125 N.J.L.J. 894
April 5, 1990
Conflict of Interest: Law Firm
Employing Services of Title Insurance
Agency Owned by an Associate of the Firm
This inquiry relates to a New Jersey lawyer who is also a
licensed title insurance agent and the owner of a title insurance
agency. He has been asked to join a law firm as an associate to do
work in areas unrelated to real estate. However, it appears that
other members of the firm will utilize the services of his title
insurance agency. It is asserted that they "... would disclose to
their real estate clients the associate's relationship to the title
Inquirer argues that since he will have no involvement in real estate matters and will have no equity interest in the law firm, these facts are distinguishable from, and not governed by this Committee's Opinions 495, 109 N.J.L.J. 329 (1982) and 612, 121 N.J.L.J. 1010 (1988).
In Opinion 495, supra, l09 N.J.L.J. 329, it was held that an attorney could not represent purchasers of real estate and the mortgage lender where he also held a beneficial interest in a title insurance agency. This Committee stated that "[t]he situation presented is basically contrary to the professional standards required and inherently creative of an appearance of impropriety such that it cannot be permitted even if disclosure is made to all parties."
Opinion 612, supra, 121 N.J.L.J. 1010, reached the same conclusion where the several members of two law firms sought to purchase stock interests in a local title abstract company which was an agent for a national underwriter which would later be used to service purchasers and/or mortgage lenders who they would represent. The inherent conflict existing between a lawyer representing a purchaser - or a mortgage lender - and a title company was fully explored in both those opinions and, because of the continuing requirement of fidelity to each interest, the proposed practice was disapproved.
The facts and circumstances posited in Opinion 513, 111 N.J.L.J. 392 (1983) make it distinguishable from Opinion 495, supra, 109 N.J.L.J. 329. In Opinion 513, 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 - made it unlikely that a perception of impropriety would be generated. Therefore, although there was the possibility of a conflict, it could be cured by consent of the clients upon full disclosure. Such is not the case here.
It is the holding of this Committee, as set forth in Opinion 495, supra, 109 N.J.L.J. 329, that the proposed activity posited by inquirer is proscribed by reason of the inherent potential for conflict which tends to create uneasiness and suspicion in the minds of all parties to these transactions. RPC 1.7(c)(1); RPC 1.8.
Finally, inquirer suggests that a difference exists because the attorney is only an associate without an equity interest in the law firm, and that he will do no real estate work and be shielded from any "conflict." We do not believe any solace can be taken from those facts based upon RPC 1.10(a), which provides that no lawyer associated with a firm may knowingly represent a client when any one of them would be prohibited from so acting.