Can a lawyer accept payment from a bank for writing title insurance and closing loans the lawyer refers to that bank?

Plain-English summary

A member submitted a letter that a national bank had sent to area lawyers, offering to let lawyers who refer clients to it for real estate loans write the title insurance, with the bank charging the borrower for services and title insurance and then remitting to the lawyer both the service charges and a fee for representing the bank, closing, and protecting the bank.

The majority of the committee saw nothing improper in the procedure. One member disagreed, suggesting that the arrangement would result either in the rendition of nonlegal services or in a division of fees, with a possible violation of Canons 6 and 34, and stated that the lawyer should make full disclosure to his client of the fact that he would be receiving payment from the bank.

Currency note

This opinion was issued in 1963, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canons 6, 34, and 38 of the Canons of Professional Ethics; the subjects are now addressed by Rule 4-1.7 (conflict of interest), Rule 4-5.4 (professional independence; sharing fees with nonlawyers), and Rule 4-1.5 (fees) of the Rules Regulating The Florida Bar (Model Rules 1.7, 5.4, and 1.5). 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 Treat this page as historical context, not current guidance.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: Can a lawyer be paid by a bank for handling title work on loans the lawyer refers to the bank?

A: The majority of the committee saw nothing improper in the bank charging the borrower and remitting to the lawyer a service charge plus a fee for representing and closing for the bank. The opinion was not unanimous.

Q: What was the dissenting member's concern?

A: One member believed the arrangement would amount either to the rendition of nonlegal services or to a division of fees, raising a possible violation of Canons 6 and 34, and said the lawyer should fully disclose to the client that he would be receiving payment from the bank.

Background and rules framework

The opinion applied former Canons 6 (adverse influences and conflicting interests), 34 (division of fees), and 38 (commissions and rebates) of the Canons of Professional Ethics. The concerns the committee discussed are now addressed by Rule 4-1.7 (conflict of interest where a lawyer's responsibilities to one person may be materially limited by responsibilities to another), Rule 4-5.4 (professional independence and sharing fees with nonlawyers), and Rule 4-1.5 (fees) of the Rules Regulating The Florida Bar (Model Rules 1.7, 5.4, and 1.5).

Citations and references

Rules of Professional Conduct:

• Canons 6, 34, 38 [Canons of Professional Ethics; see current Rules 4-1.7, 4-5.4, 4-1.5]

See also

• FL Bar Ethics Op. 63-21: Borrower Paying Bank Counsel
• FL Bar Ethics Op. 65-58: Title Defects and the Borrower

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-62-72/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-62-72-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 62-72
May 31, 1963
Advisory ethics opinions are not binding.
There is nothing improper in an arrangement whereby a bank offers to permit local lawyers to write title insurance on real estate loans referred to the bank by such lawyers, with the bank charging the borrower for services and title insurance and remitting to the lawyer the service charge together with a fee for representing the bank, closing and protecting the bank.
Canons: 6, 34, 38
Chairman Holcomb stated the opinion of the committee:
A member of The Florida Bar submits a letter from the A. National Bank sent to lawyers of the area to permit such lawyers who refer clients to it for real estate loans to write title insurance with a charge by the bank to the borrower for services and for title insurance, the bank remitting to the lawyer the service charges together with a fee for representing the bank, closing and protecting the bank.
The majority of the Committee on Professional Ethics sees nothing improper in such a procedure. One member suggests that this would result either in rendition of non-legal services or in a division of fees, with a possible violation of Canons 6 and 34. This member believes the lawyer should make full disclosure to his client of the fact that he would be receiving payment from the bank.