Roth, Matter of

Decision Date02 August 1990
Citation120 N.J. 665,577 A.2d 490
PartiesIn the Matter of Lee B. ROTH, An Attorney at Law.
CourtNew Jersey Supreme Court

Isabel Frank, First Asst. Counsel, for Disciplinary Review Bd.

William R. Wood, Deputy Ethics Counsel, for Office of Attorney Ethics.

William B. Scatchard, Jr., for respondent (Capehart & Scatchard, Mount Laurel, attorneys).

Jeffrey A. Bartolino, Deputy Atty. Gen., submitted a brief on behalf of amicus curiae New Jersey Real Estate Comm'n (Robert J. Del Tufo, Atty. Gen., attorney; Michael R. Clancy, Asst. Atty. Gen., of counsel).

Alan J. Pogarsky, Toms River, President, submitted a letter brief on behalf of amicus curiae New Jersey State Bar Ass'n.


This is an attorney-disciplinary matter. Respondent, Lee B. Roth, was found to have violated our ethics rules by attempting to obtain a real estate commission in a transaction in which he also served as the attorney for a prospective buyer of residential real estate. The case impels us to determine the appropriate ethics standards governing an attorney who undertakes to represent a client as both attorney and real estate broker in the same transaction.

The charges in this case were brought before the District XIII Ethics Committee (DEC), which found that respondent's conduct in representing a client as both an attorney and real estate broker reflected adversely on his fitness to practice law in violation of Disciplinary Rule (DR ) 1-102(A)(6), which provided that "[a] lawyer shall not ... [e]ngage in any other conduct that adversely reflects on his fitness to practice law." 1 The DEC based that conclusion on what it characterized as respondent's attempt to receive a broker's commission without having performed any brokerage services, the conflict of interest posed by the broker/attorney arrangement, and the "unseemly appearance" created by the arrangement. The matter was appealed to the Disciplinary Review Board (DRB), which determined that the DEC's conclusions were supported by clear and convincing evidence and further determined that respondent, not having a broker's license, was not entitled to seek a commission. The DRB recommended the imposition of discipline. Respondent appealed the DRB's decision to this Court. At our request, the New Jersey Real Estate Commission and the New Jersey State Bar Association have submitted amicus curiae briefs to address this unclear area of attorney ethics.


Respondent has been a member of the New Jersey bar since 1962 and is a well-respected authority on real estate law. Although at the time this matter arose respondent had taken the course to become a real estate broker and had passed the examination administered to real estate salespeople, he was not a licensed real estate broker. In January 1984, a paralegal employed in respondent's law firm became interested in purchasing a house she had seen for sale located in Flemington, New Jersey. The listing price for the house was $123,900. The paralegal asked respondent to assist her in purchasing the house and in finding a way of lowering the purchase price. Respondent told her that he would act as both her lawyer and broker in the transaction, and that as the selling real estate broker, he would be entitled to a fifty-percent share of the commission, which he would apply to a reduction in the purchase price.

Respondent's client subsequently communicated with the real estate agency owned by Carl D. Bayuk, who was the listing broker. She expressed interest in the property and stated that respondent would act both as her attorney and as the selling real estate broker. Because he was confused about respondent's dual role as attorney and broker, Bayuk called respondent directly, and respondent explained to Bayuk that, as an attorney, he, respondent, was authorized to sell real estate without a broker's license and that he would be entitled to half of the six-percent commission.

On January 20, 1984, respondent's client made a written offer of $114,000 to the sellers expressly conditioned on "the assumption that you have agreed to pay your real estate broker six percent (in this case $6,840) and that your real estate broker will divide the commission with our lawyer, who agrees that that commission be credited against the purchase price." That offer was rejected, as was a second offer, conditioned on the identical terms, for $118,500. Shortly thereafter, the property was sold to another buyer for the full listing price.

The listing real estate broker, Bayuk, subsequently filed an ethics complaint against respondent. At the hearing before the DEC, respondent stated that he had advised both his client and Bayuk that he would act as the attorney and the selling real estate broker. He testified that he did not intend to benefit personally from the arrangement and that his share of the real estate commission was to have been applied on behalf of his client to reduce the purchase price of the property.

The DEC found that respondent had not performed any brokerage services and therefore was not entitled to any brokerage commission. The DEC also found that respondent's acting as both attorney and broker in the same transaction, combined with his being compensated in both capacities, created a conflict of interest. Thus, as noted, the DEC concluded that respondent had violated DR 1-102(A)(6). Although it did not comment on whether respondent had in fact performed any brokerage services, the DRB also concluded that respondent had violated that Disciplinary Rule and recommended that respondent be publicly reprimanded.


