Can a closing law firm get a borrower to sign an advance waiver letting the firm later represent the lender against that borrower?

Plain-English summary

A law firm frequently represented a lender and also represented various borrowers in real estate loan closings in which the lender was the lending party, considering its primary obligation to be to the lender. To preserve its ability to represent the lender in later disputes with a borrower, the firm wanted a borrower to sign a document, before closing, consenting to that future representation. The committee was asked about the ethical implications, while noting its policy against opining on specific document provisions.

The committee concluded the approach was permissible within limits. Under Rule 1.2(c), a lawyer may limit the objectives of a representation if the client consents after consultation, so the firm could limit its representation of the borrower to the matters necessary to close the particular loan, with the representation deemed concluded on closing, provided it first consulted the borrower about the purpose, intent, and implications of the limitation, and provided the terms did not themselves violate the Rules. Under Rule 1.9(a), the firm could also obtain the borrower's advance consent to later adverse representation; specifically anticipated potential conflicts could be resolved by such prior consent, but other conflicts might still arise that would require the firm to decline representing the lender absent additional consent. A waiver, the committee stressed, is effective only if there is disclosure of the circumstances, including the lawyer's intended role on behalf of the new client, so the advance consent could not be invoked where an impermissible conflict under the Rules later arose.

Currency note

This opinion was issued in 1993, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 closing firm limit its representation of the borrower to just the closing?

A: Yes. The committee said Rule 1.2(c) lets a lawyer limit the objectives of a representation if the client consents after consultation, so the firm could limit its work to closing the loan, deemed concluded at closing.

Q: Is a borrower's advance consent to future adverse representation valid?

A: For specifically anticipated conflicts, yes under Rule 1.9(a), if the borrower is told the circumstances including the lawyer's intended role for the lender. But other, unanticipated conflicts may still require the firm to decline absent further consent.

Q: When can the advance consent not be used?

A: The committee said it may not be invoked if an impermissible conflict under the Rules subsequently arises; the limitation and waiver themselves must accord with the Rules and other law.

Background and rules framework

The opinion applied Rule 1.2(c) (limiting the scope of representation), Rule 1.9(a) (duties to former clients), and Rule 1.7 (current-client conflicts), which correspond to like-numbered Model Rules. It also referenced the firm's potential dual representation in a single closing.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 1.2(c) / Model Rule 1.2(c): a lawyer may limit the objectives of the representation if the client consents after consultation.
• South Carolina RPC 1.9(a) / Model Rule 1.9(a): a lawyer may represent another adverse to a former client in the same or a substantially related matter only with the former client's consent.
• South Carolina RPC 1.7 / Model Rule 1.7: conflict of interest, current clients.

Other opinions cited:

• SC Bar Advisory Opinions 90-22, 84-24, and 92-03.

See also

• SC Bar Ethics Op. 00-08: Closing a Loan for Both Sides
• SC Bar Ethics Op. 09-07: Who the Closing Lawyer Represents
• SC Bar Ethics Op. 93-19: Suing a Brief Former Client

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-93-23/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 93-23

Law Firm frequently represents Lender in a wide range of matters. Law Firm also represents various Borrowers from time to time in real estate loan closings in which Lender is the lending party. In these transactions, Law Firm considers itself to be representing both Lender and Borrower; however, Law Firm considers its primary obligation to the Lender.

Law Firm is cognizant that potential conflicts may arise which would preclude Law Firm from representing either Lender or Borrower in subsequent disputes that may arise between Lender and Borrower in conjunction with the loan closing transaction; and Law Firm seeks to draft a document that Borrower would execute prior to the loan closing transaction whereby Borrower would consent to Law Firm representing Lender in such potential future disputes if requested by Lender to do so.

Question:
What are the ethical implications of an agreement between Law Firm and Borrower which attempts to obtain Borrower's consent to permit Law Firm to represent Lender in potential future disputes between Lender and Borrower where such representation without the consent of Borrower would be prohibited by the Rules of Professional Conduct?
(Note: This opinion relates to matters set forth in Opinion 90- 22 and opinion 84-24. It is the policy of this Committee to refrain from rendering opinions regarding the drafting of specific provisions in documents.)

Summary:
Law Firm after consultation with Borrower may limit the objectives and scope of its representation to those matters necessary to close the real estate transaction and may obtain the written consent of Borrower prior to the closing to represent Lender in future disputes which may arise between Lender and Borrower. However, an agreement concerning the scope of representation must accord with the Rules of Professional Conduct and other law; and the written consent to permit Law Firm to represent Lender in a subsequent dispute may not be invoked if an impermissible conflict under the Rules subsequently arises.

Opinion:
A conflict does not necessarily exist where one attorney represents the interests of more than one party in a loan closing. However, the potential for a conflict does exist, and attorneys should be wary when undertaking such representation. (See SC Bar Advisory Opinion 92-03).

Rule 1.2(c) provides: "A lawyer may limit the objectives of the representation if the client consents after consultation." In order to preserve a continuing relationship with and loyalty to Lender, Law Firm prior to representing Borrower in a loan transaction may request that Borrower sign a document whereby Law Firm limits the objectives of its representation and Borrower consents to Law Firm representing the Lender in disputes which may arise between Borrower and Lender in the future involving the mortgage loan. Thus, Law Firm may seek to have its representation of Borrower limited only to those matters and items necessary to close a particular loan transaction. Upon completion of the closing such representation is deemed to be concluded. However, before requesting Borrower to sign a document agreeing to such limitation, Law Firm must consult with Borrower regarding the purpose, intent, and implications of its terms. Furthermore, the terms and limitations of representation themselves must not violate the Rules (See Comment, Rule 1.2).

Rule 1.9(a) provides: "A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which the person's interest are materially adverse to the interests of the former client unless the former client consents after consultation." Law Firm further attempts to obtain advance consent by Borrower to any subsequent adverse representation by Law Firm against Borrower. Although specifically anticipated potential conflicts could be resolved by prior consent pursuant to Rule 1.9(a), which would enable Law Firm to ethically represent the Lender, other conflicts may arise which would require Law Firm to decline representation of Lender in future litigations, unless additional consent is obtained from the Borrower. A waiver is effective only if there is disclosure of the circumstances including the lawyer's intended role in behalf of the new client.