A title insurance company I'm an approved attorney for wants unconditional access to my IOLTA account and client files for its audits. Can I give it that access without asking my clients?

Plain-English summary

The inquiring attorney is an approved attorney for several title insurance companies, which routinely audit approved attorneys' files to check compliance with required procedures. One insurer, First American Title Insurance Company, began requiring unconditional open access to the attorney's IOLTA account and to the files of clients for whom the attorney had obtained First American title insurance. Those files could contain clients' tax returns, social security numbers, driver's licenses, bank loan applications with employment information, bank account numbers, and bank statements; at least one lender required the attorney to keep such non-public customer information confidential under the Gramm-Leach-Bliley Act. The attorney gave First American certain documents but refused unconditional access to client files and IOLTA records, citing obligations under the Rules of Professional Conduct and confidentiality agreements with financial institutions.

The panel applied Rule 1.6, which bars a lawyer from revealing information relating to a client's representation without informed consent, except for disclosures impliedly authorized to carry out the representation or that fall within a specific exception. None of Rule 1.6's exceptions applied to a title insurer's routine audit. The panel drew a line based on implied authorization: by hiring the lawyer to obtain title insurance, a client impliedly authorizes disclosure of the information necessary to secure that title policy, and the lawyer may disclose that information during an audit. But the lawyer has no implied authority to disclose other client information, including information in the IOLTA account records, and information in the trust account relating to clients who are not the subject of the audit must be protected. Absent the client's informed consent, the title insurer's unlimited access to files and IOLTA records is prohibited. The panel expressly declined to address whether disclosing confidential information during an audit waives any attorney-client privilege.

In practice

The opinion holds that a lawyer may disclose to a title insurer, during an audit, the information the client impliedly authorized the lawyer to share in order to obtain the title policy, but may not give the insurer unconditional access to client files or IOLTA account records beyond that scope without the affected clients' informed consent, and must protect IOLTA information relating to clients who are not subjects of the audit.

Common questions

Q: Can I give a title insurance company blanket access to my client files and trust account for its audits?

A: No. The opinion holds that unlimited audit access to a lawyer's client files and IOLTA records, without the express or implied consent of the affected clients, violates Rule 1.6.

Q: Is there anything I can share with the title company without getting separate client consent?

A: Yes. The opinion holds that a client who hires a lawyer to obtain title insurance impliedly authorizes the lawyer to disclose the information necessary to secure that policy, and disclosure of that information during an audit is permissible.

Q: What about IOLTA records for clients who aren't part of the title company's audit?

A: The opinion holds that information in the lawyer's trust account records relating to the representation of clients who are not subjects of the audit must be protected and may not be disclosed as part of it.

Background and rules framework

The opinion applies Rhode Island Rule 1.6 (Confidentiality of Information), which bars a lawyer from revealing information relating to a client's representation absent informed consent, disclosure impliedly authorized to carry out the representation, or a specific listed exception (none of which the panel found applicable here). The panel's implied-authorization analysis distinguishes between information a client necessarily authorizes the lawyer to share to accomplish the specific task the lawyer was hired for (obtaining title insurance) and all other information about the client, which remains protected absent informed consent.

Citations and references

Rules of Professional Conduct:

• MR 1.6(a) (bar on revealing client information absent informed consent or implied authorization)
• MR 1.6(b) (listed exceptions to confidentiality, none applicable here)

Statutes:

• Gramm-Leach-Bliley Act (referenced as the basis of at least one lender's confidentiality requirement for non-public customer information)

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• Alabama Ethics Op. 1998-02: Third party auditing of lawyer's billings, confidentiality problems and interference with representation
• ABA Formal Op. 01-421: Lawyer Under Insurance Company Guidelines

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%202011-05.pdf

Original opinion text

Final

              Rhode Island Supreme Court Ethics Advisory Panel
                    Opinion No. 2011-05 Request No. 991
                          Issued November 10, 2011

FACTS

    The inquiring attorney is an approved attorney for several title insurance

companies. Typically, title insurers will conduct audits of the files of their approved
attorneys to ascertain compliance with required procedures. One company, First American
Title Insurance Company, now requires unconditional open access to the inquiring
attorney's IOLTA account, and to the files of clients for whom the inquiring attorney
applied for and received title insurance from First American Title. The inquiring attorney
states that those files may contain copies of clients' tax returns, social security numbers of
sellers and buyers, drivers' licenses, bank loan applications containing employment
information, bank account numbers, bank statements, and other personal information. At
least one of the financial institutions requires the inquiring attorney to agree to keep non-
public customer information confidential pursuant to the Gramm-Leach-Bliley Act.

   The inquiring attorney has made certain documents available to First American

Title but has refused to give it unconditional access to client files and to his/her IOLTA
account based on his/her obligations under the Rules of Professional Conduct and
confidentiality agreements with financial institutions.

ISSUE PRESENTED

     May an attorney who is an approved attorney for title insurance companies provide

the title companies unconditional access to his/her IOLTA account records, and to files of
clients who obtain title insurance from those title companies?

OPINION

    A title company's unlimited access during routine audits of the inquiring attorney's

client files and of his/her IOLTA account records, without the express or implied consent
of the affected clients, is prohibited by Rule 1.6.
Final Op. 2011-05
Page 2 of 2

REASONING

    Rule 1.6 entitled "Confidentiality of information" is pertinent to this inquiry. The

rule states:

        (a) A lawyer shall not reveal information relating to the representation of a client unless
        the client gives informed consent, except for disclosures that are impliedly authorized in
        order to carry out the representation, and except as stated in paragraph (b).
        (b) A lawyer may reveal such information to the extent the lawyer reasonably believes
        necessary:
        (1) to prevent the client from committing a criminal act that the lawyer believes is likely
        to result in imminent death or substantial bodily harm;
        (2) to establish a claim or defense on behalf of the lawyer in a controversy between the
        lawyer and the client, to establish a defense to a criminal charge or civil claim against
        the lawyer based upon conduct in which the client was involved, or to respond to
        allegations in any proceeding concerning the lawyer's representation of the client;
        (3) to secure legal advice about the lawyer's compliance with these Rules; or
        (4) to comply with other law or a court order.

    Rule 1.6 prohibits a lawyer from revealing any information relating to a client's

representation without consent, unless disclosure is impliedly authorized by the client in
order to carry out the representation, or unless a specific exception to confidentiality
applies. In the instant inquiry the title insurance company's audit requires access to
information relating to the inquiring attorney's representation of real estate clients. None
of the exceptions to Rule 1.6 applies. Therefore, the title insurer's access to the clients'
files must be made with the consent of the clients.

    By hiring a lawyer to obtain title insurance, a client impliedly authorizes the lawyer

to provide the title insurance company with information necessary to obtain a title policy.
As to that information, a lawyer's disclosure during a title company's audit is permissible.
However, the lawyer does not have the client's implied authority to disclose other
information relating to the client, including information contained in the attorney's IOLTA
account records. Disclosure of such other information to the title company may only be
made pursuant to the client's informed consent. Further, information in the inquiring
attorney's trust account records relating to the representation of clients who are not
subjects of the title company's audit must be protected.

    The Panel concludes that a title company's unlimited access during routine audits

of the inquiring attorney's client files and of his/her IOLTA account records, without the
express or implied consent of the affected clients, is prohibited by Rule 1.6. The Panel
offers no opinion about the evidentiary issue of whether disclosure of confidential
information in an audit waives any applicable attorney-client privilege.