NCSB Journal Spring 2026

Opinion #7: Yes. Again, as set out in Opinion #3, the rea sonableness of an amended fee agreement with a client will depend on the context and circumstances of the representation and the attorney-client relationship, as well as a vari ety of considerations including but not limit ed to the sophistication of the client, the prac tice area and its related customs, the length of the representation and the complexity of the issue(s), and the history of interaction between the client and the lawyer. See ABA Formal Ethics Op. 11-458 (“The reasonable ness of a modified fee agreement should therefore be assessed in relation to the cir cumstances at the time of the modifica tion.”). The Rules of Professional Conduct and prior ethics opinions have recognized that the level of client sophistication and familiarity with the engagement of legal serv ices is a relevant consideration when deter mining a lawyer’s professional responsibility in a given situation. See, e.g. , Rule 7.3(b)(3) (creating an exception to the general prohibi tion on direct solicitation for legal services when the potential client is a “person who routinely uses for business purposes the type of legal services offered by the lawyer.”); Rule 5.7, cmt. [8] (recognizing that, when offering law-related services, “a sophisticated user of law-related services, such as a publicly held corporation, may require a lesser explanation than someone unaccustomed to making dis tinctions between legal services and law-relat ed services”); 2009 FEO 11 (explaining that a lawyer seeking consent to a conflict from an unsophisticated individual client may need to provide more disclosure and explanation to effectively obtain the client’s consent). As previously stated, the analysis provided in Opinions #1-5 presumes the client is not a regular or sophisticated consumer of legal services. Here, Corporate Client is a sophisti cated and frequent user of legal services that has agreed to the proposed periodic fee increase structure at the outset of the repre sentation. To impose the same notice requirements on Corporate Client as an unsophisticated consumer or infrequent user of legal services would be impractical, if not a hinderance to the consistent provision of legal services and effective maintenance of the attorney-client relationship. Accordingly, Law Firm is not required to adhere to the notice requirements set out above when engaging with a sophisticated or regular user

of legal services. Law Firm must, however, ensure that Corporate Client understands the terms of the fee agreement, including the pro posed fee increase structure, and Law Firm must ensure any implemented fee increases are not clearly excessive. Rule 1.5.

conflict of interest for a lawyer to serve as a closing attorney in a real property transaction while also serving as the title agent for the purpose of obtaining title insurance based upon the lawyer’s personal interest in both roles, and that this conflict of interest cannot bewaived. See, e.g. , RPC 185; 2009 FEO 14. RPC 185 states: Even an insubstantial interest in a title insurance agency, however, could materi ally impair the judgment of a closing lawyer. RPC 49 addresses a closing lawyer’s duty to his or her client when the lawyer owns shares in a realty firm that will realize a commission upon the closing of the transaction. RPC 49 states that the conflict of interest is too great to be allowed even if the client wishes to con sent. This conflict is also present when a title agency, and, therefore, indirectly the closing lawyer who owns an interest in the title agency, will receive compensation from the client as a result of the closing of the transaction. The lawyer’s personal interest in having the title insurance agency receive its compensation could conflict with the lawyer’s duty to close the transaction only if it is in the client’s best interest. In 2009 FEO 14, the Ethics Committee concluded that the personal interest conflict identified in this scenario is also present when the lawyer’s spouse has the ownership interest in the title company: The lawyer’s personal interest in having his spouse’s title insurance agency receive its compensation may conflict with the lawyer’s duty to close the transaction only if it is in the client’s best interest. In addi tion, the lawyer’s personal relationship with the owner of the title insurance com pany will influence the lawyer’s choice of the spouse’s company as the insurer, as well as the vigorousness of the lawyer’s negotiations with the title company on his client’s behalf. Issues of title insurance coverage may have to be negotiated between the closing lawyer and the insur er. The lawyer’s client and the insurer will necessarily have competing interests as to the extent of the coverage and the amount of the premium. 2009 FEO 14. The opinion goes on to con clude that [t]he conflict of interest is too great to be allowed, even with the client’s informed consent. A closing lawyer must be able to

Proposed 2026 Formal Ethics Opinion 1 Closing Attorney’s Referral to Law Partner’s Title Insurance Agency January 22, 2026

Proposed opinion rules that a lawyer may not refer a client in a closing transaction to a title agency in which the lawyer’s law partner has a financial interest. Background: Attorney A is a real estate lawyer and a partner with Law Firm X. Attorney B is also a real estate lawyer and a partner with Law Firm X. Attorney B owns a financial interest in Title Company. Inquiry #1: May Attorney B own a financial interest in Title Company? Nothing in the Rules of Professional Conduct prohibits a lawyer from owning a financial interest in Title Company. See RPC 185 (“This opinion does not prohibit a lawyer from owning stock in a publicly trad ed title insurance company.”). Whether Attorney B is legally permitted to own a financial interest in Title Company is a ques tion outside the scope of this inquiry. Inquiry #2: Client Smith retained Attorney B to serve as closing attorney for a real property transac tion. May Attorney B recommend Title Company to Client Smith and prepare a title opinion for obtaining title insurance through Title Company? Lawyers are prohibited from engaging in concurrent conflicts of interest. Rule 1.7. “A concurrent conflict of interest exists if...the representation of one or more clients may be materially limited...by a personal interest of the lawyer.” Rule 1.7(a)(2). The Ethics Committee has long concluded that it is a Opinion #1: Yes. Opinion #2: No.

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THE NORTH CAROLINA STATE BAR JOURNAL