PLAINTIFFS' REQUESTS FOR RULINGS OF LAW

COMMONWEALTH OF MASSACHUSETTS

SUFFOLK, SS. SUPERIOR COURT

MASSACHUSETTS CONVEYANCERS
ASSOCIATION, INC., MASSACHUSETTS
ASSOCIATION OF BANK COUNSEL, INC.,
BRISTOL COUNTY BAR ASSOCIATION,
FALL RIVER BAR ASSOCIATION, BAR
ASSOCIATION OF NORFOLK COUNTY,
PLYMOUTH COUNTY BAR ASSOCIATION,
TAUNTON BAR ASSOCIATION, and
WORCESTER COUNTY BAR ASSOCIATION, C.A. NO. 96-2746-C

Plaintiffs,
v.

COLONIAL TITLE & ESCROW, INC.,
a Massachusetts Corporation, and

COLONIAL TITLE & ESCROW, INC.,
a Rhode Island Corporation, and

Defendants.

Douglas W. Salvesen (BBO# 550322)
Nancy Armitage (BBO# 636522) YURKO & PERRY, P.C.
100 City Hall Plaza, 5th Floor
Boston, MA 02108
(617) 723-6900

Attorneys for Massachusetts Conveyancers Association, Inc., et al.,
Date: April 19, 2000

The plaintiffs Massachusetts Conveyancers Association, Inc., et al., request that the Court make the following rulings of law:

Unauthorized Practice of Law Statutes

1. "[N]o corporation or association shall draw agreements, or other legal documents not relating to its lawful business . . . or give legal advice in matters not relating to its lawful business, or practice law, or hold itself out in any manner as being entitled to do any of the foregoing acts." G.L. c. 221, § 46.

2. "No individual, other than a member, in good standing, of the bar of this commonwealth shall practice law . . . ." G.L. c. 221, § 46A.

3. "The right to practice law is not one of the inherent rights of every citizen, as is the right to carry on an ordinary trade or business. It is a peculiar privilege granted and continued only to those who demonstrate special fitness in intellectual attainment and in moral character. All may aspire to it on an absolutely equal basis, but not all will attain it. Elaborate machinery has been set up to test applicants by standards fair to all and to separate the fit from the unfit. Only those who pass the test are allowed to enter the profession, and only those who maintain the standards are allowed to remain in it. To those who acquire and who retain the necessary qualifications is granted a monopoly of the honors and emoluments of a profession which more than any other is public in its nature and intimately connected with the highest functions of the State. Such a monopoly in a quasi public occupation is in no sense promoted and fostered for the personal advantage of individuals. It can be justified only on the ground that long experience has shown it to be absolutely essential to the public welfare." Matter of Keenan, 314 Mass. 544, 546-547 (1943).

4. The public interest is served only if lawyers, who have demonstrated such ability by passing the bar examination and are licensed by the Commonwealth and subject to the Court's direct oversight, are permitted to practice law. Lowell Bar Ass'n v. Loeb, 315 Mass. 176, 180 (1943) ("The jurisdiction for excluding from the practice of law persons not admitted to the Bar is to be found, not in the protection of the bar from competition, but in the protection of the public from being advised and represented in legal matters by incompetent and unreliable persons, over whom the judicial department could exercise little control").

5. Those permitted to advise and represent others as to matters affecting their legal rights are properly "held to a high standard of honor and of ethical conduct." Lowell Bar Ass'n v. Loeb, 315 Mass. 176, 180 (1943).

6. Where the practice of law requires specialized learning and training, it necessarily follows that the practice of law is "personal" and cannot be performed by a corporate entity. Opinion of the Justices, 289 Mass. 607, 613 (1935).

7. To allow a corporation, like Colonial Title, which by its nature must be beholden first and foremost to it stockholders' interest, to practice law is tantamount to "destroying the relation of direct personal confidence and responsibility which ought to exist between attorney at law and client." Matter of Show Mfrs. Protective Ass'n, Inc., 295 Mass. 369, 373 (1936). See also State Bar of Arizona v. Arizona Land Title and Trust Co., 90 Ariz. 76, 88, 366 P.2d 1, 9 (1961) ("[M]any of the Canons of Professional Ethics which attorneys must observe most scrupulously are diametrically opposed to the code by which businessmen must live if they are to survive").

Definition of Practice of Law

8. The practice of law embraces those activities that require the professional judgment of a lawyer. Lowell Bar Ass'n v. Loeb, 315 Mass. 176, 180 (1943).

9. The factors to be considered in deciding whether an activity involves the practice of law include whether the activity requires judgments regarding a client's legal rights, whether the activity does, or has the potential to, alter the legal rights and obligations of others, and whether the legal nature of the matter is invariably simple or potentially complex.

