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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS

SUPREME COURT

1N RE: DANIEL D. BALKUN AND No. SU-2018-162-M.p, :3 33'

BALKUN TITLE & CLOSING, INC. (UPLC 2017-1)

DJ

On Report OfThe Unauthorized Practice OfLaw Committee

BRIEF OF AMICI CURIAE RHODE ISLAND BANKERS ASSOCIATION,RHODE ISLAND MORTGAGE BANKERS ASSOCIATION, RHODE ISLANDASSOCIATION OF REALTORS®, INC, COOPERATIVE CREDIT UNION

ASSOCIATION, EQUITY NATIONAL TITLE AND CLOSING SERVICES, INC.AND LINCOLN ABSTRACT & SETTLEMENT SERVICES, LLC

Robert K. Taylor (#65 14)

Paul M. Kessimian (#7127)

PARTRIDGE SNOW & HAHN LLP

40 Westminster Street

Suite 1100

Providence, RI 02903

(401) 861-8200

(401) 861-8210 FAXrtaylor@,psh.com

pkessimian@psh.com

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TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................................................................................... i

STATEMENT OF INTEREST ....................................................................................................... 1

SUMMARY OF THE ARGUMENT .............................................................................................. 3

ARGUMENT ................................................................................................................................... 5

A. The Court Should Not Prohibit Non-Lawyers From Performing

Real Estate Closings And Other Routine, Standardized Activities

That Do Not Require Legal Skill And Judgment................................................................. 5

B. The Court Should Not Prohibit Non—Lawyers From Acting In

Ways That The Legislature Has Determined Fill A Public Need ...................................... 10

1. Rhode Island Statutes Provide That The Closing, Title, AndSettlement Services At Issue Are Not The Unauthorized

Practice Of Law ..................................................................................................... 10

2. The Committee’s Disregard Of Rhode Island Statutory LawRuns Counter To The Committee’s Reasoning And RhodeIsland Precedent Concerning The Unauthorized Practice Of Law ........................ 14

a. Applied T0 Rhode Island, The Logic OfREBAResults In A Conclusion Opposite To The Committee’s .......................... 15

b. This Conclusion, Moreover, Is Reinforced By This

Court’s Own Precedents ............................................................................ 16

C. The Committee Fails To Distinguish Between The Several

Types Of Real Estate Closings, Many Of Which Do NotInvolve Residential Sales ................................................................................................... 17

D. The Court Should Not Declare That Powers Of Attorney AndResidency Affidavits Can Be Prepared Only By An Attorney ..........................................23

E. The Committee’s Recommendations Do Not Address Rule 1.7

Of The Rules Of Professional Conduct ............................................................................24

CONCLUSION .............................................................................................................................. 26

APPENDIX ............................................................................................................................ APPOl

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TABLE OF AUTHORITIES

Rhode Island Cases

In re Town ofLittZe Compton, 37 A.3d 85 (R.I. 2012) .......................... 5, 10, 14, 16, 17, 20, 21, 24

R.I. Bar Ass ’n v. Auto. Servs. Ass’n,

179 A. 139, 144 (R.I. 1935) ............................................................................................................. 5

State v. McDonald, 157 A.3d 1080 (R.I. 2017) ............................................................................ 13

Unauthorized Practice ofLaw Comm. v. State, Dep ’t. 0f Workers’ Comp,543 A.2d 662 (R.I. 1988) ........................................................................................... 5, 9, 10, 14, 16

Other Cases

Countrywide Home Loans v. Ky. Bar Ass ’n,

113 S.W.3d 105 (Ky. 2003) ................................................................................................. 6, 22, 26

Dressel v. Ameribank, 664 N.W.2d 151 (Mich. 2003) ....................................................................7

1n re First Escrow, Ina, 840 S.W.2d 839 (Mo. 1992) ................................................................... 25

