Can a lawyer refer a client to a title company the lawyer has a financial interest in, and still represent the client in the same deal?
NY State Bar Ethics Opinion 891: Referrals to a Lawyer-Owned Title Company
Short answer: A lawyer may refer a client to a title abstract company or title company agent in which the lawyer has a financial interest, but may not also represent the client in the same transaction unless the company performs only ministerial tasks (or, among other conditions, the lawyer passes any commission on to the client where title exceptions are non-negotiable).
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
The committee was asked two questions: whether a lawyer may refer work to a title company in which the lawyer has a financial interest, and whether the lawyer may also represent the client in a transaction where that title company is providing services (paragraphs 1 through 2).
The committee answered by carrying forward a line of opinions decided under the former Code of Professional Responsibility (N.Y. State 595, 621, 738, 752, 753, and 755), holding that their reasoning remains valid under the Rules of Professional Conduct that took effect April 1, 2009. Under N.Y. State 595, a lawyer may refer clients to an abstract company the lawyer has an interest in, and continue to represent the client in the transaction, provided the company performs only ministerial tasks. If the company performs non-ministerial tasks, such as issuing title insurance or recommending it, the resulting personal-interest conflict with the lawyer's duty to the client is non-consentable, so the lawyer cannot both own that role and represent the client in the same deal (paragraphs 3 through 4).
The committee summarized the supporting opinions: N.Y. State 621 distinguished N.Y. State 576, which allowed referral to a title company paying the lawyer a commission only if the lawyer passed the commission to the client and title exceptions were non-negotiable; N.Y. State 738 extended the prohibition to a spouse's financial interest; N.Y. State 752 confirmed the title-company prohibitions survived the adoption of DR 1-106; and N.Y. State 753 reiterated that the lawyer cannot represent buyer, seller, or lender, even with consent, unless the company's work is purely ministerial. The committee added that Rule 5.7 is substantially the same as DR 1-106, so the same reasoning applies (paragraphs 5 through 9).
In practice
The opinion holds that, under New York Rules 1.7, 1.8, and 5.7 as they stood at the time, the dividing line is ministerial versus non-ministerial work by the lawyer-owned title company. Where the company performs only ministerial tasks, the lawyer may refer the client and stay on the transaction; where it performs non-ministerial work like issuing or recommending title insurance, the lawyer's financial interest creates a non-consentable conflict that bars representing the client in that transaction, though the referral itself remains permissible. The committee treated its pre-2009 title-company opinions as still controlling because Rule 5.7 carried forward DR 1-106, and it preserved the narrow N.Y. State 576 path (pass the commission to the client, non-negotiable title exceptions).
Common questions
Q: Can I send my client to a title company I own?
A: Yes, you may refer the client. The question the committee focused on is whether you may also represent the client in the same transaction, which depends on what the company does (paragraphs 1, 4).
Q: Can I represent the client in the same deal where my title company is working?
A: Only if the company performs purely ministerial tasks. If it issues title insurance or recommends it, the conflict is non-consentable and you may not represent the client in that transaction (paragraphs 4, 8).
Q: Does it matter that the financial interest is my spouse's, not mine?
A: No. The committee noted N.Y. State 738 applied the prohibition where the lawyer's spouse holds the financial interest (paragraph 6).
Background and rules framework
The opinion interprets New York Rule 1.7 (personal-interest conflicts), Rule 1.8 (business transactions and lawyer interests), and Rule 5.7 (responsibilities regarding nonlegal services), corresponding to ABA Model Rules 1.7, 1.8, and 5.7. Because Rule 5.7 is substantially the same as the former DR 1-106, the committee held that its earlier title-company opinions (decided under DR 1-106 and DR 5-104(A)) continue to govern.
Citations and references
Rules of Professional Conduct:
- MR 1.7 / NY Rule 1.7: personal-interest conflicts; non-consentable conflicts
- MR 1.8 / NY Rule 1.8: business transactions and lawyer interests
- MR 5.7 / NY Rule 5.7 (formerly DR 1-106): responsibilities regarding nonlegal services
Other opinions cited:
- N.Y. State 595, 621, 738, 752, 753, 755: title-company referral and representation line under the former Code
- N.Y. State 576: commission-paying title company permitted only if commission passed to client and title exceptions non-negotiable
See also
- NY State Bar Ethics Op. 896: Providing Lien-Search Services to Clients
- NY State Bar Ethics Op. 976: A Law Firm's Arrangement With a Nonlegal Service Provider
- NY State Bar Ethics Op. 1101: Linking a Law Website to a Real Estate Brokerage
Source
- Landing page: https://nysba.org/ethics-opinion-891/