10. The essence of a lawyer's professional judgment is his educated ability to apply the general body and philosophy of the law to evaluate, alter or protect a client's legal rights.

11. The public interest is served only if these judgments as to legal rights are rendered by lawyers, who have met rigorous educational requirements, have demonstrated such ability by passing the bar examination, have been certified of honest demeanor and good moral character, and are licensed by the Commonwealth and subject to the Court's direct oversight. Lowell Bar Ass'n, 315 Mass. at 180 ("The jurisdiction for excluding from the practice of law persons not admitted to the Bar is to be found, not in the protection of the bar from competition, but in the protection of the public from being advised and represented in legal matters by incompetent and unreliable persons, over whom the judicial department could exercise little control").

12. The actual practices of the community have an "important bearing" in determining what activity constitutes the practice of law. Lowell Bar Ass'n v. Loeb, 315 Mass. 176, 186 (1943).

Practice of Law Embraces Conveyancing

13. Conveyancing, which is a short-hand way for referring to the various functions relating to the creation, transfer or termination of an interest in real property, constitutes the practice of law. Opinion of the Justices, 289 Mass. 607, 613 (1934) (practice of law "embraces conveyancing"); Massachusetts Association of Bank Counsel, Inc. v. Closings, Ltd., (Suffolk Superior Court, C.A. No. 90-3053-C, August 30, 1993). See also In re Burton L. Schafer, No. 88-21BD (Jan. 17, 1991) (Wilkins, J.) (activities which include delivering deed, reviewing computations of closing figures, and making telephone calls to locate missing mortgage discharge, constituted practice of law); Coffee County Abstract and Title Co. v. State ex rel. Norwood, 445 So.2d 852 (Ala. 1983); State Bar of Ariz. v. Arizona Land Title & Trust Co., 90 Ariz. 76, 366 P.2d 1 (1961), reheard, 91 Ariz. 293, 371 P.2d 1020 (1962); Florida Bar v. Irizarry, 268 So.2d 377 (Fla. 1972); Regas v. Continental Casualty Co., 139 Ill. App. 3d 45 (1985); State v. Buyers Service Co., 357 S.E.2d 15 (S.C. 1987); Bowers v. Transamerica Title Ins. Co., 100 Wash.2d 581 (1983).

14. The acts involved in closing a residential real estate loan on behalf of a mortgage lender or other person constitute the practice of law and may be performed only by an attorney or under his or her supervision and control. Massachusetts Association of Bank Counsel, Inc. v. Closings, Ltd., (Suffolk Superior Court, C.A. No. 90-3053-C, August 30, 1993).

15. As the practice of conveyancing necessarily involves judgments as to rights and obligations of others under the law, it is in the public interest that conveyancing be performed only by persons who have been trained in the law, who have demonstrated a proficiency in the law by passing the bar entrance examination, who have been licensed by the Commonwealth, and who remain subject to the continuing oversight of the Board of Bar Overseers and the jurisdiction of the Courts of the Commonwealth.

16. A review of title to residential property constitutes the practice of law. E.g., In re Behenna, 92-72BD (Jan. 19. 1993) (O'Connor, J.) ("title examination, even without the rendering of advice, would constitute the practice of law"); In re James M. Oates, No. 81-11BD (Aug. 6, 1986) (Liacos, J.) ("[T]itle searching its commonly perceived by the general public to be a pursuit, if not exclusively within the realm of the legal profession, closely associated with it").

17. The collection, drafting and review of various legal documents that effect the title to the real estate (including deeds, easements, restrictions, covenants, mortgages, instruments releasing encumbrances of record, or other documents granting rights that have binding legal effect) or impact the parties' obligations under their agreements, constitutes the practice of law. See Freitas v. Freitas, 349 Mass. 276 (1965) (preparation of deed by real estate broker constitutes the unauthorized practice of law); Matter of Shoe Mfrs. Protective Ass'n Inc., 295 Mass. 369, 372 (1936) (corporation which completes legal documents for others in the course of conducting its collection business engages in the unauthorized practice of law); Calvert v. K. Hovnanian at Galloway, VI, Inc., 607 A.2d 156, 162 (N.J. 1992) (licensed real estate broker was engaged in the unauthorized practice of law by filling in the purchase agreement and other conveyance forms); Kentucky State Bar Ass'n v. Tussey, 476 S.W.2d 177 (Ky. 1972) (preparation of real estate mortgages by lay-persons constituted the unlawful practice of law); State Bar of Arizona v. Arizona Land Title and Trust Co., 90 Ariz. 76, 366 P.2d 1 (1961), reheard, 91 Ariz. 293, 371 P.2d 1020 (Ariz. 1961) (non-lawyers may not prepare deeds or conveyances relating to land in which they do not hold absolute or equitable ownership); People v. Sipper, 61 Cal. App. 2d Supp. 844, 142 P.2d 960 (1943) (unauthorized practice of law found when a real estate broker prepared for a fee a document to secure a loan with real property).

