Can a lawyer regularly employed by a title insurance company examine titles the company is required to insure, without aiding unauthorized practice?

Plain-English summary

A loan applicant ("A") was told he must have his title examined and the property insured by a particular title company ("X"), and that X would insure the title only if it was examined by an attorney the title company regularly employed, retained, or designated. The committee was asked whether that attorney was obtaining legal business through an intermediary, soliciting business through the title company, or aiding the unauthorized practice of law. It answered that he was not.

The committee treated the question as largely answered by its companion opinions on lenders (E-21, E-22, and E-23), adding only the requirement of title insurance by the lender. It reasoned that the title company stood in the same position as the lender and could choose the attorney it wanted to make the title report and opinion. Examining real-estate titles, the committee observed, is a special phase of legal practice requiring an experienced and qualified attorney, and it would be contrary to the legal tradition of the right to choose one's lawyer not to uphold the parties' right to select the attorney they consider best qualified, particularly where large loan sums and mortgage security are involved.

The committee noted that no question was raised in this opinion about the kind of unauthorized practice the Court of Appeals had condemned in the First Federal case or was then considering in the Banks and Trust Company case, so it confined itself to an attorney rendering legal services in a legitimate manner. On those facts, it concluded the attorney did not violate the Canons of Professional Ethics by any of the acts in the three-part question.

Currency note

This opinion was issued in 1965 under the former Canons of Professional Ethics (in effect in Kentucky from 1946 to 1971) and predates both the 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. Subsequent rule amendments and 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 Treat this page as historical context, not current guidance.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 point mentioned here.

Common questions

Q: Can a title insurance company require its own lawyer to examine title?

A: Under this opinion, yes. The committee held the title company stands in the same position as a lender and may choose the attorney it wants to make the title report and opinion.

Q: Is the title company's lawyer aiding the unauthorized practice of law?

A: No. The committee found the lawyer was rendering legal services in a legitimate manner, and that no unauthorized-practice question of the kind condemned in First Federal was raised on these facts.

Q: Is the lawyer obtaining business through an intermediary?

A: No. Because the title company, like the lender, may select its own qualified title attorney, the committee found no violation of the Canons in the lawyer accepting that work.

Background and rules framework

The opinion applied Canon 6 (conflicts of interest) and Canon 35 (obtaining business through a lay intermediary), in the context of a title insurance company selecting its examining attorney. The modern analogs are Model Rule 5.4 (professional independence and a lawyer's employment relationships) and Model Rule 5.5 (unauthorized practice of law), with Kentucky's counterparts at SCR 3.130(5.4) and SCR 3.130(5.5).

Citations and references

Rules of Professional Conduct:

• Canons 6, 35 (conflicts of interest; business through a lay intermediary); modern analogs Model Rules 5.4 and 5.5

Cases:

• Kentucky State Bar Ass'n v. First Federal Savings and Loan Ass'n, 342 S.W.2d 397 (Ky.), referenced on the line between proper legal service and unauthorized practice
• Banks and Trust Company case (referenced as then pending before the Court of Appeals)

See also

• KBA Ethics Op. E-21: Lender's Choice of Title Lawyer
• KBA Ethics Op. E-22: Borrower Paying the Lender's Lawyer
• KBA Ethics Op. E-23: Whom the Title Lawyer Represents
• KBA Ethics Op. E-195: Signing Title Opinions, Lay Research

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-024.pdf

Original opinion text

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

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-24
Issued: January 1965

Question:

May an attorney regularly employed by a title insurance company examine
titles where the applicant at a lending agency must obtain insurance from
this title company with the attorney examining the title in order to obtain
financing and not violate the provisions of Canons 6 and 35 and aid in the
unauthorized practice of law?

Answer:

Yes.

References:

Canon 6, 35
OPINION

“A” applies to a lending agency for a loan on real property. He is told that he must
first have his title examined and have the property insured by “X” company. Upon further
investigation it is determined that “X” company will not insure “A’s” title unless it is
examined by an attorney regularly employed, retained or designated by the title company.
1.
Is the attorney who accepts business in this manner obtaining legal business
through an intermediary?
2.

Is the attorney soliciting business through a title company?

3.

Is the attorney aiding in the unauthorized practice of law?

This question involves the same matters set forth in the preceding three questions
and is largely answered in each of them. The only addition is the requirement of title
insurance by the lender before making the loan .The title company is in the same position
as the lender. It may choose an attorney it wants to make the title report and opinion. The
examination of titles to real estate is a special phase of legal practice and requires the
services of an attorney experienced and qualified in such practice. It would be contrary to
all of our legal background in our society to not uphold the right of anyone to choose the
attorney he considers best qualified to handle the legal services needed. Particularly where
large sums of money may be involved in a loan which requires mortgage security, it is
necessary and proper to obtain the best legal service available. The lender and the title
company have the right to select their own attorney. No question is raised in this or the
other questions concerning the unauthorized practice condemned by the Court of Appeals

in the First Federal case or as is presently being considered by the Court in the Banks and
Trust Company case, so that we are not concerned with those matters, but only with an
attorney rendering legal services in a legitimate manner.
Under these circumstances we are of the opinion that the attorney is not violating
the Canons of Professional Ethics by any of the acts in the three-part question set forth
above.

Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the
Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530
(or its predecessor rule). The Rule provides that formal opinions are advisory only.