Can a Florida lawyer keep a fee a title company pays for endorsing its title commitment if the client consents?

Plain-English summary

The inquiry built on Opinion 74-50, which had found unethical an arrangement where a title company prepares a title commitment, sends it with a copy of its search to the lawyer, the lawyer reviews the search and adds an endorsement, and the title company then remits a substantial percentage of the title insurance fee to the lawyer. The committee was asked (a) whether that arrangement becomes permissible if the lawyer fully discloses the amount received to the client and obtains consent, and (b) to what extent the lawyer must credit that money against any fee charged the client.

The committee answered (a) in the affirmative: under DR 5-107(A)(2) and EC 2-21, a lawyer may accept a thing of value related to the representation from someone other than the client with the client's consent after full disclosure, and accepting the title company fee under these facts does not necessarily impair the lawyer's ability to represent the client. As to (b), the committee concluded that if any part of the fee the lawyer charges the client is for time spent looking at the search and endorsing the commitment, the amount received from the title company should be credited against that part of the fee; otherwise crediting is not required unless the client's consent was conditioned on it. The committee added the caveat that a lawyer may not receive payment from a third party where that would violate law, citing the Real Estate Settlement Procedures Act of 1974, and expressly declined to give any legal opinion on RESPA's effect.

Currency note

This opinion was issued in 1977, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Code of Professional Responsibility, which has since been replaced. Treat this page as historical context, not current guidance. Verify against current Rule 4-1.8 before relying on any specific requirement mentioned here.

Common questions

Q: Can a lawyer accept money from a title company for endorsing its title commitment?

A: The opinion concluded the lawyer may, but only with the client's consent after full disclosure of the amount received, citing DR 5-107(A)(2) and EC 2-21.

Q: Does the lawyer have to credit that money against the client's bill?

A: Per the opinion, if any part of the lawyer's fee is for time spent reviewing the search and endorsing the commitment, the title company's remittance should be credited against that part; otherwise it need not be, unless the client's consent was conditioned on a credit.

Q: Did the committee address whether RESPA permits this?

A: No. The committee noted a lawyer may not take third-party payment where that would violate law and pointed to RESPA's referral-fee prohibitions, but it expressly declined to give any legal opinion on RESPA's effect.

Background and rules framework

The opinion applied DR 5-107(A)(2) and EC 2-21 of the former Code of Professional Responsibility, which addressed a lawyer accepting compensation or anything of value related to the representation from someone other than the client. That subject corresponds to Model Rule 1.8(f) (compensation from a third party with informed client consent); the current Florida counterpart is Rule 4-1.8.

Citations and references

Rules of Professional Conduct (as cited, former Code):

• CPR EC 2-21; DR 5-107(A)(2) (accepting value related to the representation from a non-client)
• Canon 38, Canons of Professional Ethics

Statutes:

• Real Estate Settlement Procedures Act of 1974, 41 Fed. Reg. 109 (referenced; the committee gave no legal opinion on its effect)

Other opinions cited:

• Florida Bar Opinions 74-50, 75-27

See also

• FL Bar Ethics Op. 76-36: Undisclosed Title Discount
• FL Bar Ethics Op. 75-29: Billing Clients for Secretarial Costs

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-75-40/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-75-40-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 75-40
June 15, 1977
Advisory ethics opinions are not binding.
A lawyer may, with client consent after full disclosure, participate in an arrangement with a title company whereby the title company prepares a title commitment to which the lawyer adds an endorsement and the title company remits a substantial percentage of the title insurance fee to the lawyer.
Canon: 38, Canons of Professional Ethics
CPR: EC 2-21; DR 5-107(A)(2)
Opinions: 74-50, 75-27
Misc.: Drinker, Legal Ethics, p. 97; Real Estate Settlement Procedures Act of 1974, 41 Fed. Reg. 109
Vice Chairman Lehan stated the opinion of the committee:
This inquiry concerns the circumstances outlined in Opinion 74-50, i.e., an arrangement between a lawyer and a title insurance company under which:
1. The lawyer would ask the title company for a commitment;
2. The title company then prepares and signs by its authorized in-house agent a title commitment in usual form and sends same to the attorney, accompanied, however, by a photocopy of the title company's search;
3. The lawyer then spends whatever time he wishes "looking at the search;"
4. The attorney adds a stamped or typed endorsement to the commitment stating that the title appears to be the way the title company says it is, then signs his name; and
5. Finally, the title company "remits a substantial percentage of the title insurance fee" to the lawyer.
Opinion 74-50 finds that arrangement unethical for the reasons stated therein.
The present inquiry is:
(a) whether the arrangement above is permissible if the attorney makes full disclosure to the client of the amount received from the title company and obtains the client's consent; and
(b) to what extent, if any, the attorney must credit against any fee charged the client the money the title company has remitted to him.
For purposes of this inquiry, we assume that the premiums charged by any competing title companies between which the attorney might choose in placing title insurance and the amounts of the premium each title company would remit to the attorney are competitive. Also, the underlying facts, as we construe them for the purpose of this opinion, involve the attorney bearing responsibility to the title company for the status of title in the event a title defect causes loss. See Opinion 75-27.
The Committee is of the opinion that the inquiry should be answered in the affirmative as to (a). As to (b), the Committee is of the opinion that if any part of the fee the attorney charges the client is for time spent looking at the search and endorsing the commitment, the amount the attorney receives from the title company should be credited against that part of the fee. Of course, if the client's consent to the attorney's keeping the money he receives from the title company is conditioned upon the attorney's crediting that amount against the fee charged the client, the attorney should credit the amount received from the title company. Otherwise, it is not necessary to credit against the fee to the client the amount the title company remits to the lawyer.
DR 5-107(A) provides:
(A) Except with the consent of his client after full disclosure, a lawyer shall not:
(2) Accept from one other than his client any thing of value related to his representation of or his employment by his client.
EC 2-21 provides that "a lawyer should not accept compensation or anything of value incident to his employment or services from one other than his client without the knowledge and consent of his client after full disclosure." EC 2-21 is similar to former Canon 38 providing that a lawyer "should accept no compensation, commissions, rebates or other advantages from others without the knowledge and consent of his client after full disclosure." That Canon was construed as permitting, with client consent after full disclosure, "customary allowances" from title companies which "obviously in no way interfere with the lawyer's loyalty to his client." Drinker, Legal Ethics (1953), p.97.
We reach the same conclusion as to the propriety of this practice under the Code of Professional Responsibility. We do not believe that the attorney's accepting the fee from the title company under the circumstances stated above necessarily impairs his ability to properly represent his client.
We add the caveat that, of course, a lawyer may not receive payment from a third party if that would constitute a violation of law. See the Real Estate Settlement Procedures Act of 1974 and regulations thereunder, including those relating to prohibitions as to referral fees. 41 Fed. Reg. 109. The Committee expresses no legal opinion whatsoever as to the effect of RESPA under the facts of this Inquiry or under the facts of Opinion 74-50.