18. The review of a deed or a proposed deed in order to assess its legal sufficiency constitutes the practice of law. Opinion of Justices, 289 Mass. 607, 615 (1935) (practice of law includes the examination of real estate records in order to assess the legal validity of those documents and of title). See also Freitas v. Freitas, 349 Mass. 276 (1965) (preparation of deed by real estate broker constitutes the unauthorized practice of law);

19. An explanation at the closing of documents concerning the interest in the real estate being created, transferred, or terminated, or the parties' agreements, and a description of the legal significance of any such document, constitutes the practice of law. Goldblatt v. Corporation Counsel of Boston, 360 Mass. 660, 665 (1971) (in reviewing a Civil Service Commission appointment, the Court observed under Section 46 that "[o]nly an attorney may advise as to the legal 'validity' of tax titles"); State v. Buyers Service Co., 357 S.E.2d 15 (S.C. 1987) (real estate closings shall be conducted only under the supervision of attorneys who have the ability to furnish their clients with legal advice should the need arise).

20. The activities undertaken on behalf of a mortgage lender for compensation to ensure that the creation, transfer, or termination of the legal interest in the real estate occurs in accordance with the intent of the parties' agreement, including the conveyance of the interest in the real estate, the disbursement of the purchase money or other consideration for the interest, and the execution, exchange and recording of documents affecting the legal rights of the parties, constitutes the practice of law.

Public Policy That Closings Be Conducted by Attorney

21. In connection with the granting of any loan secured by a purchase money first mortgage on a one-four family dwelling to be occupied by the mortgagor, General Laws Chapter 93, § 70 requires an attorney acting for or on behalf of a mortgagee to render to the mortgagor and to the mortgagee a certification of title to the mortgaged premises.

22. General Laws Chapter 93, § 70 evinces a public policy that services performed on behalf of a mortgagee to secure its interest in residential real estate be conducted by attorneys.

Activities of a Title Insurance Agent Constitute the Practice of Law

23. The activities of a title insurance agent, which are premised upon an evaluation of title to the real estate in light of state and federal law, constitute the practice of law. United States v. City of Flint, 346 F. Supp. 1282, 1286 (E.D. Mich. 1972) (title insurance is "predicated upon careful examination of the muniments of title, an exhaustive study of the applicable law and the exercise of expert contract draftsmanship . . . . the existence of title defects will depend upon legal doctrines and judicial interpretations of various applicable statutes"); Beach Abstract & Guaranty Co. v. Bar Association, 230 Ark. 494, 326 S.W.2d 900 (1959) (title insurance agent who reviewed title abstract to determine state of title were illegally practicing law); McLaughlin v. Attorneys' Title Guaranty Fund, 61 Ill. App. 3d 911, 915-16, 378 N.E.2d 355, 359, 18 Ill. Dec. 891 (1978).

24. The activities of a title insurance agent by which, pursuant to its obligations under its Issuing Agent Contract, it "show[s] as exceptions to coverage . . . all matters disclosed by the opinion of title . . . which constitute a defect or question as to the validity and marketability of the title being insured" constitute the practice of law. Opinion of the Justices, 289 Mass. 607, 615 (1935) (act of searching the public records of real estate transactions accompanied by an "opinion or advice as to the legal effect of what is found" constitutes the practice of law).

25. A review of title to residential property by the title insurance agent constitutes the practice of law. E.g., In re Behenna, 92-72BD (Jan. 19. 1993) (O'Connor, J.) ("title examination, even without the rendering of advice, would constitute the practice of law"); In re James M. Oates, No. 81-11BD (Aug. 6, 1986) (Liacos, J.) ("[T]itle searching its commonly perceived by the general public to be a pursuit, if not exclusively within the realm of the legal profession, closely associated with it").

1. To determine whether title to real estate is insurable, the title insurance agent must be able to understand and to analyze those documents recorded in the registry in light of applicable law to determine whether there are any defects, liens or encumbrances that adversely affect the title.

2. These judgments, by which the title insurance agent applies legal principles, case law, and statutory provisions to a specific factual situation, constitute the practice of law.

3. The activities of a title insurance agent, which are virtually indistinguishable from those of a closing agent, constitute the practice of law.

