Ezel / Ethics Opinions / NYSBA
NYSBA April 16, 2001

Can a lawyer refer real estate clients to a title abstract company in which the lawyer's spouse has an ownership interest?

Short answer: The opinion concluded that a lawyer may not refer a real estate client to a title abstract company owned in whole or part by the lawyer's spouse for anything beyond purely ministerial abstract work; where the company prepares or procures a title report or policy, the conflict is a per se bar that client consent cannot cure.

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This page answers the general question as of 2001. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2001
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The question was whether a lawyer who represents real estate clients may refer them to a title abstract company in which the lawyer's spouse holds an ownership interest. The committee answered by extending its earlier opinions on lawyer-owned abstract companies to the spousal situation.

In N.Y. State 595 (1988) and N.Y. State 621 (1990), the committee had permitted a law firm to refer real estate clients to an abstract company the firm owned for "purely ministerial abstract work" with advance informed consent, but held that when the company prepared a title report or acted as agent for the title underwriter, a non-curable conflict arose. The committee explained that the dual roles would require the lawyer, as a principal in the abstract company, to negotiate title exceptions and insurability "with itself" while representing a party in the transaction; a disinterested lawyer would believe that conflict adversely affects the representation, so the 1999 "disinterested lawyer" standard in DR 5-101(A) does not change the result.

The committee held the same per se result applies when the spouse, rather than the lawyer, owns the abstract company. It relied on a long line of opinions treating a spouse's financial interest as inseparable from the lawyer's, including N.Y. State 244 (1972) and N.Y. State 340 (1974) (lawyer may not represent a party where the spouse acted as broker or salesperson) and N.Y. State 654 (1993) (district attorney could not oppose a defendant represented by the DA's spouse). Accordingly, a spouse's ownership does not insulate the lawyer from the bar of N.Y. State 595 and 621; the lawyer may make a referral only for purely ministerial title work.

Currency note

This opinion was issued in 2001, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 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 refer a client to a title abstract company the lawyer's spouse owns?

A: The opinion concluded only for purely ministerial abstract work. If the company prepares or procures a title report or policy, the referral is barred per se and client consent cannot cure it.

Q: Why doesn't informed consent fix the conflict?

A: The opinion concluded that a disinterested lawyer would believe the conflict adversely affects the representation, because the lawyer would in effect negotiate title issues with the lawyer's own family business; DR 5-101(A)'s consent route is unavailable when that standard is not met.

Q: Does it matter that the spouse, not the lawyer, owns the company?

A: No. The committee treated a spouse's financial interest as inseparable from the lawyer's and reached the same per se result as when the lawyer owns the company.

Background and rules framework

The opinion interpreted DR 5-101(A) (personal-interest conflicts and the "disinterested lawyer" test as amended in 1999) and DR 5-105(C) (consent to multiple-client conflicts) of New York's former Code of Professional Responsibility. The Model Rule analogue is Rule 1.7 (concurrent conflicts of interest, including personal-interest conflicts and the limits of client consent). New York replaced the Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

  • MR 1.7 (concurrent conflicts of interest)
  • NY DR 5-101(A); DR 5-105(C)

Other opinions cited:

  • N.Y. State 595 (1988) and N.Y. State 621 (1990): lawyer-owned abstract company; ministerial work only
  • N.Y. State 244 (1972) and N.Y. State 340 (1974): spouse as broker or salesperson; per se bar
  • N.Y. State 654 (1993): spousal conflict in a criminal matter

See also

Source

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