FEE ATTORNEYS AND ETHICAL CONSIDERATIONS. JOHN F. ROTHERMEL, III Stewart Title Guaranty Company Vice President & Texas Underwriting Counsel

Transcription

1 FEE ATTORNEYS AND ETHICAL CONSIDERATIONS JOHN F. ROTHERMEL, III Stewart Title Guaranty Company Vice President & Texas Underwriting Counsel ADVANCED REAL ESTATE DRAFTING COURSE February 11-12, 1999 Austin, Texas O

2 Fee Attorneys and Ethical Considerations O-i Table of Contents Ethics in the title insurance industry... 1 Daily Life... 1 Contract History... 1 Moral v. Legal Standards... 1 Contracts as Relationships... 2 Efficient Breach Theory... 3 The Attorney s Dilemma... 3 Escrow Agent Ethics... 3 Maintaining Protected Status... 4 Fee Attorneys... 4 Examination of title... 4 Closing the transaction is defined... 4 An escrow officer is defined... 5 Ethics of Multiple Representation... 7 Conclusion FORM: T-00 Verification of Services Rendered... 8 An Example of a P-22 to letter to a title company... 9

3 Fee Attorneys and Ethical Considerations O-1 FEE ATTORNEYS AND ETHICAL CONSIDERATIONS John F. Rothermel, III Stewart Title Guaranty Company Vice President & Texas Underwriting Counsel This talk is based in part on a seminar produced by the Maguire Center for Ethics at Southern Methodist University in February, It is based in part on the author s 20+ years experience in the Texas title insurance industry. Finally, the author acknowledges the invaluable assistance of Bert M. Massey, Massey, Shaw & West, Brownwood Texas and D. Diane Dillard of Dillard, LeBarron & Brashier, L.L.P., Houston both of whom have presented papers on this topic to the Texas Land Title Institute. Ethics in the title insurance industry: Title insurance in Texas is part of the most highly regulated insurance business in the United States. Title insurance has been regulated since the 1920s. The Texas Insurance Department promul-gates all rates, rules and forms. Each title insurance company and title insurance agency and each escrow officer receives a license from the insurance department. The license is based, in part, on the understanding that the companies and escrow officers will follow the rules. The Legislature has given enforcement powers to the Insurance Department to insure that the laws and the rules and regulations are followed. Daily Life: You are in your office. Refinance transactions are eating up your time; keeping you from more productive work. You would like to turn all of the requests away but don t want to offend your lender clients. It comes to you that an alternative would be to simply refuse to give the R-8 credit. The borrowers don t know it s available anyway. The lender won t care. Everyone gets better service and you get paid. Question: Is your decision ethical? To answer that question, we need first to examine the way contracts and ethics came into being. Contract History Recently, the law has changed from enforcing agreements to requiring payment for breach of agreements. Originally, our legal system and our thoughts were that a person, who entered into a contract, voluntarily and knowingly, was bound to honor the contract. The courts or the regulatory body would then hold him to fulfilling it. Now, it seems that the law has swung to the theory that rather than enforcing a contract, the court should simply arbitrate the amount of damages (in the TDI case, the amount of penalty) the offending party should pay. The concept of contracts and then regulation arose from the practices of trading. A trade occurs when A says to B, I ll give you my cow for 8 of your chickens. But, a trade isn't a contract. A contract requires a future action. I ll give you a cow today, if you ll give me 8 chickens in 6 weeks. In our case, we say, If you will pay me the premium today, I ll insure you for the life of the loan that your lien is good or for your ownership of the land that your title is good. When voluntary agreements for future actions (read: contracts) became common, thoughts about these agreements led to social contract theory. The social contract theory states that each person gives up some of his freedom to do anything he wants in return for every other person s similar agreement. In our case, we have given up our rights to charge whatever we want for our services for the security of a standard set of rates, rules and forms. Moral v. Legal Standards Why is there a moral obligation to perform? Why should the law seek to enforce these promises? Here are some examples: Wayfaring seaman-- fell ill, father promised to pay for expenses, reneged. Is father liable? Held, no. Expenses were incurred with no expectation of payment. So, no consideration for the promise. Maybe a moral duty, but not a legal one. Other realm -- God said to fulfill contracts. Islamic law says this. Religious basis not found in Christian faith. Jewish tradition is that God makes a promise but expects action in return. Landowner--hired workers at different times; then paid them the same. Jesus take: first will be last and the last first. Law: contract was honored by the landowner. Why is a promise a legal issue? In the 1700 s, political thinkers devised the social contract theory to explain that each person gives up a portion of their individual freedom in order live in peace and harmony with his neighbor. And, that the government has only the powers given to it to enforce the peace and harmony of its people. Thus, the Social Contract says that society has right to enforce contracts to keep the