In re Opinion N0. 26 ofComm. 0n Unauthorized Practice ofLaw,654 A.2d 1344 (NJ. 1995) ..................................................................................................... 5, 6, 21

King v. First Capital Fin. Servs. Corp,828 N.E.2d 1155 (Ill. 2005) ......................................................................................................... 7, 8

LaBrum v. Commonwealth Title C0. ofPhiladelphia,

358 Pa. 239, 56 A.2d 246 (1948) ..................................................................................................... 8

Real Estate Bar Ass ’n v. Nat ’l Real Estate Info. Servs.,

946 N.E.2d 665 (Mass. 201 1) ........................................................................................... 13, 15, 17

Ticor Title Ins. C0. v. Smith,

794 S.W.2d 734 (Tenn. App. 1990) ................................................................................................ 8

Statutes or Rules

12 C.F.R. §§ 1024.1 et seq. ............................................................................................................ 21

12 C.F.R §§ 1026.1 el seq. .............................................................................................................21

H. 5630, 2015 Gen. Assemb., Jan. Sess. (R.I. 2015) ..................................................................... 11

H. 5566, 2009 Gen. Assemb., Jan. Sess. (R.I. 2000) ..................................................................... 11

H. 5936, 2003 Gen. Assemb., Jan. Sess. (R.I. 2003) ..................................................................... 11

i-_-’

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H. 7462, 2002 Gen. Assemb., Jan. Sess. (R.I. 2002) ..................................................................... 11

H. 6001, 2001 Gen. Assemb., Jan. Sess. (R.I. 2001) ..................................................................... 11

M.G.L. ch. 93 § 70 .........................................................................................................................50

P.L. 1917, ch. 1494, § 2 ................................................................................................................. 11

P.L. 1935, ch. 2190, §1 ................................................................................................................. 11

R.I. Gen. Laws § 5-20.5-4 .............................................................................................................. 23

R.I. Gen. Laws § 5-20.5-5 .............................................................................................................. 23

R.I. Gen. Laws § 5-20.5-25 ............................................................................................................ 23

R.I. Gen. Laws § 5-20.8-2 .............................................................................................................. 21

R.I. Gen. Laws§ 11-27-16 ........................................................................................... 10, 14, 15, 17

R.I. Gen. Laws § 11-27-16(a) ........................................................................................................ 11

R.I. Gen. Laws§ 11-27-16(a)(1) ............................................................................................. 1 1, 17

R.I. Gen. Laws § 11-27-16(a)(7) ..................................................................................................... 9

R.I. Gen. Laws § 18-16-2 ............................................................................................................... 23

R.I. Gen. Laws§ 19-14-1(13) ...................................................................................... 12, 14, 15, 17

R.I. Gen. Laws § 27-2.4-3 .............................................................................................................. 22

R.I. Gen. Laws § 27-2.4-8 .............................................................................................................. 22

R.I. Gen. Laws § 27-24-21 ............................................................................................................ 22

R.I. Gen. Laws § 27-2.6-3(17) ................................................................................................. 12, 15

R.I. Gen. Laws § 27-2.6-3(17)(ii)(B) ....................................................................................... 15, 17

R.I. Gen. Laws § 27-2.6-3(18) ....................................................................................................... 14

R.I. Gen. Laws § 27-2.6-3(18)(ii)(B) ............................................................................................. 12

R.I. Gen. Laws § 27-2.6-3(18)(ii)(C) ................................................................................. 12, 15, 17

R.I. Gen. Laws § 27-2.6-7 .............................................................................................................. 22

R.I. Gen. Laws § 27-2.6-13 ............................................................................................................22

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R.I. Rule of Prof. Cond. 1.7, Comment 8 ......................................................................................25

R.I. Rule of Prof. Cond. 1.7 ...........................................................................................................25

R.I. Rule of Prof. Cond. 7.4 ........................................................................................................... 12

15 U.S.C. § 1635 ............................................................................................................................21

W. Va. Code § 30-2-5 ...................................................................................................................... 8

Other Authorities

Andrew G. Pizor et al., Mortgage Lending

36-37, 46-47 (2d ed. 2014) ...................................................................................................... 17, 18

Deborah L. Rhode & Lucy Buford Ricca, Protecting the Proféssion 0r the Public?

