraught with adversity and conflict, even for the most
scrupulous attorney in the friendliest of deals.
The facts presented by the inquirer reference the typical situation in which some or all
terms of the sale, particularly elements of financing, must be negotiated between buyer and
seller. Where there is disagreement or material terms of an agreement have not been addressed
between buyer and seller as to financing, security, consulting agreements with the seller, title
defects, or any other material matter relating to the sale, conflicts may exist or develop. Under
the foregoing circumstances, it would be unethical for a Florida attorney to represent both buyer
and seller in the closing of the sale of a business in Florida, acting as “closing agent” for the
transaction. A member of The Florida Bar may not be involved in negotiations of the parties to a
sale of a business and then attempt to represent both parties to the transaction at closing of the
sale. Under the foregoing circumstances, such representation presents a nonwaivable conflict
under Rule 4-1.7(a) and (b) and is ethically prohibited.