4 O-2 Advanced Real Estate Drafting Course peace. Law may not impose same result as religious Including no duty to tell the truth. Doesn t this ethics. But, it is important in real life to be able to opinion run counter to your common sense? predict outcome of similar situations. Yet, there is some basis for this type of decision. Many current scholars of ethics contend contract Both sides know that each will withhold information negotiations should not be done in an adversarial way. such as their walk away price. But, is there a place These scholars believe both sides to a contract have where parties can trust each other? If both know the obligation if not a duty to fairly explain their side you're lying, is it lying? Wasn t this the argument and to point out the weaknesses in the other side s used by so many builders for lying on bills paid position. In this context, the attorney would no longer affidavits? Only with the change in the law in the be responsible for his client s partisan interests and 1997 legislature did lying on an affidavit become a would be accountable morally for both the means and separate offense, one subject to a $4000 fine and time the ends of the contract as well as its being legal. The in jail with no community supervision. In other words, other side of this argument is that the parties are the Legislature changed the equation: The title responsible for making their own deals. No one else company has the right to think the builder won t lie. should be responsible for making them. This debate So, if the information isn t true, it is a lie. is much like that between the liberals and the True but misleading statements are O.K. if the conservatives in politics and economics. other side has no right to have that information. In the context of the title industry question first Exaggeration is O.K. unless a reasonably posed, is it the responsibility of the title company to knowledgeable person wouldn t know it wasn't true. give a credit because the rule is there? Or, is it the responsibility of the customer to find out what the Contracts as Relationships rules are? In an adversarial system, the inclination If aim of a contract is to create a relationship, no is to say that unless the customer requests a credit, the company shouldn t give one. On the other hand, the generally accepted position in a regulated industry such as the Texas title insurance industry is that if a credit is available, then it should be given. A licensee of the state has a public trust. We are given the opportunity to make money within a system designed to provide a reasonable, if small, profit. Few other businesses operate with the assurance that a profit is possible, even if not everyone will make one. Thus, the public has the right to expect that the title company will make available every credit to which a person is entitled. Cases of ethics sometimes run counter to our sense of morality. What may be proven ethical at the lies should be allowed. A contract is the start of a relationship, not the end. While so true in the case of the title insurance transaction, this statement is not as true in the case of the real estate contract. In the typical real estate deal, the seller has property and wants money. The buyer has money and wants the property. After the contract is closed and the seller has the money and the buyer has the land, the relationship is pretty much at an end. Contrast this with the title insurance contract. The buyer has money and wants the property. After the contract is closed and the seller has the money and the buyer has the land, the relationship between the buyer/insured and the title company has really just begun. Both parties have the right to believe that the courthouse, may appear to be silly, even offensive, contract was closed according to its terms. Both outside the legal arena. For example, let s say you are negotiating a sale, a new partner or investor. The new investor asks for information your company. You ask for financial information about him. The information you receive from your investor s attorney is wrong. You make the deal. Some months later the deal goes south. You find out that when your investor gave the information to his attorney, the attorney knew from other situations that the information was false. He gave it to your anyway. Can you sue the attorney? Using common sense, the answer might well be parties have the right to know that the money each spent went where it was directed to go. Additionally, the buyer -- now the insured has a long-term relationship with the