4. As a title insurance agent is not incorporated under G.L. c. 175, the provisions of G.L. c. 175, § 47(11) which authorize a title insurer to "examine titles of real and personal property" do not apply to it.

5. Prior to 1935, Massachusetts law prohibited corporations from practicing law, though the statute provided that "[t]his act shall not apply . . . to any corporation . . . lawfully engaged in the examination and insuring of titles to real property." St. 1916, c. 292, § 4, codified at G.L. c. 221, § 47. In 1934, the Legislature was considering legislation that would further permit certain corporations to practice law, and sought an advisory opinion from the Supreme Judicial Court as to the constitutionality of the propose legislation. The Court held that, while the Legislature could place limitations on who could practice law, it could not confer any individual or corporation the right to practice law. Opinion of the Justices, 289 Mass. at 612-13. The fact that following the decision of the Supreme Judicial Court, the Legislature repealed G.L. c. 221, § 47, which had excepted title insurers from the unauthorized practice of law statute demonstrates a recognition that the examination of titles for insurance purposes constitutes the practice of law. St. 1935, c. 346, § 3.

Showing of Harm is Unnecessary

6. Where a defendant is engaged in the unauthorized practice of law, a showing of harm is unnecessary to enjoin him from such activity. The Florida Bar Re: Amendment to the Integration Rule, 399 So.2d 951, 951 (Fla. 1981) ("[t]here is a potential for harm to the public whenever unqualified persons attempt to practice law and, because of this potential, the prevention of unauthorized practice would be promptly and carefully effected"); In re Margow, 77 N.J. 316, 325 (1978) ("fact that no demonstrable have resulted from unlawful actions does not lessen [court's] concern as to the potential harm which may befall the unsuspecting victim of unqualified legal advice . . . [as] 'the amateur at law is as dangerous to the community as an amateur surgeon would be'").

Corporation May Not Practice Law

7. "The practice of the law is personal. It is open only to individuals proved to the satisfaction of the court to possess sufficient general knowledge and adequate special qualifications as to learning in the law and to be of good moral character. After one has been sanctioned in these respects, the oath as an attorney must be taken, whereby one becomes an officer of the court and subject to its discipline for violation of his office. A dual trust is imposed on attorneys at law: they must act with all good fidelity both to the court and to their clients. They are bound by canons of ethics which have been the growth of long experience and which are enforced by the courts. [citation omitted]. The relation of an attorney to his client is preeminently confidential. In addition to adequate learning, it demands on the part of the attorney undivided allegiance, a conspicuous degree of faithfulness and disinterestedness, absolute integrity, and utter renunciation of every personal advantage conflicting in any way directly or indirectly with the interests of his client. Only a human begin can conform to these exacting requirements. Artificial creations such as corporation or associations cannot meet these prerequisites." Opinion of the Justices, 289 Mass. 607, 613 (1934).

8. "[T]he practice of law is not a business in which a corporation may legally engage." State Bar Ass'n v. Connecticut Bank & Trust Co., 140 A.2d 863, 870 (Conn. 1958).

9. The fact that a corporation engages licensed attorneys is immaterial since "as [the corporation] cannot practice law directly, it cannot do so indirectly by employing competent lawyers to practice for it, since that would be an evasion which the law will not tolerate." State Bar Ass'n v. Connecticut Bank & Trust Co., 140 A.2d 863, 870 (Conn. 1958).

10. To allow a corporation, which by its nature must be beholden first and foremost to it stockholders' interest, to practice law is tantamount to "destroying the relation of direct personal confidence and responsibility which ought to exist between attorney at law and client." Matter of Show Mfrs. Protective Ass'n, Inc., 295 Mass. 369, 373 (1936). See also State Bar of Arizona v. Arizona Land Title and Trust Co., 90 Ariz. 76, 88, 366 P.2d 1, 9 (1961) (*"[M]any of the Canons of Professional Ethics which attorneys must observe most scrupulously are diametrically opposed to the code by which businessmen must live if they are to survive").

11. A corporation may not perform conveyancing services indirectly by engaging attorneys or others to perform such services for their benefit or for the benefit of one or more of the parties to the transaction. Joffe v. Wilson, 381 Mass. 47, 52-53 (1980) ("lawyer should be free of direction by a third [party]"); People ex. Rel. Los Angeles Bar Ass'n v. California Protective Corp., 76 Cal. App. 354, 360(1926) (corporation that contracted with patrons to furnish legal services for a fee was engaged in unlawful practice of law).

12. Wherever the practice of law exists, a direct attorney-client relationship must also exist to ensure that the attorney exercises his judgment independently. This is not possible where the attorney is employed or retained by a corporation, is its agent and subject to its control and direction, and has no direct relationship with the person who is the true client.