If a borrower pays the lender's lawyer's fee, does that lawyer have to correct the borrower's belief that the lawyer represents the borrower too?

Plain-English summary

A credit union required home buyers to pay a $400 fee for the legal services of Lawyer D, who represented the credit union, as a condition of processing the loan. The loan documents showed the buyer was paying for the lawyer's services but did not state that Lawyer D did not represent the buyer, and the buyer believed Lawyer D would represent the buyer's interests too.

The opinion concluded that the arrangement is permissible: Lawyer D was not retained by the buyer and did not owe the buyer the duties a lawyer owes a client. But it held that when a buyer pays the lawyer's fee, the buyer might reasonably believe the lawyer represents the buyer, even knowing the lawyer represents the credit union. Under Rule 4.3, the opinion reasoned, the lawyer may not state or imply that the lawyer is disinterested, and must make reasonable efforts to correct the misunderstanding when the lawyer knows or reasonably should know the unrepresented person misunderstands the lawyer's role.

The opinion explained that the duty to correct arises either when the lawyer reasonably should know a person might have the misimpression (an objective test) or when the lawyer actually realizes the misimpression exists, even if it is unreasonable. It noted that prior Opinions 86-11, 88-03, and 93-14, while not directly applicable because nothing indicated Lawyer D caused the misunderstanding, illustrate the caution lawyers must exercise toward a non-client's misimpression about the lawyer's role.

Currency note

This opinion was issued in 1999, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rules (referring to Rule 4.3), while noting 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 Treat this page as historical context, not current guidance.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: Is it improper for a borrower to pay the lender's lawyer's fee?

A: No. The opinion concluded the arrangement is permissible, and the lawyer does not owe the borrower the duties a lawyer ordinarily owes a client because the borrower has not retained the lawyer.

Q: When must the lawyer correct the borrower's belief about whom the lawyer represents?

A: Under Rule 4.3, when the lawyer knows or reasonably should know the unrepresented borrower misunderstands the lawyer's role. The opinion held the lawyer must then make reasonable efforts to correct the misunderstanding and may not imply the lawyer is disinterested.

Q: Does it matter whether the borrower's belief is reasonable?

A: The opinion said the duty applies either way: if the lawyer reasonably should know a person might have the misimpression, or if the lawyer actually realizes it exists, even if the belief is unreasonable.

Background and rules framework

The opinion interpreted Illinois Rule 4.3 (dealing with an unrepresented person; Model Rule 4.3), which bars a lawyer from implying disinterest and requires reasonable efforts to correct an unrepresented person's misunderstanding of the lawyer's role. It referenced prior Opinions 86-11, 88-03, and 93-14 on advising or appearing disinterested to unrepresented parties.

Citations and references

Rules of Professional Conduct:

• Model Rule 4.3 (dealing with unrepresented persons) / Illinois Rule 4.3

Other opinions cited:

• ISBA Advisory Opinions Nos. 86-11, 88-03, 93-14: a lawyer may not advise or appear disinterested to an unrepresented party

See also

• ISBA Ethics Op. 99-03: Soliciting an Already-Represented Borrower
• ISBA Ethics Op. 98-06: One Spouse in Divorce, Both Spouses in Bankruptcy

Source

• Landing page: https://www.isba.org/ethics/opinions/9907