Can a lawyer place title insurance for a client through an agency the lawyer's firm has a financial interest in, and what must the lawyer disclose?

Plain-English summary

The inquiry concerned a law firm placing title insurance policies for clients through a title insurance agency in which members of the firm had an interest. It asked whether two requirements of LE Op. 174-A still applied: (1) that the attorney examining title and submitting the application may participate only in the general management of the agency, and (2) that the authority to issue or decline a policy, and to set exceptions and exclusions, must rest with someone not under the substantial control of the examining attorney. Three further questions were posed contingent on those conditions still being valid.

The committee concluded those conditions of LE Op. 174-A were no longer valid, making the contingent questions unnecessary to reach. It found that LE Op. 187 had implicitly overruled them: although LE Op. 187 addressed other parts of LE Op. 174-A, its rationale effectively overruled the parts in question. Quoting LE Op. 187, the committee explained that DR 5-101(A) sets a qualified rather than absolute prohibition, so it does not bar a lawyer from undertaking employment in which the lawyer has a personal or financial interest in the subject matter, provided the client consents after the lawyer fully explains the lawyer's interests; absent an absolute Code prohibition, the committee could not bar by ethics opinion conduct that DR 5-101(A) appears to permit on proper disclosure.

So the committee found no per se prohibition on obtaining title insurance policies for clients under DR 5-101(A), with the crucial factor being the adequacy of the attorney's disclosure. It endorsed LE Op. 187's caution that all doubts about the sufficiency of disclosure must be resolved in favor of the client and against the attorney, since the attorney seeks to profit from the advice given the client, and that adequacy can only be determined case by case. The committee noted that questions of law are outside its province, but that an attorney's violation of law may place the attorney in violation of DR 1-102(3).

Currency note

The Virginia State Bar's committee note records that this opinion is "overruled, in part, by L E Op. No. 1702" and directs readers also to LE Op. 1564. This opinion was issued in 1988, under Virginia's former Code of Professional Responsibility (the disciplinary rule it cites), before the adoption of the Rules of Professional Conduct effective January 1, 2000. The conflict-and-consent analysis now falls under Rules 1.7 and 1.8 (the counterparts of ABA Model Rules 1.7 and 1.8). Treat this page as historical context, not current guidance. Verify against current rules and the cited later opinions before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer place title insurance through an agency the firm has an interest in?

A: Under this 1988 opinion, the committee found no per se bar under DR 5-101(A); the conduct turns on the adequacy of the lawyer's disclosure to the client.

Q: Are the older LE Op. 174-A management conditions still in force?

A: The committee concluded those conditions were no longer valid, having been implicitly overruled by LE Op. 187's reasoning that DR 5-101(A) is a qualified, not absolute, prohibition.

Q: How is the adequacy of disclosure judged?

A: Case by case, with all doubts about sufficiency resolved in favor of the client and against the attorney, because the attorney seeks to profit from the advice given.

Background and rules framework

The opinion interpreted former Virginia DR 5-101(A), which barred undertaking employment affected by the lawyer's own financial, business, property, or personal interests unless the client consented after full disclosure. The current analogs are Rule 1.7 (concurrent conflicts) and Rule 1.8 (business transactions with a client), the counterparts of ABA Model Rules 1.7 and 1.8.

Citations and references

Rules of Professional Conduct:

• Former Virginia DR 5-101(A) (employment affected by the lawyer's own interests; consent after disclosure)
• Former Virginia DR 1-102 (misconduct)
• ABA Model Rule 1.7 (concurrent conflicts) and Model Rule 1.8 (business transactions with clients)

Other opinions cited:

• Virginia LE Op. 174-A, LE Op. 187, LE Op. 1564, and LE Op. 1702 (title insurance and lawyer self-interest).

See also

• VA LEO 1754: Lawyer Earning Insurance Commission
• VA LEO 1593: Taking Client Stock as a Fee
• VA LEO 1489: Lawyer Borrowing From a Client
• VA LEO 1083: A Law Firm's Non-Legal Services Subsidiary

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1072.pdf

Original opinion text

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

Committee Opinion
May 31, 1988
LEGAL ETHICS OPINION 1072

TITLE INSURANCE

Your inquiry concerns the practice of a law firm purchasing title insurance policies for
clients, through a title insurance agency in which members of the law firm have an
interest. In particular, you ask whether the following two requirements of LE Op. 174-A
are still applicable: (1) The attorney examining the title and submitting the application for
title insurance may participate only in the general management of the title insurance
agency, and (2) The authority to determine whether to issue or decline a policy and to
determine what exceptions and exclusions to include in the policy must rest with an
individual who is not under the substantial control of the attorney examining the title.
You have asked three other questions contingent upon the Committee finding that the
above-referenced portions of LE Op. 174-A are still valid. Because the Committee opines
that the above-referenced conditions set forth in LE Op. 174-A are no longer valid, it is
unnecessary to set forth your other questions.
It is the Committee's opinion that LE Op. 187 implicitly overruled the above-referenced
portions of LE Op. 174-A. Although the specific inquiry involved in LE Op. 187
concerned other portions of LE Op. 174-A, the rationale applied in LE Op. 187
effectively overruled the portions of LE Op. 174-A of which you inquire. In referring to
LE Op. 174-A, LE Op. 187 stated:
This earlier conclusion was reached in the absence of an absolute prohibition in the
Code of Professional Responsibility. Since DR:5-101(A) sets forth a qualified
prohibition rather than an absolute one, the Committee now thinks that the attorney's
conduct must be measured in light of the disclosure the attorney gives his client.
DR:5-101(A) does not actually bar an attorney from undertaking employment when
the attorney has a personal or financial interest in the subject matter of the
representation. The attorney cannot undertake the representation unless the client
consents to the employment of the attorney, after the attorney explains fully the
attorney's interests in the representation. Absent an absolute prohibition against such
conduct by the Code of Professional Responsibility, the Committee does not believe
it can bar through an ethics opinion that which appears to be permitted by DR:5101(A) upon proper disclosure.
Thus, there are no per se prohibitions in obtaining title insurance policies for clients
pursuant to DR:5-101(A). As stated in LE Op. 187, “the crucial factor is the adequacy of
the attorney's disclosure. . . .” In determining the adequacy of the disclosure this
Committee heartily endorses the caution in LE Op. 187 that “all doubts regarding the
sufficiency of the disclosure must be resolved in favor of the client, and against the
attorney, since it is the attorney who seeks to profit from the advice given his client.” The
adequacy of the disclosure can only be determined on a case-by-case basis, in light of the
particular circumstances involved.
Because questions of law, as opposed to ethics, are not within the province of this
Committee, this Committee does not opine whether or not there are laws governing

Committee Opinion
May 31, 1988
matters related to your question. Of course, an attorney's violation of a law may place the
attorney in violation of DR:1-102(3).
Committee Opinion
May 31, 1988
Legal Ethics Committee Notes. – Editor’s Note: See also L E Op. No. 1564.
This opinion is overruled, in part, by L E Op. No. 1702 which would require the lawyer
to return the materials without reading them. While an ex parte interview of an
adversary’s expert is not per se improper, standing procedural rules or pretrial orders of
the tribunal might restrict or prohibit an ex parte contact with the opponent’s expert. See
Rule 3.4(d). See, e.g., Rule 4:1(b)(4)(B) of the Rules of the Supreme Court (discovery of
facts or opinions held by an expert may only be had by written interrogatories, unless the
parties agree otherwise.)