86 N.J.L.J. 621
November 7, 1963
Title Insurance Rebates
Disclosure to Client
An attorney inquires whether, without full disclosure to his
client, he may properly retain a percentage or rebate from a title
The comments and opinions on the subject of title insurance rebates to lawyers endorse the policy established in Canon 38 of the Canons of Professional Ethics of the American Bar Association, which reads:
38. Compensation, Commission and Rebates
A lawyer should accept no compensation, commissions, rebates or other advantages from others without the knowledge and consent of his client after full disclosure.
Disclosure and consent are the essential requirements. Disclosure avoids receipt of secret remuneration from a party for whom the attorney is not an agent; consent satisfies the principle of agency that an agent must not put himself in a position that will interfere with his duty to his principal. See Drinker, Legal Ethics 96-97 (1953).
It is the opinion of the Committee that if the attorney obtains the consent of his client after full disclosure, he may ethically keep the rebate. See Ass'n. of the Bar, City of N.Y., Committee on Professional Ethics, Opinions 203 (1931), 637 (1943) and 777 (1953). If, after full disclosure, the client refuses consent, the attorney must credit the amount of the rebate to the client's account or pay it directly to the client, since funds received by the attorney in the service of his client properly belong to the client. City of N.Y., Opinion 155 (1930); Drinker, supra 97.