Rethinking Unauthorized Practice Enforcement,

82 Fordham L. Rev. 2587 (2014) ............................................................................................ 13, 14

In re Daniel S. Balkun, UPLC—2017-1,

(R.I. Unauthorized Practice of Law Comm. June 7, 2018) ........................................................ 9, 17

In re William E. Paplauskas, Jr., UPLC 2015-6,

(R.I. Unauthorized Practice of Law Comm. May 9, 201 8) ........................................................ 9, 17

In re SouthCoast Title & Escrow, UPLC-2017—7,V

(R.I. Unauthorized Practice 0f Law Comm. June 7, 2018) .................................................. 9, 17, 25

Joyce Palomar, The War Between Attorneys and Lay Conveyancers —

Empirical Evidence Says “Cease Fire! ”,

31 Conn. L. Rev. 423 (1999) ................................................................................................... 13, 23

Justin Pritchard, How Home Equity Loans Work: Pros and Cons,

The Balance (last updated Oct. 30, 2018) ...................................................................................... 19

Leslie C. Levin, The Monopoly Myth and Other Tales About the Superiority ofLawyers,

82 Fordham L. Rev. 2611 (2014) ................................................................................................... 13

Office of the Comptroller of the Currency,

Residential Real Estate 3-5 (2017) .................................................................................... 18, 19, 21

Miscellaneous

State of Rhode Island — Division of Taxation Seller’s Residency Affidavit ................................23

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STATEMENT OF INTEREST

This brief is submitted on behalf of organizations and companies interested in

preserving the proper, competitive, and functioning market for loan, title, and settlement services

in the State of Rhode Island. The decision by the Unauthorized Practice of Law Committee (the

“Committee”) unnecessarily, and perhaps unintentionally (given the very limited record below),

threatens long-standing practices that benefit consumers and businesses alike. Amici submit this

brief to assist the Court in understanding the manifold negative implications of the Committee’s

decision.

The Rhode Island Bankers Association (“RIBA”) is a membership organization of

banks and trust companies doing business in Rhode Island. RIBA works with bank regulators

and elected officials to communicate the banking industry’s perspective on legislative and

regulatory issues and to promote policies that enhance customer access to low cost, high quality

banking products. Rhode Island banks collectively hold over $2 billion in residential mortgages.

Accordingly, RIBA’s members will be directly affected by any changes to established closing

and settlement practices that may result from this proceeding, and have a strong interest in

offering the Court insight into the ways such changes would affect RIBA’S members and their

customers.

The mission of the Rhode Island Mortgage Bankers Association, Inc. (“RIMBA”)

is to promote and sustain responsible home lending in Rhode Island. RIMBA serves as an active

and leading voice 0n legislative and regulatory matters affecting home lending in Rhode Island.

RIMBA’S 86 individual and organizational members include banks, mortgage companies, credit

unions, title insurance companies, mortgage insurance companies, and closing and escrow

companies. Accordingly, RIMBA’S members will be directly affected by, and have a strong

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interest in educating the Court about, the consequences of a determination that real estate

closings are the practice of law.

The Rhode Island Association ofREALTORS®, Inc. (“RIAR”) is a 501(c)(6) not-

for-profit professional organization for real estate licensees with 5,257 members. RIAR

advocates for policies that advance the right to own, use, and transfer real property. RIAR and

its members have an interest in the development of standards for efficient, effective, and ethical

real estate business practices, including practices in the early stages of a real estate transaction

that may be affected by the outcome of this proceeding. RIAR is participating in this amicus

brief t0 protect consumer choice throughout all stages of a real estate transaction from beginning

to end.

