When an attorney is in-house counsel for a mortgage broker and handles all of the broker's real estate closings, who is the client and is there a conflict of interest?

Plain-English summary

The Committee was asked, where an attorney is an employee of a mortgage broker and handles all real estate closings and title insurance for loans brokered by the employer, who the attorney represents and whether there is a conflict of interest among the attorney, the employer, the buyer, seller, owner, or title insurance company.

The opinion explains that a client is one to whom the attorney renders counsel and advice, and that simply retaining or paying the attorney does not by itself create an attorney-client relationship. Because the attorney is in effect in-house counsel for the mortgage broker, the mortgage broker is the client in the real estate transactions; the opinion notes that absent a separate lender the broker may also be the lender, and in any event the broker has an interest in the transaction making it the client for closing purposes.

The opinion concludes that the closing attorney should have a clear understanding of whom he represents, should make sure all parties understand who is and is not his client, and should give the unrepresented parties an opportunity to obtain counsel. Assuming the attorney represents only one party and the others are aware of that, there is no conflict with the other parties. If the attorney acts merely as a scrivener, he must not render legal counsel or advice to any party during the transaction (citing Rule 4.3). Relying on E.O. 147, the opinion adds that it is advisable for the closing attorney to state in writing who his client is so there is no misunderstanding.

In practice

The opinion holds that, under the Mississippi rules as they stood at the time of the opinion, the mortgage broker employer is the closing attorney's client in transactions the broker procures, and a conflict is avoided where the attorney represents only one party, discloses that to the other parties, lets them seek their own counsel, and refrains from giving legal advice to anyone he does not represent. The opinion treats putting the identity of the client in writing as advisable rather than required.

Common questions

Q: If a mortgage broker employs the attorney to handle closings, who is the client?

A: The opinion concludes the mortgage broker (the employer) is the client in the real estate transactions, because the attorney is in effect in-house counsel for the broker and the broker has an interest in the transaction.

Q: Is there a conflict with the buyer, seller, or title company at the closing?

A: The opinion concludes there is no conflict with the other parties as long as the attorney represents only one party and the other parties are made aware of that representation and given an opportunity to obtain their own counsel.

Q: Can the closing attorney give advice to the other parties?

A: If the attorney is acting merely as a scrivener, the opinion concludes he must not render legal counsel or advice to any party during the transaction, citing Rule 4.3 on dealing with unrepresented persons.

Q: Should the attorney put the client's identity in writing?

A: The opinion states it is advisable, following E.O. 147, for the closing attorney to state in writing who his client is so there is no misunderstanding about whom he represents.

Background and rules framework

The opinion addresses identifying the client and avoiding conflicts in a real estate closing (cf. Model Rule 1.7 on conflicts of interest) and applies Mississippi Rule of Professional Conduct 4.3 (dealing with unrepresented persons; cf. Model Rule 4.3) to a closing attorney acting as a scrivener. It relies on the Committee's prior Ethics Opinion 147.

Citations and references

Rules of Professional Conduct (Mississippi; cf. Model Rules):

• MRPC 1.7 (conflict of interest) (cf. Model Rule 1.7)
• MRPC 4.3 (dealing with unrepresented persons) (cf. Model Rule 4.3)

Other opinions cited:

• Mississippi Ethics Opinion 147

See also

• AL Op. 1995-02: In-House Counsel for Finance/Title Company
• AL Op. 1994-01: In-House Counsel for Banking Company Conducting Real Estate
• AL Op. 1989-99: Representing Buyer and Seller in a Real Estate Transaction

Source

• Landing page: https://www.msbar.org/ethics-discipline/ethics-opinions/formal-opinions/248/
• Original PDF: https://www.msbar.org/media/1067/et_op_248-amended.pdf

Original opinion text

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

ETHICS OPINION NO. 248

OF THE MISSISSIPPI BAR

RENDERED April 12, 2001

AMENDED April 06, 2013

CONFLICT OF INTEREST - An attorney employed as in-house counsel by a mortgage broker who closes all real estate transactions brokered by his employer represents the mortgage broker in the transactions.

The Ethics Committee of The Mississippi Bar has been requested to render an opinion on the following facts:

An attorney is an employee of a mortgage broker and handles all real estate closings and title insurance for all loans brokered by his employer.

The questions presented to the Ethics Committee are as follows:

Who does the attorney represent?

Is there a conflict of interest between the attorney, his employer, the buyer, seller, owner or title insurance company?

An attorney's client is one to whom the attorney renders counsel and advice. Retaining the attorney or paying the attorney does not, in and of itself, create an attorney-client relationship. Therefore, in the above situation where the attorney is, in effect, in-house counsel for the mortgage broker, the mortgage broker is the client in the real estate transactions. Since there is no reference in the factual scenario to a lender, it may be presumed that the mortgage broker is also the lender. Even if not, the mortgage broker is the attorney's client for purposes of closing real estate transactions procured by the mortgage broker as the mortgage broker has an interest in the transaction.

The attorney in a real estate closing should have a clear understanding of whom he represents, and should make sure that all parties involved in the transaction understand who is and is not the attorney's client, and give the unrepresented parties an opportunity to obtain counsel. Assuming that the attorney represents only one party, as he should, and that all other parties are made aware of that representation, there is no conflict with the other parties. If an attorney who closes a real estate transaction is merely a scrivener, he must not render legal counsel or advice during the course of the transaction to any party. See Rule 4.3, MRPC.

E.O. 147 held that there was no conflict for an attorney who represented a mortgage company in a loan closing to subsequently represent another party against the mortgage company's customer. The Committee held that since the mortgage company was the client of the attorney, and the mortgage company customer was not, there was no conflict. It is advisable, as stated in the Opinion, that the closing attorney state in writing who is his client so there is no misunderstanding as to whom he represents.