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| ATG Advocacy in Action|Supreme Court Testimony: 10-24-08
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 | | Attorneys’ Title Guaranty Fund, Inc.
Testimony to the Illinois Supreme Court Rules Committee:
Modifications to the Rules of Professional Conduct
October 24, 2008 |
Since 1964, Illinois lawyers have been examining title and issuing title insurance as part of their legal representation of clients. Today, there are more than 7500 lawyers registered to issue title insurance in Illinois and ATG lawyers alone have issued more than 2.5 million title policies. Lawyers, working on behalf of real estate clients are the dominant method by which title exam and assurance is conducted in Illinois.
ATG supports the objective of proposals 4-18 and 4-19, but we have serious concerns about the proposed Comment [1] to Rule 1.8 which cites the "sale of title insurance" as an example of a Business Transaction with a Client. The ISBA and IRELA have submitted comments to this committee opining that the comment is unnecessary. They have also pointed out that, of the states that have adopted some form of Rule 1.8, 20 have not opted not to include title insurance as an example of a business transaction with a client.
In Illinois, it is inaccurate to refer to the attorney agent's role in the title conveyancing process as the "sale of title insurance." Where lawyers are providing title assurance as part of their representation of a client, the provision of that service is in fact, the practice of law, and clients should receive all of he protections afforded by the code of professional responsibility as part of that representation.
In Illinois, a lawyer, providing title exam and assurance services on behalf a real estate client cannot merely "sell" title insurance. They are required by the Illinois Title Insurance Act to make a determination of insurability based upon an exam of the public records. And the lawyer is liable for that determination. The title agent is required to review the legal documents, tax records and judgment records affecting parties to real estate transactions and the parcels they wish to convey, and make a determination of the legal impact those documents will have on the marketability of the title and the legal rights of the parties to the transaction. Many of the issues that arise in a title exam require extensive legal training and knowledge. It defies logic that in a state where lawyers play such an integral role in title transfer and assurance, that title insurance would be singled out as an example of a business transaction with a client.
We support the ISBA's proposed language that recognizes, but does not conclusively determine, that services performed by a lawyer that are substantially related to the practice of law, are likely the practice of law, and not a business transaction with a client.
As a practical matter, clients of Illinois attorney title agents are the primary beneficiaries of the present system. A recent study of closing costs nationwide concluded that Illinois ranked among the states having the lowest closing costs in the nation, behind 47 other US markets. So in Illinois, consumers have the benefit of legal counsel in a real estate transaction while enjoying low closing costs.
If Rule 1.8, and accompanying comment [1] is adopted as submitted, it could be argued that a lawyer providing title examination services on behalf of a client would have to recommend that the relationship receive the additional scrutiny of independent counsel. To do so would be impractical. Most lawyers and clients faced with that unnecessary step and expense would choose to find another way to complete the transaction.
However, by adopting the language proposed by the ISBA, this committee has the opportunity to clarify that clients will automatically receive all of the existing benefits of the Rules of Professional Conduct when their lawyer provides title assurance as part of their representation.
[Last update: 12-22-08] |
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