If a lawyer also acts as the agent who issues the title insurance policy in a real estate deal, can the lawyer keep the part of the premium that pays for title work the client has already been billed for separately?

Plain-English summary

An attorney active in the real estate field asked the Commission to reconsider Opinion #18, reporting that it had confused members of the bar who issue title insurance policies about what fees a lawyer may charge for issuing the policy and for related functions, separate from the title work the client had already paid for. The inquiring attorney also argued the Commission had erred in saying a "substantial" portion of the premium represents the cost of the title work.

The Commission reviewed Opinion #18 and declined to rescind or amend it except in two respects. It deleted the word "substantial" from the last sentence of the statement of the question, and it amended sub-paragraph (4) of the conclusion to read that the lawyer must give the client full credit for that portion of the title insurance premium which represents compensation for title work for which the lawyer has previously billed the client.

The Commission stated that in all other respects Opinion #18 adequately set out its view: a lawyer who acts as agent for a title insurance company may receive compensation for doing so out of the title insurance premium paid by the client, except that the lawyer must credit the client with the portion of the premium representing compensation for title work for which the client has already been billed, since the lawyer would otherwise be charging twice for the same work.

Currency note

This opinion was issued in 1983, 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 Treat this page as historical context, not current guidance.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 who issues a title insurance policy be paid out of the premium?

A: The opinion concluded yes. A lawyer who acts as agent for a title insurance company may receive compensation for doing so out of the premium the client pays.

Q: What is the limit on that compensation?

A: The opinion concluded the lawyer must credit the client for the portion of the premium that represents title work the lawyer has already billed the client, because keeping both would charge the client twice for the same work.

Q: What did this opinion change about Opinion #18?

A: The opinion deleted the word "substantial" from the statement of the question and rewrote sub-paragraph (4) of the conclusion to require a full credit for the previously billed title work. It left Opinion #18 otherwise in force.

Background and rules framework

The opinion concerns the fee a lawyer may charge when the lawyer also serves as the issuing agent for the title insurance on the same transaction, the subject matter addressed by Model Rule 1.5 (fees) and, because the lawyer occupies a dual commercial role, Model Rule 1.8 (a lawyer's business dealings touching the client's matter). The opinion does not cite a Bar Rule by number; it reasons from the principle that a lawyer may not charge a client twice for the same work, the fee concern reflected in Maine Bar Rule 3.3(a). It is an amendment to and clarification of Opinion #18 rather than a fresh analysis.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 (fees); Model Rule 1.8 (lawyer's business dealings)
• Maine Bar Rule 3.3(a) (fees)

Other opinions cited:

• Maine Professional Ethics Commission Opinion #18 (charges for title insurance), reconsidered and amended

See also

• Maine Ethics Op. 43: Real Estate Purchase Price in Trust
• Maine Ethics Op. 106: Law Firm as Escrow Agent for Both Parties
• Maine Ethics Op. 116: Client Funds Owed to Third Parties

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89671

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: June 2, 1983

Question

The Commission has been requested by an attorney who is active in the real estate field to reconsider Opinion #18. The Commission is advised that that opinion has caused confusion among the members of the bar who issue title insurance policies as to what, if any, fees may be charged for an attorney's services in issuing the title insurance policy and other related functions having nothing to do with the title work for which the attorney has already been paid by his client. The inquiring attorney also asserts that the Commission was in error in asserting that a "substantial" portion of the title insurance premium represents the cost of the title work.

Opinion

The Commission has reviewed Opinion #18 and declines to rescind or amend it except in the following respects:

• The word "substantial" is deleted from the last sentence of the statement of the question.

• Sub-paragraph (4) of the conclusion is amended to read as follows:

The lawyer must give his client a full credit for that portion of the title insurance premium which represents compensation for title work for which he has previously billed his client.

The Commission is satisfied that in all other respects the opinion adequately sets forth the Commission's view that a lawyer who acts as agent for a title insurance company may receive compensation for doing so out of the title insurance premium paid by his client except that he must credit his client with that portion of the premium which represents compensation for title work for which his client has already been billed since he would otherwise be charging twice for the same work.