title insurer whose policy was issued. Long term because the policy is good for as long as the buyer or his heirs own the property or are liable under warranties after sale. The coverage could last for 100 years! All for a one time premium, as low as a fraction of 1% of the sales price. All in all, title insurance is a good deal. We exist because we work to reduce or eliminate risk, and yes. The attorney knowingly provided false spread the remaining risk across many policies. If the information that misleads you into making a bad business deal. However, at least one court has held to the contrary. In the case of Shatz v. Rosenberg the buyer s title is challenged, the title insurer will provide a defense and ultimately pay the insured s loss if loss is proven. court held that an attorney has no duty to other side. Efficient Breach Theory

5 Fee Attorneys and Ethical Considerations O-3 Should courts attempt to make moral decisions it a fatal conflict? Is there a way to solve the conflict? about why the person breached the contract? Efficient Has the State Bar of Texas addressed this question? breach is not favored by people who believe that The answers to these questions are: yes, no, yes, yes. contracts have a moral underpinning. Efficient breach Any time an attorney represents both sides to a is as the person breaching the contract doing so deal he has a potential conflict of interest. Remember, deliberately as long as the damages of the aggrieved an attorney has a duty to his client to protect the are paid and the breacher makes more money. Title client s interest. He has no duty to disclose to the insurance example: A very large, very regular other side anything. We already reviewed that case customer comes to you. Customer is putting together above. But, when he has a duty to both sides, a a deal to sell a part of a larger tract you closed and conflict is potentially there. Add to this mix the fact insured within the past 2 years. To make the deal with that the attorney will also prepare the loan documents. his buyer, he needs to bring the price of the land down Now he has a duty to three parties. And, by owning by $25,000. He wants you to give him a $25,000 the title company and examining the title, he has 4 owner policy credit. Of course, Texas has no Owner clients all interested in the same transaction and each Policy reissue rate. You will make $500,000 in expecting their rights to be protected. premiums on this deal. You made $350,000 in The conflict is not fatal because the State Bar has premiums on the other deal. You know that if this approved a method by which the conflict can be deal comes to the attention of the Texas Insurance handled. The Bar s position is: (i) so long as the Department, you will likely be fined $25,000. Do you attorney recognizes the conflict(s); (ii) discloses them give the credit? to all parties in writing; and (iii) gives the parties the If you follow the theory of the efficient breach, opportunity to object to the conflict, then the conflict, you would never look back. Of course you give the while still there, is mitigated. Among the things the credit. You might spend $50,000 to make $450,000. attorney must disclose are: (i) who he represents, (ii) You already made $350,00. Who loses? The what the potential is for conflict, (iii) how potential customer makes his deal, and makes his money. The conflicts will be communicated to the parties, (iv) buyer gets the property at his price. You get plenty when the attorney will have to withdraw from enough money. No other title company had a real shot representing which parties, (v) a commitment to the at the business. Who can be hurt? parties to provide full information necessary for the I submit to you that everyone is hurt. The public party to make informed decisions and (vi) states that is hurt because the parties and you will have abused the attorney believes that multiple party representation the public trust given to you by your license. The can effectively be given. (See Ethics Opinion 408 of public is hurt because the integrity of the entire rate the State Bar of Texas, and Ethics Rules ) making system is called into question. The competition is hurt because they follow the rules and will never have a chance at this business. Ultimately, Escrow Agent Ethics Another matter with ethical considerations is the your reputation with the regulatory body is hurt duty of the escrow agent. Texas law is clear that an because you voluntarily violated a known rule. escrow agent acting in the capacity of an innocent All agreements are not promises. But, the stakeholder is relieved of liability for not taking sides. moralist theory is that all contracts are promises. In fact to maintain such status, the escrow agent must Efficient breach theory is that no contracts are carefully and scrupulously avoid taking sides. It s promises. Both positions are probably wrong. A special relationship can be created, thus even better to avoid the appearance of taking sides. Examples of not taking sides are: creating a trust to which a moral liability can attach. This is the situation in the regulated title business. Because of our special relationship with the state and 1. paying escrow money only under written instructions with the public because of our licensing, we are given a position of trust. Knowingly violating the rules is a 2. telling the seller about an nsf check from the buyer violation of that trust. 