Link to original WordPerfect Document

                                         89 N.J.L.J. 689
                                        October 27, 1966


Appointed by the New Jersey Supreme Court


Division of Fees
Mortgage Company

    An attorney, engaged in private practice, inquires as follows:

            I forwarded to you my inquiry as to whether an attorney may represent a mortgage company in the closing of its mortgage loans under a situation where on the closing of the loans an amount of approximately $300 is charged to the borrower under the heading Examination of Title. Of this amount, a specify sum in each case, approximately $75, is retained by the attorney and the balance of this sum is forwarded to the mortgage company. The attorney does not actually search the title or examine the title but he receives through the mortgage company's offices a title binder from a title insurance company. In addition, the client is charged a premium for title insurance at the standard rates and the commissions, whatever they may be, accrue to the benefit of the mortgage company.

            The factual situation giving rise to this question is that I have been approached by a mortgage company to represent it in closing its loans on this basis. The mortgage company would provide the title binder through a title insurance company and my responsibility as closing attorney would be to prepare the necessary documents, see that they are properly executed, attend and supervise the closing and see that the documents are properly recorded. The fee which I have above referred to as Examination of Title is what I would normally consider to be called the fee for legal services. And the term for examination of title is mine not one which has been stressed by the mortgage company.

The applicable principle is clearly enunciated in Drinker, Legal

Ethics 180 (1953):

            A lawyer may properly accept employment, on a stated salary or any other agreed basis, from a collection agency, accountant, or other layman to advise and assist the layman in any activity in which the layman may lawfully engage; but when a lawyer is employed by a layman to perform legal services for the layman's client, the charge therefor by the lawyer must be fixed by the lawyer and be paid by the client, the layman acting as the client's agent in employing the lawyer. In such cases, even where a layman's client authorizes him to employ a lawyer, the lawyer's charges may not be paid by the layman as a proportion of the layman's fee. The lawyer may not be employed by the layman on a salary basis to perform services for such clients; otherwise the layman would be exploiting his legal services and practicing law. The layman may not determine the amount of the lawyer's charges for legal services to the patron.