Could a lawyer issue title abstract opinions as an abstract-company employee or for a title insurer?

Plain-English summary

A lawyer proposed issuing abstract opinions for property buyers or financing banks while employed by an abstract company. Alternatively, the lawyer could advise a title insurance company on whether to issue coverage.

The opinion rejected the abstract-company model. It identified assistance in unauthorized practice under Rule 4-5.5(b), nonlawyer fee splitting under Rule 4-5.4(a), and possible conflicts between the true client receiving the opinion and the employer.

It permitted an independent law practice to accept clients referred by the abstract company if clients paid the lawyer directly and no value was given for referrals. It also permitted employment by a title insurer to produce opinions for that insurer's coverage decisions, with the insurer as client and payer.

Currency note

This 1995 opinion predates Missouri's 2007 amendments to its Rules of Professional Conduct. An official reference note identifies July 1, 2007 amendments to Rules 4-1.9 and 4-1.10. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context and verify current rules before relying on it.

Common questions

Q: Could the abstract company employ the lawyer to serve buyers or banks?

A: The opinion identified unauthorized-practice, fee-sharing, and possible client-employer conflict problems with that model.

Q: Could the company refer clients to an independent practice?

A: Yes, if clients paid the lawyer directly and the company received no value for the referral.

Q: Could the lawyer advise a title insurer as an employee?

A: Yes, where the insurer was the client and paid for the opinions used in its coverage decisions.

Background and rules framework

The opinion applied Missouri Rules 4-5.5(b) and 4-5.4(a) to law practice within a general business corporation and distinguished the insurer-as-client employment arrangement.

Citations and references

Rules of Professional Conduct:

• Missouri Rule 4-5.5(b)
• Missouri Rule 4-5.4(a)

See also

• Missouri Informal Op. 950145: Insurance agent estate referrals
• Missouri Informal Op. 950155: Credit-card referral fees

Source

• Landing page: https://mo-legal-ethics.org/informal-opinion/950066/

Original opinion text

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

QUESTION: Attorney proposes to practice only in the area of abstract opinions. Attorney would like to practice as the employee of the abstract company and provide abstract opinions for individuals purchasing property or banks financing the purchase. Another option would be for Attorney to be employed by a title insurance company and provide opinions for the use of that company in determining whether to issue title insurance. ANSWER: The first arrangement proposed would create a number of problems under the rules. Practicing law in a general business corporation, such as the abstract company, would involve assisting the unauthorized practice of law by the title company in violation of Rule 4–5.5(b) and fee splitting with a non-lawyer in violation of Rule 4–5.4(a). Additionally, the arrangement would involve possible problems with conflicts of interest between Attorney´s true client, the one receiving the abstract opinion, and the abstract company by which Attorney would be employed. If Attorney maintains an independent law practice, the abstract company can refer the clients to Attorney. Attorney may then give abstract opinions to the clients as long as the clients pay Attorney rather than the abstract company and as long as Attorney does not give the abstract company anything of value in exchange for the referral. Attorney may be employed by a title insurance company to provide opinions to that company upon which it would base its decision regarding the issuance of title insurance. In this situation, the client would be the title insurance company and the compensation would come from the client.