3. depositing the earnest money 4. obtaining and recording proper documents The Attorney s Dilemma 5. not telling seller that buyer had complied Some situations have built in ethical dilemmas. In many places, an attorney is asked to draw a real estate contract. The same attorney also draws papers with contract terms when knowing he had not done so. for the bank. He also owns the title company and will examine title. Does he have a conflict of interest? Is Texas law is also clear that when the escrow agent is following instructions he is protected from

6 O-4 Advanced Real Estate Drafting Course attack by the parties. For example, the title company Title insurance is composed of 4 distinct parts. is not responsible for telling the buyer the names of all Search of the title. Examination of title. Closing the previous owners of the property. The title company, transaction. Policy issuance and claims handling. in a title insurance transaction, is not an abstractor. Attorneys, by virtue of their license to practice law can The title company is a title insurance agent. provide the legal services necessary to examine title Another example is that the title company has no and close transactions. An attorney who accepts the duty to discover or disclose title defects. If a defect is responsibility for taking on these functions can be paid missed, the duty of a title insurance agent and the a legal fee for doing so. insurer is to defend title and to pay damage if title cannot be successfully defended. The measure of Examination of title is defined (in Art damage available to the insured is much, much less than an abstractor s liability for failing to disclose all possible defects. A final warning. The title insurance company is not liable to the insured for the escrow officer s breach Insurance Code) (m) as "Title Examination" means the search and examination of a title to determine the conditions of the title to be insured and to evaluate the risk to be undertaken in the issuance of a title insurance policy or other title insurance form. of the escrow agreement. Texas law distinguishes between the title company s actions as a title insurance agent for a title insurer and the title company s independent escrow business. The insurer is neither responsible for nor liable for the title company s actions outside the title insurance contract. Maintaining Protected Status To maintain the protected status as an innocent stakeholder, the title company and its escrow officers should insist on written closing instructions. Any money to be held post-closing should be held only under a written escrow agreement. Money should not spent unless both seller and buyer agree in writing as to how. (contrast this with paragraph 18 of the TREC contract form giving some form of limited protection to the escrow agent.) The escrow officer should not give legal advice or interpret documents. The escrow officer should not take sides in any dispute among the parties. The escrow officer should freely provide information to both parties as to the status of the contract and compliance with it. Maintaining status as an innocent stakeholder means that if the parties can t agree what to do with escrowed money, the title company can interplead the money and receive its court costs and attorney s fees out of the escrowed money. Failure to properly follow escrow instructions can lead to the horrific situation where the title company is accused of taking sides and perhaps even causing damages. In the worst case, the title company could even be held liable for punitive damages. Other than the most aggressive plaintiff s attorneys, most legal scholars hold that punitive damages are appropriate only when someone is really mean or really stupid. If you follow the general guideline set out in this paper you should be neither. Fee Attorneys Closing the transaction is defined (in Art Insurance Code) Closing the Transaction" means the investigation made on behalf of a title insurance company, title insurance agent, or direct operation before the actual issuance of the title policy to determine proper execution, acknowledg-ment, and delivery of all conveyances, mortgage papers, and other title instruments which may be necessary to the consummation of the transaction and includes the determination that all delinquent taxes are paid, all current taxes, based on the latest available information, have been properly prorated between the purchaser and seller in the case of an owner policy, the consideration has been passed, all proceeds have been properly disbursed, a final search of the title has been