Legal Ethics Opinion No. 1405 

Title Agency: Directly Paying Law Firm Employees and Invoices for
Goods, Services and Advertisements Rendered to the Law Firm

You have indicated that a title insurance company is owned by one
individual who functions as both the sole shareholder and
binder-issuing agent.  The same person is the sole owner of a law
firm.  The title insurance company is located in the same office
as the law firm and pays for advertisements for the benefit of
the law firm.  The facts you have provided do not indicate the
nature of the law firm's practice, i.e., whether the law firm
represents clients to whom title policies will be issued. 

You have asked the committee to opine whether, under the facts of
the inquiry, (l) it is proper for the title insurance company to
directly pay the salaries of individuals who perform work solely
for the benefit of the law firm, and (2) it is proper for the
title insurance company to directly pay invoices sent to the law
firm for goods, services and advertisements rendered to the law

The appropriate and controlling disciplinary rules relative to
your inquiry are DR 5-l06(A)(2) which prohibits a lawyer from
accepting from one other than his client anything of value
related to his representation of or his employment by his client;
and DR 5-l0l(A) which similarly prohibits a lawyer from accepting
employment if the exercise of his professional judgment on behalf
of his client may be affected by his own financial, business,
property or personal interests.  Both Disciplinary Rules provide
that the impropriety may be overcome if the lawyer has the
consent of his client after full and adequate disclosure. 
Further guidance is available in Ethical Consideration 5-l which
cautions, in pertinent part, that the professional judgment of a
lawyer should be exercised, within the bounds of the law, solely
for the benefit of his client and free of compromising influences
and loyalties.  

The committee has previously outlined the conditions under which
an attorney may hold an ownership interest in title agencies or
real estate settlement services.  See LEOs #l87, 532, 545, 59l,
603, 886, 939, and ll52.  See also LEO #l329.  In addition, the
committee has also opined that it is improper for an attorney to
execute title binders and policies issued by the title agency to
the law firm's client when the attorney is an officer and/or
director and/or stockholder in the law firm and is an officer
and/or director and/or stockholder in the title insurance agency. 
See LEO #690.

In addition to the appropriate Disciplinary Rules, the committee
directs your attention to 38.2-46l4 (previously 38.l-733.l) of
the Virginia Code Annotated which prohibits to attorneys of
payments constituting kickbacks, rebates, or commissions in
connection with the issuance of title insurance for real property
that is part of a real estate settlement conducted by such
attorney.  Although it is beyond the committee's purview to opine
as to interpretations of statutes, we direct your attention to
the Opinion of the Attorney General, issued January l5, l982
prior to the Virginia State Bar Council's consideration of LEO
#l87, which found that, in light of the appropriate statute, an
attorney would appear to be precluded from serving as a
compensated agent for a title insurance company; however, the
attorney can legally maintain such an interest and represent a
client in a real estate transaction if full disclosure of the
attorney's interests and influences which might affect his advice
to the client is made at the outset of the attorney-client

In the facts you present, the committee believes that payments by
the title insurance company, such as those you describe, of the
law firm's employees' salaries and of costs of the law firm's
goods, services and advertisements would be improper and
violative of DR 5-l06(A)(2) and DR 5-l0l(A).  Furthermore, if a
finder of fact determines that such payments do constitute
kickbacks, rebates, commissions or other payments prohibited
under 38.2-46l4, the receipt of such payments might constitute
misconduct in violation of DR l-l02(A)(3) which prohibits a
lawyer from committing a crime or other deliberately wrongful act
that reflects adversely on the lawyer's fitness to practice law.

Committee Opinion 
September 17, 1991