LEO: Title Agency: Issuing Title Policies LE Op. 1152
Title Agency: Issuing Title Policies to Real Estate Clients.
November 16, 1988
You wish to know whether it is proper for 13 attorneys practicing before
the bar, in a locality where only 21 attorneys engage in the practice of
law, to form and own equal shares of stock in a corporation which will act
as an agent for a title insurance company. You advised that equal
dividends will be distributed among the attorneys, the agency will be
located in its own office, separate from the office of any attorney, and
an office manager and secretary will be hired to run the day-to-day
business affairs. You state further that there are already two existing
title insurance agencies in the locality which are owned in whole or in
part by attorneys and which will indeed be in competition with the
proposed new agency.
Disciplinary Rule 5-101(A) [ DR:5-101] is the controlling rule relative
to your inquiry. The rule provides as follows:
A lawyer shall not accept employment if the exercise of his professional
judgment on behalf of his client may be affected by his own financial,
business, property, or personal interest, except with the consent of his
client after full and adequate disclosure under the circumstances.
The Committee has previously opined that it is not improper for an
attorney to place his real estate clients' title insurance needs through a
title agency in which the attorney has an ownership interest, as long as
full disclosure is made to the client. The Committee would direct your
attention to LE Op. 886 and LE Op. 939, which in the Committee's view
are dispositive of your inquiry.
Committee Opinion November 16, 1988