made, and all necessary papers have been filed for record. An attorney has an option when handling a portion of a title insurance transaction for which he wants to be paid out of the title insurance premium. She can choose to remain an independent attorney or she can choose to become a fee attorney. A fee attorney is generally considered to be an attorney who has chosen to part of the title insurance industry by becoming an escrow officer for the title company. The attorney puts the name of the title company on his door, his escrow (not his trust account) account is subject to audit. One benefit of opting into the title insurance system is that the escrow accounts of the attorney are entitled to receive insurance protection by virtue of the insured closing service letter issued by insurers on behalf of its agents. This form assures a lender that the escrow agent will not steal funds. Unless the attorney operates under the auspices of the title company, such letter is not available. An escrow officer is defined (in Art Insurance Code) as (g) "Escrow Officer" means an attorney, or bona fide employee of either an attorney

7 Fee Attorneys and Ethical Considerations O-5 licensed as an escrow officer, bona fide employee of a or invoice which clearly sets forth in detail the actual direct operation, or bona fide employee of a title services rendered and billed for in representing the insurance agent whose duties include any or all of the Company in the respective settlement, closing and/or following: (1) countersigning title insurance forms; or examination, and such Company verifies, in writing, (2) supervising the preparation and supervising the that such services were actually rendered in delivery of title insurance forms; or (3) signing escrow accordance with form T-00; and checks; or (4) closing the transaction. (G) In the event of collection of the title To be paid a portion of a title insurance premium, insurance premium by such Person, the entirety of the attorney must comply with Procedural Rule P-22 such premium shall have been remitted to the which reads as follows: Company; and (H) No portion of the charge for the services actually rendered shall be attributable to, and no payment shall be made for the solicitation of, or as an inducement for the referral or placement of the title insurance business with the Company; and P-22. Payment of a Fee for Examination and/or Closing - No payment shall be made by a Title Insurance Company, Title Insurance Agent, Escrow Officer or any employee or agent of any of them, to any Person who is not its bona-fide employee, for examination of a title and/or closing a transaction unless: (A) Such Person is (i) a Title Insurance Company as defined in Article 9.02, Insurance Code, and qualified to do business in the State of Texas, (ii) a Title Insurance Agent as defined in Article 9.02, Insurance Code, and licensed to do business in the State of Texas by the State Board of Insurance, or (iii) an attorney at law duly licensed by the Supreme Court of Texas to practice law in the State of Texas, or (iv) any Person legally authorized to perform such services; and (B) Such Person has performed all of the services described in P-1, paragraph f, that such Person is legally authorized to perform, and/or the examination of the title required for the issuance of a commitment for title insurance prior to the issuance of any such commitment, construction binder, policy or other contract of title insurance, to determine the condition of the title to be insured; and (C) Timely disclosures of such payment have been made as required by Rule P-21 and Article 9.53; and (D) Any payment made must be commensurate with the services actually performed; and (E) The Person rendering the service shall have filed with the Company at least thirty (30) days prior (I) Any portion of any payment inconsistent with the requirements hereof, or any payment by the Company to any Person for the solicitation of, or as an inducement for the referral or placement of title insurance business, is deemed to be a violation of Article 9.30; and (J) The Company shall keep written itemized statements or invoice, and the Schedule, in its official records for a period of five years and shall make such copies thereof available to the State Board of Insurance and its representatives for inspection and duplication upon request. In the area of disclosures, it is also important to keep in mind the requirements of Procedural Rule P-21, Basic Manual, which requires disclosure be made in any commitment for title insurance as to all person or entities that will be receiving any portion of the title insurance premium. P-21 reads as follows: P-21. Additional Requirements for Contents of Commitment for Title Insurance - Each Title Insurance Company and each Title Insurance Agent, licensed to do business in Texas, shall, in connection with the issuance of each Commitment for Title Insurance whereby a commitment is made to issue either a binder or policy of title insurance (insuring