It is not unlawful or unethical per se for an attorney to engage in the business of a real estate broker. The Advisory Committee on Professional Ethics has concluded that an attorney who is also licensed as a broker may conduct business in both fields, so long as he or she separates the two. See, e.g., Opinion 124, 91 N.J.L.J. 108 (1968). As the DEC noted below, "There would appear to be no impediment to respondent engaging in the real estate brokerage business upon obtaining a proper license and upon taking appropriate steps to separate such a brokerage business from his practice of law." An attorney who is not so licensed may also perform brokerage activities. Although the law governing the licensing of real estate brokers, N.J.S.A. 45:15-1 to -42, provides in pertinent part that "no person shall engage either directly or indirectly in the business of a real estate broker or salesman ... without being licensed," it exempts certain classes of people, including attorneys, from that requirement. N.J.S.A. 45:15-4. Thus attorneys are authorized to engage in the business of a real estate broker or salesperson without being licensed as such. The primary question posed in this matter, however, is not whether respondent could lawfully undertake to perform brokerage activities, but whether in this transaction he compromised his professional responsibilities as an attorney by engaging in such dual activities and seeking dual compensation.

As noted, DR 1-102(A)(6) proscribed attorney conduct "that adversely reflects on his fitness to practice law." The DRB found that the payment of a real estate commission to an attorney who does not possess a broker's license is beyond the scope of the attorney exemption to the real estate licensing law. Although the Board accepted respondent's testimony that he sought not to profit from the transaction but rather to reduce the purchase price for his client, it found that "[r]espondent could not transfer to the paralegal that to which he was not entitled." Thus, the DRB concluded that respondent had transgressed the strictures of DR 1-102(A)(6) by seeking compensation in the form of a brokerage commission for work not encompassed by the "attorney" exemption to the statute.

Our courts have had few occasions to examine the statutory "attorney" exemption of N.J.S.A. 45:15-4. In Spirito v. New Jersey Real Estate Commission, 180 N.J.Super. 180, 434 A.2d 623 (1981), the Appellate Division rejected the notion that the statutory exemption makes an attorney's license the equivalent of a real estate broker's license. The court declined to grant a real estate broker's license to an attorney who claimed a right to the license by virtue of the statutory exemption. It held that an attorney is not entitled to a broker's license without meeting the apprenticeship and licensing requirements of the real estate licensing law, N.J.S.A. 45:15-1 to -42. The court reviewed the legislative background of the law in some detail and quoted with approval Attorney General's Formal Opinion 13-1979, which found that historically "the statutory exemption for attorneys has been grouped with those persons or institutions who by their very nature would be circumscribed in carrying out general real estate activities." 180 N.J.Super. at 184, 434 A.2d 623. The court concluded that the statutory exemption was not meant to provide the equivalent of a broker's license to one exempt from the requirement of the licensing law, but rather to authorize attorneys to perform only those brokerage services "incidental to the normal practice of the profession or business." Id. at 189, 434 A.2d 623.

Applying Spirito to this case, the DRB focused on whether respondent's brokerage activities in connection with the legal representation of his client could be reasonably regarded as incidental to the performance of his legal services. The DRB concluded, "Clearly, to demand a real estate commission, as respondent did here, is not an activity incidental to the normal practice of law." The thrust of that reasoning is that an attorney has the lawful right to engage in the business of a real estate broker, but only in a manner that is ancillary and subordinate to his or her normal activities as an attorney. In this context, the term "incidental" denotes that which is of "minor importance, insignificant, and of little...

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6 cases
  • Kanengiser v. Kanengiser
    • United States
    • New Jersey Superior Court
    • March 14, 1991
    ... ... holds that such distribution did not defeat the absolute privilege because all recipients of the letter had a significant interest in the matter or connection to it ... Preliminary Statement ...         This action revolves around correspondence dated October 4, 1990, from ... that even if his real estate brokerage fee is seen as a commission, he should not be held to have violated ethical strictures because Matter of Roth, supra, "has only prospective[590 A.2d 1230] application." Yet when the Supreme Court Advisory Committee On Professional Ethics was asked in 1983 ... ...
  • Stewart Title of the Midwest, Inc. v. Reece & Nichols Realtors, Inc.
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    • May 11, 2012 a concept that is more extensively discussed in Sherman v. Bruton, 497 S.W.2d 316, 321 (Tex.Civ.App.1973), and Matter of Roth, 120 N.J. 665, 667–69, 577 A.2d 490 (1990). These courts reason that the contractual trigger for earning a commission is producing a ready and willing buyer; in o......
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    ...and Longport Marine. The primary questions raised by this claim were addressed by the Supreme Court in a recent case of Matter of Roth, 120 N.J. 665, 577 A.2d 490 (1990). As that case makes clear, an attorney may not act as both attorney and broker in the same transaction. Unfortunately, th......
  • LaRosee, Matter of
    • United States
    • New Jersey Supreme Court
    • February 15, 1991
    ...The owners retained respondent to sell the business and agreed to pay him a commission when the sale had occurred. Cf. In re Roth, 120 N.J. 665, 675, 577 A.2d 490 (1990) (holding that attorney unlicensed as broker must confine brokerage services to those incidental to practice of law and no......
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