Must a lawyer who sells a client title insurance and keeps part of the premium disclose his interest?

Plain-English summary

At a recent Bar Convention and Institute on Legal Ethics, the question arose whether there was any impropriety in a lawyer writing title insurance in the Lawyers' Title Guaranty Fund for his client without advising the client of the lawyer's interest in the Fund and of his retention of a portion of any fee charged for the title insurance.

The committee tied the question to ABA Opinion 304 (adopted February 16, 1962). It explained that where a lawyer simply charges a blanket fee and then provides the title insurance policy at his own cost out of that fee, no duty rests on him to inform the client of his interest in the Fund. A distinction appears where the title insurance is sold and a portion of the fee retained, in which case it is incumbent on the lawyer to make disclosure to the client, as opposed to where the title insurance is furnished as additional protection without any additional charge.

Currency note

This opinion was issued in 1962, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canons 6 and 38 of the Canons of Professional Ethics; conflicts of interest and a lawyer's business and financial dealings with a client are now addressed by Rules 4-1.7 and 4-1.8 of the Rules Regulating The Florida Bar (Model Rules 1.7 and 1.8). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: When did the lawyer have to disclose his title-insurance interest?

A: When the title insurance was sold and the lawyer retained a portion of the fee. In that case the committee said disclosure to the client was required.

Q: Was disclosure required if the lawyer absorbed the cost?

A: No. The committee said that where the lawyer charged a blanket fee and provided the policy at his own cost out of that fee, or furnished the insurance as additional protection without extra charge, no duty to disclose his interest arose.

Background and rules framework

The opinion applied former Canons 6 and 38 of the Canons of Professional Ethics and followed ABA Opinion 304. The duties at issue, a lawyer's conflicting interest and his business dealings with a client, are now addressed by Rules 4-1.7 and 4-1.8 of the Rules Regulating The Florida Bar (Model Rules 1.7 and 1.8). The committee's distinction turned on whether the lawyer retained a portion of the premium.

Citations and references

Rules of Professional Conduct:

• Canons 6, 38 [Canons of Professional Ethics; see current Rules 4-1.7, 4-1.8]

Other opinions cited:

• ABA Formal Opinion 304 (February 16, 1962)

See also

• FL Bar Ethics Op. 67-25: Hidden Insurance Referral Fee

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-61-60/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-61-60-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 61-60
May 10, 1962
Advisory ethics opinions are not binding.
A lawyer who sells his client title insurance through the Lawyer's Title Guaranty fund and retains a portion of the premium should disclose to the client his interest in the fund and his retention of the portion of the premium.
Canons: 6, 38
Opinion: ABA 304
Chairman Holcomb stated the opinion of the committee:
At the recent Bar Convention and the Institute on Legal Ethics, the question arose as to whether there was any impropriety in a lawyer writing title insurance in the Lawyers' Title Guaranty Fund for his client without advising the client of the lawyer's interest in the Fund and of his retention of a portion of any fee charged for the title insurance.
This relates to Opinion 304 of the ABA Committee appearing in the ABA Journal of April, 1962, adopted February 16, 1962. The opinion was expressed that where the lawyer simply charged a blanket fee and then provided the title insurance policy at his own cost out of his fee, no duty rested on him to inform his client of his interest in the Fund.
A distinction appears where the title insurance is sold and a portion of the fee retained — in which case it is incumbent on the lawyer to make a disclosure to his client — and where the title insurance is furnished as an additional protection to the client without any additional charge therefor.