either a lien or the title to real property), add to the promulgated Commitment for Title Insurance form an to the rendering of such service a written schedule of additional schedule (which schedule shall be charges normally imposed by such Person for such designated "Schedule D") setting forth the following: services (Schedule) and such Schedule shall have been agreed to and approved by the Company as being 1. As to each Commitment for Title Insurance, reasonable charges for such services. the issuing Title Insurance Company shall disclose: However, payments to licensed title (a) A listing of each shareholder owning or insurance agents are excluded from the requirements controlling, directly or indirectly, ten percent (10%) or of this paragraph (E); and more of the shares of the Title Insurance Company; (F) The Person rendering the service shall have there shall also be disclosed all individuals, presented to the Company, at or prior to the time of partnerships, corporations, trusts or other entities payment of said services, a written itemized statement owning ten percent (10%) or more, of those entities

8 O-6 Advanced Real Estate Drafting Course directly owning ten percent (10%), or more, of the (e) For purposes of this paragraph 2, Title Insurance Company. Such additional disclosure "having, owning or controlling" includes the right to requirement shall not, however, apply to a publicly receipt of a percentage of net income, gross income, or held company whose stock is traded on a stock cash flow of the Agent or entity in the percentage exchange or in the over-the-counter market or is a part stated in subparagraphs (a) or (b). of an insurance holding company system the parent of which is so publicly held; 3. As to each Commitment for Title Insurance, (b) The names of the directors of the Title the following additional language shall be included in Insurance Company; and each Schedule D, together with all required (c) The names of the president, the information included within the blanks contained executive or senior vice-president, the secretary and below: the treasurer of the Title Insurance Company. "You are entitled to receive advance disclosure of In connection with such disclosure, each Title settlement charges in connection with the Insurance Company (i) may use in such listing the proposed transaction to which this commitment officers and directors so holding each such respective relates. Upon your request, such disclosure will office on the December 31st immediately preceding be made to you. Additionally, the name of any the date of such Commitment for Title Insurance, and person, firm or corporation receiving any sum (ii) shall furnish to each of its appointed Title from the settlement of this transaction will be Insurance Agents the above required information for disclosed on the closing or settlement statement. such Title Insurance Agent to comply with this Paragraph 1 of this Rule P-21; and (iii) each Title "You are further advised that the estimated title Insurance Agent shall be entitled to rely upon and use premium* is: the information furnished to the Title Insurance Agent Owners Policy $ by its appointing Title Insurance Company. Mortgagee Policy $ Endorsement Charges $ 2. As to each Commitment for Title Insurance Total $ issued by a (i) a Title Insurance Agent, or (ii) a Title Insurance Company, where not issued by a Title Of this total amount: Insurance Agent, the issuing Title Insurance Agent or $ (or %) will be paid to the Title Insurance Company shall disclose: policy issuing Title Insurance Company; (a) A listing of each shareholder, owner, partner, or other person having, owning or controlling $ (or %) will be retained by one percent (1%) or more of the Title Insurance Agent the issuing Title Insurance Agent; and the that will receive a portion of the premium. remainder of the estimated premium will be paid (b) A listing of each shareholder, owner, to other parties as follows: partner, or other person having, owning or controlling 10 percent (10%) or more of an entity that has, owns Amount To Whom For Services or controls one percent (1%) or more of the Title $ (or %) Insurance Agent that will receive a portion of the $ (or %) premium. $ (or %) (c) If the Agent is a corporation: (i) the name of each director of the Title Insurance Agent, "*The estimated premium is based upon and (ii) the names of the President, the Executive or information furnished to us as of the date of this Senior Vice-President, the Secretary and the Treasurer Commitment for Title Insurance. Final of the Title Insurance Agent. determination of the amount of the premium will (d) The name of any person who is not be made at closing in accordance with the Rules a full-time employee of the Title Insurance Agent and who receives any portion of the title insurance and Regulations adopted by the State Board of Insurance." premium for services performed on behalf of the Title Insurance Agent in connection with the issuance of a title insurance form; and, the amount of premium that any such person shall receive. {Emphasis added} Each Title Insurance Company and each Title Insurance Agency shall, prior to usage, file its proposed Schedule D form with the State Board of Insurance; in like manner each Title Insurance Company and each Title Insurance Agent shall file all

