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                                         111 N.J.L.J. 392
                                        April 14, 1983

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 513

Conflict of Interest
Attorney-Shareholder of
Title Insurance Company

    The inquiry here is whether, on the facts presented below, an attorney who owns a minority stock interest in a local title abstract company is precluded by Opinion 495, 109 N.J.L.J. 329 (1982), from obtaining for a client title insurance from a nationally known underwriter which owns a majority interest in the same abstract company.
    The facts presented here indicate that the local company acts as an agent of the underwriter and is authorized to issue title binders and policies. The local company is managed by its president, an attorney employed full-time by it. The local company's officers are independently staffed and independently operated. The attorney-shareholder utilizes the company for the benefit of real estate purchaser clients (and that purchaser's mortgage lender) in the same manner as would other attorneys who have no stock interest. Pecuniary benefits to the attorney shareholder are limited to dividends which may be declared by the company. The attorney-shareholder, prior to using the company's services, offers full disclosure to his clients as well as the option of obtaining title insurance elsewhere.

    Opinion 495, supra, considered the guidelines set down by this Committee, the Disciplinary Rules, and the decisions of the Supreme Court in similar situations. It held that the facts relevant there presented a potential conflict so fraught with the danger of creating an appearance of impropriety that it could not be cured by consent of the parties.
    We believe that the circumstances posited here are disting uishable from those set forth in Opinion 495, supra. The degree of independence between the attorney and the local company, as well as the attenuated relationships - attorney-shareholder with local company as opposed to any direct relationship with the national underwriter - make it unlikely that a perception of impropriety would be generated. Thus, although there is present a possible conflict, we hold that it may be cured by full disclosure, consent of the clients and adequate advice to the clients of the option and opportunity to purchase title insurance from an alternate source.

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