Can a Mississippi lawyer who closed a buyer's real estate loan for the mortgage company, giving the buyer no legal advice, later defend the homebuilder in a suit brought by that buyer?

Plain-English summary

The Committee addressed Attorney A, who represented Homebuilder B and also acted as closing agent for Mortgage Company C, closing the company's real estate loans and rendering certificates of title but giving no legal advice to the company's customers. After Attorney A closed the loan for the buyer of a home built by Homebuilder B, that buyer threatened suit against the homebuilder over the sale. The question was whether Attorney A could ethically represent the homebuilder in the action.

The opinion framed the issue as identifying the client. On the facts, the homebuilder and the mortgage company were the lawyer's clients, and nothing indicated the mortgage company's customer was a client or believed an attorney-client relationship existed. The opinion stated it is desirable for the attorney to advise the borrower, in writing, that he represents the homebuilder and the mortgage company but not the borrower. It observed that a lawyer may represent his client in an action brought by a non-client, and that the only apparent concern was the lawyer's role in closing the borrower's loan.

The opinion relied on ABA Informal Opinion 837 (1965) and ABA Informal Opinion 643 (1963), which treat a lender's closing attorney as the lender's lawyer (not the borrower's) regardless of how the fee is allocated. It concluded that Attorney A may defend and represent the homebuilder in the suit brought by the mortgage company's customer, because Attorney A never represented that customer; his clients were the homebuilder and the mortgage company.

In practice

Under this opinion, a lawyer who served only as the mortgage company's loan-closing agent, rendered a certificate of title, and gave the borrower no legal advice may represent the homebuilder in a later suit brought by that borrower. Per the opinion, the analysis turns on who the client is: the borrower was never the lawyer's client, so defending the homebuilder against the borrower is not adverse to a client under Rule 1.7. The opinion noted it is desirable to confirm the non-representation to the borrower in writing.

Common questions

Q: Is the borrower whose loan the lawyer closed considered the lawyer's client?

A: No. The opinion concluded that, on these facts, the borrower was not the lawyer's client and did not appear to believe an attorney-client relationship existed; relying on ABA Informal Opinions 837 and 643, the closing attorney is the lender's lawyer, not the borrower's.

Q: Can the lawyer defend the homebuilder against that borrower?

A: Yes. The opinion concluded the lawyer may defend the homebuilder, because he never represented the borrower; his clients were the homebuilder and the mortgage company.

Q: What should the lawyer do to make the relationship clear?

A: The opinion stated it is desirable for the lawyer to advise the borrower in writing that he represents the homebuilder and the mortgage company, but not the borrower.

Background and rules framework

The opinion interprets Mississippi Rule 1.7 (conflict of interest), corresponding to Model Rule 1.7, and turned on the threshold question of client identity. Because the borrower was not a client, the representation of the homebuilder against the borrower was not directly adverse to any client. The opinion drew on ABA Informal Opinions 837 (1965) and 643 (1963) treating a lender's closing counsel as the lender's lawyer rather than the borrower's.

Citations and references

Rules of Professional Conduct (Mississippi; cf. Model Rules):

• MRPC 1.7 (conflict of interest; representation adverse to a client) (cf. Model Rule 1.7).

Other opinions cited:

• ABA Informal Opinion 837 (1965) (a lender's closing attorney is the lender's lawyer, not the borrower's).
• ABA Informal Opinion 643 (1963) (an attorney employed by a lending association to perform loan services is the company's attorney, not the borrower's).

See also

• MS Bar Ethics Op. 152: Taking a Deed to a Divorce Client's Home as a Fee
• MS Bar Ethics Op. 151: Representing the Same Divorce Client Against the Ex-Spouse

Source

• Landing page: https://www.msbar.org/ethics-discipline/ethics-opinions/formal-opinions/147/
• Original PDF: https://www.msbar.org/media/1039/et_op_147-amended.pdf

Original opinion text

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

ETHICS OPINION NO. 147

OF THE MISSISSIPPI BAR

RENDERED June 02, 1988

AMENDED April 06, 2013

CONFLICT OF INTEREST - An Attorney may defend a client Homebuilder in a suit brought by a client Mortgage Company's customer when that Attorney merely closed the customer's real estate loan, rendered his Certificate of Title for the Mortgage Company and gave no legal advice to the client Mortgage Company's customer.

The Ethics Committee of The Mississippi Bar has been requested to render an opinion on the following situation:

Attorney A represents Homebuilder B in XYZ County. Attorney A also acts as closing agent for Mortgage Company C in XYZ County to close real estate loans for Mortgage Company C's customers. Attorney A gives no legal advice to Mortgage Company C's customers, but is asked only to render his Certificate of Title to Mortgage Company C.

Customer B is threatening legal action against Homebuilder B resulting from the sale of a home Homebuilder B constructed. Attorney A closed the real estate loan for Mortgage Customer B.

Is it ethical for Attorney A to represent Homebuilder B in the action?

The scenario represented to the Committee presents a question of just who is the client. The facts show the Homebuilder and the Mortgage Company were and still are the clients of the Attorney in question. Nothing in the facts would indicate that the Mortgage Company's customer (the party threatening legal action against the Homebuilder) either is a client of the Attorney or later stated he thought an attorney-client relationship existed. In this situation, it is desirable that the Attorney advise the Borrower, in writing, that he represents the Homebuilder and Mortgage Company but not the Borrower.

It is elementary that an Attorney may represent his client in an action brought by a party who is not the client of that Attorney. The Committee infers that the requester of this Opinion has some problem with the fact that the Attorney closed the client Mortgage Company's customer's real estate loan. ABA Informal Opinion 837 (1965) appears to address that issue and indicates that the customer is not the client of the Attorney:

...The Bank believes that it needs to be represented when it makes loans. It has the right to choose an Attorney. It is an economic matter as to how he is paid. The cost of such a lawyer obviously is passed, in whole or in part, on to the borrower either directly or indirectly. No ethical problem arises as to how this is passed along. The lawyer...is the Bank's lawyer no matter how he is paid...The borrower may have his lawyer any time he chooses. He may be a better lawyer or poorer lawyer than the Bank's lawyer. He advises the borrower while the Bank's attorney protects the interests of the Bank.

See also ABA Informal Opinion 643 (1963):

A lending association may properly employ an attorney to perform services for it and to pay that attorney for such services and, if it desires, charge the person obtaining the loan the cost of the loan including the attorney fee. In such case the attorney is the attorney for the company and not for the person obtaining the loan.

The Committee concludes that the Attorney may defend and represent the Homebuilder in a suit brought by the Mortgage Company's customer since the Attorney in question never represented the customer. The Attorney's clients were, and have been, the Homebuilder and the Mortgage Company.