Can a South Carolina lawyer take a $125 fee from a mortgage company just to witness the borrowers' signing of loan documents when the company handles the rest of the closing?

Plain-English summary

A mortgage company asked a lawyer to represent it by witnessing borrowers' execution of loan documents for a $125 fee to insure the documents were executed correctly. The company would prepare all closing documents, forward executed documents for recording, and arrange for a clerk of court's employee to perform the title examination and issue a certificate of title. The lawyer asked whether representing the company under these circumstances was ethical.

The committee concluded the arrangement is a potential violation of Rule 5.5(b), which bars a lawyer from assisting a non-member of the bar in activity that constitutes the unauthorized practice of law. It found the lawyer's role would not fall under the exception allowing delegation to supervised paraprofessionals under Rule 5.3, because the lawyer had no control or supervision over the work done by the mortgage company or its agents.

Whether the company's activities constitute the unauthorized practice of law, the committee explained, is a question only the South Carolina Supreme Court can answer, and the court has chosen to decide such questions case by case rather than by comprehensive rule, inviting declaratory actions in its original jurisdiction. The committee, which cannot render legal opinions, recommended lawyers review several cited South Carolina decisions, noted that unauthorized practice is a criminal offense so lawyers may wish to confer with the local solicitor, and suggested contacting the Bar's Unauthorized Practice of Law Committee.

Currency note

This opinion was issued in 1997, 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 Treat this page as historical context, not current guidance.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 lawyer be paid just to witness loan-document signatures at a closing run by a mortgage company?

A: The committee concluded the arrangement is a potential Rule 5.5(b) violation if the mortgage company's handling of the closing constitutes the unauthorized practice of law.

Q: Does the paraprofessional-delegation exception apply?

A: No. The committee found the Rule 5.3 exception for supervised paraprofessionals does not apply because the lawyer would have no control or supervision over the mortgage company or its agents.

Q: Who decides whether the company's activities are unauthorized practice?

A: The committee stated only the South Carolina Supreme Court decides what constitutes unauthorized practice, on a case-by-case basis, and that the committee itself cannot render that legal opinion.

Background and rules framework

The opinion applied Rule 5.5(b) (assisting a non-lawyer in the unauthorized practice of law) and Rule 5.3 (responsibilities regarding nonlawyer assistants, including the supervised-delegation exception), each corresponding to the like-numbered Model Rule. The committee read these against the South Carolina Supreme Court's exclusive authority over the definition of the practice of law.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 5.5(b) / Model Rule 5.5: assisting the unauthorized practice of law.
• South Carolina RPC 5.3 / Model Rule 5.3: responsibilities regarding nonlawyer assistants.

Statutes:

• S.C. Code Ann. § 40-5-10 (1986); S.C. Const. art. V, § 4: Supreme Court regulation of the practice of law.
• S.C. Code Ann. § 40-53-20: unauthorized practice as a criminal offense.

Cases:

• In re Unauthorized Practice of Law Rules Proposed by the South Carolina Bar, 309 S.C. 304, 422 S.E.2d 123 (1992): case-by-case determination of unauthorized practice.
• In re Easter, 275 S.C. 400, 272 S.E.2d 32 (1980).
• State v. Buyers Service Co., 292 S.C. 426, 357 S.E.2d 15 (1987).
• State v. Roberson, 321 S.C. 286, 486 S.E.2d 290 (1996).
• In re Duncan, 83 S.C. 186, 65 S.E. 210 (1909).

See also

• SC Bar Ethics Op. 97-33: Out-of-State Closings
• SC Bar Ethics Op. 97-19: Closing-Fee Inducement

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-97-24/

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 97-24

Lawyer has been contacted by a mortgage company requesting that Lawyer represent the mortgage company by witnessing the borrowers' execution of the loan documents. The mortgage company will prepare all of the necessary closing documents, forward all executed documents for recording and will arrange for an employee of the clerk of court's office to perform the title examination and issue a certificate of title to it. The mortgage company agrees to pay the attorney a fee of $125.00 to insure that the documents are executed correctly by the borrower.

Question:
Is it ethical for Lawyer, under South Carolina law, to represent the mortgage company under these circumstances?

Summary:
Attorney's representation of the mortgage company is a potential violation of Rule of Professional Conduct 5.5(b), if the activities of the mortgage company constitute the unauthorized practice of law.

Opinion:
Rule 407, SCACR, containing RPC 5.5 provides as follows:
(a) Practice law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction, or
(b) Assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law.

Under the facts presented, the mortgage company has requested the attomey to assist it in the closing of a real estate loan, by insuring proper execution and witnessing the signature of the borrower. Attorney's actions will not fall under the exception to Rule 5.5, et seq. which allow an attorney to employ the services of paraprofessionals and delegating functions to them, so long as the lawyer supervises the delegated work and retains responsibility for their work under the provisions of Rule 5.3. Here, the attorney has no control or supervision over work done by the mortgage company or its agents or employees.

The question is whether such activities of the mortgage company constitute the unauthorized practice of the law. The practice of law is regulated in South Carolina solely by the Supreme Court. S.C. Code Ann. Section 40-5-10 (1986), also see SC Const, Art. V, Section 4. The Supreme Court alone determines what is the unauthorized practice of law in this state. In declining to adopt proposed rules governing the unauthorized practice of law in South Carolina the Supreme Court stated, "We commend the subcommittee for it's herculean efforts to define the practice of law. We are convinced, however, that it is neither practical nor wise to attempt a comprehensive definition by way of a set of rules. In fact, we are convinced that the better course is to decide what is and what is not the unauthorized practice of law in the context of actual case and controversy.... Finally, we recognize that other situations will arise which will require this court to determine whether the conduct at issue involves the unauthorized practice of law. We urge any interested individual who becomes aware of such conduct to bring a declaratory action in this court's original jurisdiction to determine the validity of the conduct." IN RE: UNAUTHORIZED PRACTICE OF LAW RULES PROPOSED BY THE SOUTH CAROLINA BAR 309 S.C. 304, 422 S.E.2d 123 (1992). The South Carolina Supreme Court as the sole judge of what constitutes the unauthorized practice of law has decided to determine what is and what is not the unauthorized practice of law on a case by case basis and has invited declaratory judgment actions. While the Ethics Advisory committee cannot render legal opinions it recommends that lawyers review the following cases: In the matter of William Randolph Easter, Respondent 275 S.C. 400, 272 S.E.2d 32 (S.C. 1980) , State of South Carolina v. Buyers Service Company, Inc., 292 S.C. 426, 357 S.E.2d 15 (1987), State v. Roberson 321 S.C. 286, 486 S.E.2d 290 (1996), In re Duncan 83 S.C. 186, 65 S.E. 210 (1909) Since the unauthorized practice of law is a criminal offense, lawyers may want to confer with the local solicitor. See S.C. Code Ann. Section 40-53-20. Lawyers may also wish to contact the Unauthorized Practice of Law Committee of the South Carolina Bar.