9 Fee Attorneys and Ethical Considerations O-7 amended Schedule D forms with the State Board of Insurance prior to usage. Nothing contained in this Rule P-21 shall ever be deemed or considered to require the issuance of a Commitment for Title Insurance prior to the issuance of any policy or binder for title insurance. Each Title Insurance Agent and Title Insurance Company may, in preparing its Schedule D, use whatever reasonable format it elects, provided that such format does not alter or delete the furnishing of the disclosures hereby required. It is the express intent of this paragraph to enable usage of electronic equipment in preparation of the required Schedule D. Ethics of Multiple Representation When an attorney examines title or closing the transaction and is paid a portion of the title insurance premium, the attorney represents the title company. When the attorney also is drafting papers for the lender, or the parties can he represent all of these multiple parties? The general rule is that the attorney may represent multiple parties only if the multiple representation is disclosed to all parties and all parties agree. Attached to this paper are samples of Ethics Opinion 408 of the State Bar and Texas Disciplinary Rule 107 dealing with this issue. Also attached are samples of a joint representation letter and a P-22 letter. Conclusion. Carrie M. Maguire is a Dallas oilman. Several years ago he funded a yearly seminar on ethics through SMU. It is appropriate to give him the final word for this talk: Good ethics is good business. Good business is ethical.

10 O-8 Advanced Real Estate Drafting Course FORM: T-00 Verification of Services Rendered Sec. V-Page 31 VERIFICATION OF SERVICES RENDERED G. F. No. Pursuant to the requirements of Procedural Rules P-1.o. and P-22, the undersigned representative of (Company issuing the Policy) hereby verifies that the following services were actually rendered by (Person and firm affiliation rendering the service) Date(s) services rendered Location services rendered DETAILED DESCRIPTION OF SERVICES: Percentage or amount of premium (remaining after remittance to the Title Insurance Company) agreed to be paid to the person rendering service: $ or % Signature of Person rendering service Date To Be Completed by Person Paying for Service I, agree, to the best of my knowledge, that the above description of services rendered is accurate and complete and that the amount shown paid is correct. Signature Date

11 Fee Attorneys and Ethical Considerations O-9 An Example of a P-22 to letter to a title company would be as follows: Date: To: Title Company Address City, Texas Zip Letterhead Gentlemen: I/We propose to provide the following services to you in connection with real estate transactions. If to be paid for examination of title: I will examine title to determine the conditions of the title to be insured and to evaluate the risk to be undertaken in the issuance of a title insurance policy or other title insurance form. I will provide such information and my opinion thereon to you in a form to be agreed to by us. My Fee will be: % of the premium. If to be paid for closing the transaction: I will close the transaction as defined by Art and Procedural Rule P-1 f to make a final determination of insurability. Particularly I will determine proper execution, acknowledgment and delivery of all conveyances, mortgage papers, and other title instruments which may be necessary to the consummation of the transaction and includes the determination that all delinquent taxes are paid, all current taxes, based on the latest available information, have been properly prorated between the purchaser and seller in the case of an Owner Policy, the consideration has been passed, all proceeds have been properly disbursed, a final search of the title has been made, and all necessary papers have been filed for record. For these services my fee will be % of the premium. I understand that my fee is contingent upon the transaction closing and funding. You and I agree that I will owe you nothing for title examination or other services unless the transaction closes and funds. I will use my best efforts to comply with the rules and regulations of Title Company and its title insurance underwriters and those promulgated under the Basic Manual for Writing of Title Insurance in the State of Texas and with sound legal, business and underwriting principles. If these services and my fees meet with your approval, please evidence your acceptance in the space provided below. By executing this letter agreement, we agree that I will receive no portion of a premium until 30 days after the date hereof. Attorney Agreed and accepted this day of,. Title Company