Can a lawyer retained by a lending institution to give it a title opinion allow that opinion to be sold to the institution's borrower?

Plain-English summary

Opinion 12 (adopted March 26, 1960) addressed a lawyer retained by a lending institution to render a title opinion on property the institution was financing. The institution charged its customer for the title opinion on the settlement sheet, and at closing, with the lawyer's knowledge, offered the customer a copy of the lender-addressed opinion for an additional charge.

The Committee concluded the lawyer violated Canons 6, 27, and 35. By acquiescing in the sale of the opinion to the customer, the lawyer caused the customer to believe he had bought a title opinion he could rely on for his own purposes, which the opinion said might also discourage the customer from retaining his own counsel. The Committee found that an attorney-client relationship was in fact created with the customer. It treated that relationship as solicited through the lending institution in violation of Canon 27 (which also bars permitting a third party to solicit on the lawyer's behalf), and found a Canon 6 conflict because the lawyer was in effect representing conflicting interests without the required full disclosure to the customer. Letting the institution conduct the dealings on the lawyer's behalf breached Canon 35 (intermediaries), which provides that a lawyer's relationship to the client should be personal and direct. The opinion added that if any part of the fee charged to the customer were retained by the institution with the lawyer's knowledge and consent, the lawyer would also violate Canon 34's prohibition on dividing fees with a lay agency.

Currency note

This opinion was issued in 1960 under the former Canons of Professional Ethics, before the Colorado Code of Professional Responsibility and before the Colorado Rules of Professional Conduct took effect on January 1, 1993, and before Colorado's 2008 revisions to those rules. The conflict-of-interest principles the opinion applied are now reflected in Rule 1.7 (conflicts of interest), the bar on lay intermediation and fee division with nonlawyers in Rule 5.4, and the solicitation and third-party-payment rules have likewise changed. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer who gives a bank a title opinion let the bank sell a copy to the borrower?

A: No, under this opinion. The Committee concluded that selling or acquiescing in the sale of the lender-addressed title opinion to the borrower created an attorney-client relationship with the borrower and violated the conflict, solicitation, and intermediary canons.

Q: Why was a conflict found if the lawyer worked for the bank?

A: The opinion concluded that furnishing the opinion to the borrower for a charge created an attorney-client relationship with the borrower too, putting the lawyer in the position of representing conflicting interests (lender and borrower) without the full disclosure the canons required.

Q: What was the problem with the lender handling the arrangement?

A: The opinion concluded that letting the lending institution conduct the discussions and sale on the lawyer's behalf breached Canon 35 (intermediaries), because the lawyer's relationship to a client should be personal and direct, not directed by a lay agency.

Background and rules framework

The opinion applied the Canons of Professional Ethics: Canon 6 (representing conflicting interests), Canon 27 (solicitation, including solicitation by a third party on the lawyer's behalf), Canon 35 (intermediaries), and Canon 34 (division of fees with a lay agency). The corresponding modern principles appear in Model Rule 1.7 (conflicts of interest) and Model Rule 5.4 (professional independence of the lawyer; fee division with nonlawyers).

Citations and references

Rules of Professional Conduct:

• Colo. RPC 1.7 / Model Rule 1.7 (conflicts of interest; modern analog to the Canon 6 analysis)
• Colo. RPC 5.4 / Model Rule 5.4 (professional independence; fee division with nonlawyers; modern analog to Canons 34 and 35)

See also

• CBA Formal Op. 17: Preparing Real-Estate Documents for a Sales-Service Firm
• CBA Formal Op. 23: Insurer-Selected Counsel for a Minor's Guardian

Source

• Landing page: https://www.cobar.org/ethicsopinions
• Original PDF: https://www.cobar.org/Portals/COBAR/repository/ethicsOpinions/FormalEthicsOpinion_12_2011.pdf