Can a lawyer keep a small fee a title insurance company pays for furnishing 'back title evidence' when applying for the client's title insurance?

Plain-English summary

A title insurance company offered a lawyer a $25 fee for furnishing "back title evidence" when applying for title insurance. The evidence, the most recent title policy or commitment issued by another company, let the insurer reduce its costs by limiting its search to the period after the prior evidence of title. The lawyer asked whether he could properly accept the fee and keep it, or accept it and remit or credit it to the client.

The committee answered no to the first question and yes to the second. It relied on Opinion 563, which held that a commission received from a title insurance company must be fully disclosed to the client, and that the lawyer's retention of the commission violates Rule 2-106 because the commission is a fee to the lawyer that is not "reasonable": it is arbitrary and not based on any of the factors, such as the time and labor required, that bear on a proper fee. The committee adhered to that view.

The committee added that no ethical rule prevents the lawyer from accepting the commission if he remits it to the client or credits it to the client's account. The distinction the committee drew was thus between the lawyer keeping the payment, which it found improper, and the lawyer passing the benefit through to the client, which it found permissible.

Currency note

This opinion was issued in 1982, under the former Illinois Code of Professional Responsibility and before Illinois adopted the 2010 Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rule (Rule 1.5), while cautioning that the specific standards referenced may differ from the 2010 Rules. 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 Treat this page as historical context, not current guidance.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 keep a title insurer's payment for furnishing back title evidence?

A: The opinion concluded no; retaining the commission violates the fee-reasonableness rule because it is arbitrary and unrelated to the lawyer's time or labor, and it must be disclosed and passed to the client.

Q: Can the lawyer accept the payment at all?

A: Per the opinion, yes, if he remits it to the client or credits it to the client's account; no ethical rule prevents accepting the commission for the client's benefit.

Q: Why is keeping the fee unreasonable?

A: The committee, following Opinion 563, found the commission arbitrary and not based on the factors that determine a proper fee, such as the time and labor required, so the lawyer's retention of it violates Rule 2-106.

Background and rules framework

The opinion applied former Illinois Code Rule 2-106 (a lawyer shall not charge or collect an unreasonable fee), following Opinion 563 and ABA Opinion 304. The Board's 2010 affirmation maps the analysis to current Illinois Rule of Professional Conduct 1.5 (fees), corresponding to ABA Model Rule 1.5, with the receipt of a benefit from a third party connected to the representation addressed by Model Rule 1.8.

Citations and references

Rules of Professional Conduct:

• Illinois Code Rule 2-106 (applied in the opinion)
• Illinois RPC 1.5 (2010 equivalent per the Board's affirmation)
• MR 1.5 (fees must be reasonable); MR 1.8 (a lawyer's receipt of value connected to the representation)

Other opinions cited:

• ISBA Opinion 563: a title insurer's commission must be disclosed to the client and may not be retained by the lawyer
• ABA Opinion 304: ethical treatment of bar-related title insurance arrangements

See also

• ISBA Ethics Op. 841: Title Insurer the Lawyer Co-Owns
• ISBA Ethics Op. 802: Lawyer as Surety on a Client's Bond
• ISBA Ethics Op. 768: In-House Lawyer's Salary as a Fee

Source

• Landing page: https://www.isba.org/ethics/opinions/799