In-house counsel for finance/title company may not remit attorney fees to company as such constitutes division of fees with nonlawyer

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In-house counsel for finance/title company may not remit attorney fees to company as such constitutes division of fees with nonlawyer


“Pursuant to our telephone conversation of this date, I am submitting the following situation for a legal opinion from the Alabama State Bar regarding professional responsibility issues. Acme Title Company, Inc., is a Settlement/Closing Agent of, inter alia, residential real estate loans. It is the wholly owned subsidiary of Acme Money, Inc. Acme Money, Inc. is the wholly owned subsidiary of Acme Financial Corporation, as is Acme Bank. Acme Title Company would like to close loans for Acme Bank. Among the forms that Acme Bank requires to be executed at a closing is the enclosed ‘Acknowledgement of Attorney’s Representation.’ Very simply put my query is:

Considering this form, would the staff attorney for Acme Title Company, Inc.
be construed as allowing Acme Title Company to profit from the practice of
law by representing Acme Bank in a loan closing?

I submit this query to you in light of the Alabama State Bar opinion to Acme Title Company of January 1994, part of which regards a corporation being prohibited from profiting from the practice of law. It is my understanding that since both Acme Bank and Acme Title Company, Inc. come under the umbrella of Acme Financial Corporation, the Acme Title attorney would be construed as ‘in-house’ counsel and therefore be conducting ministerial functions. Performing such ministerial functions would preclude Acme Title
Company from charging ‘Attorney’s fees’ but would not prevent it from charging a settlement fee. With this query, I am hereby requesting a formal opinion from the Alabama State Bar.”

* * *


This is to acknowledge that ___________________ represents Acme Bank in connection with the loan transaction made with Acme Bank this day. I/we acknowledge that the attorney represents Acme Bank even though the cost, including attorney fees, of this transaction are paid by me/us. I/we further acknowledge that I/we could have retained an attorney to represent me/us, but I/we have chosen not to
retain counsel.

___________ ___________________
Date Borrower



The earlier Disciplinary Commission opinion to which you make reference is RO-94-01. In that opinion, the following statement was made:

“If ATC charges for the preparation of legal documents to be used at a real estate closing,
two problems arise. First of all, ATC is engaging in the unauthorized practice of law
because in-house counsel are employees of the corporation (ATC) and it is the entity which
is charging and collecting for legal work traditionally handled by private lawyers and
law firms. Similarly, the lawyers doing the work are splitting legal fees with an entity
not organized for the practice of law. This violates Rule 5.4(a).”

You make the point that “in-house counsel” for Acme Title because of their job description or classification are only performing “ministerial” functions. That is not a correct analysis. An attorney who is providing legal services to others as enumerated in Title 34-3-6 is engaging in the practice of law. It does not matter whether or not he is acting at the direction of another, such as an employer. The Disciplinary Commission does not believe that you can escape Rule 5.4(a) by calling fees charged for legal work associated with a financial real estate transactions “settlement fees” rather than “attorney’s fees”.

The “Acknowledgement” you have submitted adds nothing to this particular analysis one way or the other.

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