In residential real estate transactions lawyers routinely represent the buyer/borrower, lender and title company. Everyone does it. However, not everyone takes Rule 1.7 into account. The issue is whether the lawyer’s multiple roles create conflicts of interest under Rule 1.7?
The rationale behind the dual representation is low cost and efficient representation that benefits all involved and posses no actual conflict of interest. But, as the subprime crisis illustrates, there can be serious unexpected consequences flowing from residential real estate transactions.
For the sake of clients and lawyers alike, it makes sense for lawyers to carefully spell out the scope of representation, including the ways in which the scope of representation may be limited by virtue of her multiple roles. Whatever past practice may have been, it is important to take Rule 1.7 into account. More on this later. In the meantime, bear this in mind: the “every one does it defense” or in this case the “no one does it defense” is not likely to work. One is likely either to avoid a problem altogether or satisfy a regulator by a well reasoned conclusion as to the applicability of Rule 1.7 based on the text of the rule itself.