Can a lawyer agree to handle all of a mortgage lender client's loan closings for a fixed monthly fee?

Plain-English summary

A lawyer's regular client was a company in the business of making mortgage loans as a direct lender, not a broker. The lawyer already inspected and processed the loan documents, while various other lawyers handled the actual closings. The client now wanted the lawyer to handle all closings for a fixed monthly compensation not based on the number of closings, with closings held in the company's office. The lawyer would receive, directly or indirectly, no portion of the out-of-pocket closing costs or disbursements charged to the borrower, and although he might arrange mortgagee title insurance, he and his client would get no rebate from the borrower's title insurance charges.

The committee saw no ethical problem in those circumstances. It noted that Canon 9 requires a lawyer to avoid anything that may tend to mislead a party not represented by counsel and not to undertake to advise such a party as to the law, observing that a prudent closing attorney will make clear he does not represent the borrower but only the lender.

Currency note

This opinion was issued in June 1966, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Canons 9 and 12 on dealing with unrepresented parties and fixing fees. Dealings with unrepresented persons are now governed by Rule 4-4.3 of the Rules Regulating The Florida Bar, and fees by Rule 4-1.5 (Model Rules 4.3 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 Treat this page as historical context, not current guidance.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: Could the lawyer take a flat monthly fee for all the lender's closings?

A: Yes. The committee saw no ethical problem in the attorney agreeing with the mortgage-lender client to conduct all closings for a fixed monthly compensation not tied to the number of closings.

Q: What did the committee say about the borrower at these closings?

A: Citing Canon 9, the committee said a prudent closing attorney will make clear he does not represent the borrower but only the lender, and must avoid misleading the unrepresented borrower or advising him on the law.

Q: Could the lawyer share in the borrower's closing costs or title-insurance charges?

A: The facts the committee approved had the lawyer receiving no part of the borrower's out-of-pocket closing costs or disbursements, and no rebate from the borrower's title-insurance charges.

Background and rules framework

The opinion applied the former Canon 9 (avoiding misleading an unrepresented party) and Canon 12 (fixing the amount of the fee). Today, communications with unrepresented persons are addressed by Rule 4-4.3 of the Rules Regulating The Florida Bar, and fees by Rule 4-1.5; the Model Rule analogues are Rules 4.3 and 1.5. The committee's approval rested on the lawyer representing only the lender and not sharing in the borrower's charges.

Citations and references

Rules of Professional Conduct:

• Canons 9, 12 [Canons of Professional Ethics; see current Rules 4-4.3 and 4-1.5]

See also

• FL Bar Ethics Op. 66-72: Lawyers and Credit Bureaus
• FL Bar Ethics Op. 67-1: Contingent Fees in Condemnation

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-66-29/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-66-29.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 66-29
June 3, 1966
Advisory ethics opinions are not binding.
It is proper for an attorney to agree with a client engaged in the mortgage loan business to conduct all closings for the client at a fixed monthly compensation.
Canons: 9, 12
Chairman Kittleson stated the opinion of the committee:
A member of The Florida Bar has requested the Committee's advice on circumstances which we understand to be as follows. One of the lawyer's regular clients is a company whose business is making mortgage loans, as a direct lender and not as a broker. Presently, legal services to the lender include the inspection and processing of the loan documents, although the actual closings are handled by various other lawyers. The client now desires that the lawyer handle all closings for a fixed monthly compensation, and the amount will not be based upon the number of closings. The closings will be held in the company's office. The lawyer will not receive directly or indirectly any portion of the out-of-pocket closing costs or disbursements charged to the borrower. Although he may arrange for appropriate mortgagee title insurance, this will result in no rebate of any kind to him or to his client from amounts charged to the borrower for title insurance. The Committee's advice is sought on the ethical propriety of participation in this manner.
The Committee sees no ethical problem in the circumstances set forth above. Canon 9 provides that an ethical lawyer must avoid everything that may tend to mislead a party not represented by counsel, and he should not undertake to advise him as to the law. A prudent closing attorney will make it clear that he does not represent the borrower but only the lender.