Can a lawyer put a dollar cap or time limit on the firm's liability in a title opinion to limit malpractice exposure?

Plain-English summary

The Commission was asked whether limiting liability in a real-estate title opinion violates Maine Bar Rule 3.6(b). A typical clause capped the lawyer's liability at a dollar figure (for example, $30,000) and limited it to the time the recipient owned the property. Rule 3.6(b) provides that a lawyer shall not attempt to exonerate himself from, or limit, his liability to a client for his own malpractice or that of his partners or salaried employees, while allowing the lawyer to settle or defend a malpractice claim. The first sentence is identical to DR 6-102(A) of the ABA Code of Professional Responsibility, enlarged upon by EC 6-6, which the Commission quoted: a lawyer who handles a client's affairs properly has no need to limit liability, and one who does not should not be permitted to.

The Commission held that attempting to limit liability for errors in a title opinion falls squarely within Rule 3.6(b) and is plainly prohibited. If allowed, such a disclaimer could leave the client without an effective remedy for damages directly caused by the lawyer's malpractice. The Commission noted that title opinions sometimes attempt to cap liability at the amount of the first mortgage even though the opinion is addressed to the borrower, whose loss could be far greater, particularly if the property has been improved.

The Commission added that neither limits of liability in title insurance policies nor any practice of basing a title-examination fee on liability exposure changes the result. Attorneys are not title insurance companies; their practice is governed by the Maine Bar Rules, and unlike title insurers they are liable only if they fail to exercise due care. While attorneys may base a fee in part on the responsibility assumed, the fact that fees may once have been calculated on an erroneous view of that responsibility is no reason to disregard the plain meaning of Rule 3.6(b). The Commission expressly declined to opine on whether a lawyer rendering a title opinion incurs liability to, or represents, both the bank and the borrower, treating the first as a question of law and pointing to Opinion #12 on the second.

Currency note

This opinion was issued in 1981, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). 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, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer limit malpractice liability in a title opinion?

A: The opinion concluded no. A dollar cap or time limit on liability in a title opinion falls squarely within Rule 3.6(b)'s bar on limiting liability to a client for one's own malpractice.

Q: Does the existence of title insurance limits justify a lawyer's own liability cap?

A: The opinion concluded no. Attorneys are not title insurers; they are liable only for failing to exercise due care, and title-insurance limits do not change the application of Rule 3.6(b).

Q: Can a lawyer charge less for a title opinion in exchange for capping liability?

A: The opinion concluded the fee basis does not matter. A lawyer may base a fee in part on responsibility assumed, but cannot use that to override Rule 3.6(b)'s plain prohibition on limiting malpractice liability.

Background and rules framework

The opinion interprets Maine Bar Rule 3.6(b), which bars a lawyer from exonerating or limiting his liability to a client for his own malpractice or that of partners or salaried employees, while permitting settlement or defense of a malpractice claim. That provision (identical to DR 6-102(A), with EC 6-6 as context) corresponds to Model Rule 1.8(h) (limiting a lawyer's malpractice liability to a client). The analysis is a direct application of the rule's text to a title-opinion disclaimer.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.8(h) (limiting malpractice liability to a client)
• Maine Bar Rule 3.6(b)
• ABA Code of Professional Responsibility DR 6-102(A); EC 6-6

Other opinions cited:

• Maine Professional Ethics Commission Opinion #12 (whether a title-opinion lawyer represents both bank and borrower)

See also

• Maine Ethics Op. 170: Agreement to Arbitrate Future Malpractice
• NYC Bar Op. 1995-7: Prospective Limitations on Liability
• ABA Formal Op. 481: Duty to Inform Client of Material Error

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89527

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: April 2, 1981

Question

The Grievance Commission has been asked whether the practice of limiting liability in opinions on the title to real estate is a violation of Rule 3.6(b) of the Maine Bar Rules. A typical such limitation would be the following: "our liability to you as a consequence of this opinion shall not exceed the amount of $30,000.00. Our liability to you shall not extend beyond the time during which you are the owner of the property in question."

Opinion

Rule 3.6(b) of the Maine Bar Rules provides as follows:

A lawyer shall not attempt to exonerate himself from, or limit, his liability to his client for his personal malpractice or that of his partners or salaried employees. This rule shall not prevent a lawyer from settling or defending a malpractice claim.

The first sentence of the rule is identical to DR 6-102(A) of the ABA Code of Professional Responsibility. The former canons of ethics apparently contained no counterpart. Ethical consideration 6-6 of the ABA Code of Professional Responsibility enlarged somewhat upon DR 6-102(A) as follows:

A lawyer should not seek, by contract or other means, to limit his individual liability to his client for malpractice. The lawyer who handles the affairs of his client properly has no need to attempt to limit his liability for his professional activities and one who does not handle the affairs of his client properly should not be permitted to do so.

The practice of attempting to limit liability for errors in a title opinion falls squarely within the language of Rule 3.6(b) and is plainly prohibited by it. If allowed, the practice described in the question could leave the client without any effective remedy for damages directly caused by the malpractice of the lawyer. For example, title opinions containing such a disclaimer sometimes attempt to limit liability to the amount of the first mortgage, even though the opinion is directed to the borrower. Obviously, the client-borrower's loss could be much greater, particularly if the property has been improved. The loss of the client-bank may also exceed the original principal amount of the mortgage, although this would not ordinarily be the case.

Neither limitations of liability in policies of title insurance nor the practice, if it exists, of basing the fee for a title examination on exposure to liability, alter this result. Attorneys are not title insurance companies; the practice of their profession is subject to the Maine Bar Rules. Unlike title insurance companies, attorneys are subject to liability only if they fail to exercise due care. Attorneys may, of course, base the amount of their fee in part upon the responsibility assumed. Because attorney's fees may in the past have been calculated upon the basis of an erroneous legal conclusion about the extent of that responsibility is, however, no reason to disregard the plain meaning of Rule 3.6(b).

We do not mean to intimate that an attorney rendering a title opinion necessarily incurs liability to or represents both the bank and the borrower. The former is a question of law on which this Commission does not undertake to express any opinion. As to the latter, see Opinion #12.