The Cooperative Credit Union Association (“CCUA”) represents nearly 200

credit unions in Rhode Island, Massachusetts, New Hampshire, and Delaware. CCUA’s

members strive to provide consumers with outstanding financial services, including

competitively priced residential mortgages. The Committee’s recommendations, if adopted,

would directly affect the operations of CCUA’s members in Rhode Island.

Equity National Title & Closing Services, Inc. (“Equity National”) is a leading

provider of title and settlement services throughout the United States. Headquartered in

Providence, Rhode Island, Equity National provides service and support to lenders (both

commercial and residential), homeowners and real estate professionals, and has over 28 years of

experience in title and settlement services. Equity National will be directly affected by any

changes to established closing and settlement practices that may result from this proceeding, and

has a strong interest in educating the Court about the already extensive regulation of title and

settlement services in Rhode Island and otherjurisdictions.

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Lincoln Abstract & Settlement Services, LLC (“Lincoln Abstract”) is a Rhode

Island based title and closing agency, with a national footprint. Lincoln Abstract provides

settlement services to local, regional and national banks, lenders and mortgage originators.

Lincoln Abstract has been a provider of title and closing services in Rhode Island for many years

and the majority of its title and closing services is for properties located in Rhode Island and

Massachusetts. Lincoln Abstract will be directly affected by any changes to established closing

and settlement practices that may result from this proceeding, and has a strong interest in

educating the Court about the existing regulation of title and settlement services that fully

protects the public interest.

SUMMARY OF THE ARGUMENT

The Committee’s recommendations, if accepted, are likely to lead to a substantial

increase in consumer costs associated with the thousands of real estate transactions that occur in

Rhode Island every year. Based on publicly available data on closing costs, Amici estimate that

the Committee’s recommendations would cost Rhode Islanders as a whole over $7,000,000 each

year. While this significant cost increase would doubtless benefit Rhode Island attorneys, there

is no evidence that taking many millions of dollars from the pockets of Rhode Islanders for

services that many choose not t0 pay for would serve a compelling public need. The

Committee’s recommendations are akin to mandating the hiring of Olympic swimmers as

lifeguards at the neighborhood pool — highly skilled people, but very expensive and not

necessary to protect the swimming public.

This Court’s primary consideration in regulating the practice of law is the public

interest. Notably, the elected representatives of the people of Rhode Island, many ofwhom are

themselves attorneys, long ago concluded that it is in the public interest to exclude the activities

of title insurance companies from the definition of the practice of law. The Committee’s

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recommendations fail t0 give the Legislature’s long-standing assessment of the public interest

the substantial weight that it deserves. This Court should not upend established practices by

declaring that preparing title commitments and standardized transactional documents is the

unauthorized practice of law.

Mortgage transactions in particular are highly regulated by both the state and

federal governments. They are standardized and trigger numerous statutory consumer

protections and disclosure requirements. Mortgagors may not be cognizant of all the issues that

an attorney might discern in the loan documents at a closing, but they are certainly aware that the

mortgage involves a sizable sum of money and significant legal obligations. Mortgagors attend

the closing prepared to move forward despite this knowledge. By the time of the closing, the

standardized loan documents have been prepared, are not negotiable, and are merely presented

for signature. Mortgagors should not be compelled to pay for an attorney to be present at an

event that is in most cases a formality.

This Court should not prohibit closing and settlement practices that are commonly

used in Rhode Island (and many other states), and have been for years without any noticeable

detriment to the public. Such a ban would impose significant new costs on Rhode Islanders, and

is not justified by the sparse record below. The public interest in limiting particular activities to

licensed attorneys is small when, as with most closings, those activities are routine and d0 not

require a high degree of legal skill and judgment. The Court, therefore, should reject the

Committee’s recommendations.

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ARGUMENT

A. The Court Should Not Prohibit Non-Lawyers From Performing Real Estate

Closings And Other Routine, Standardized Activities That D0 Not Require

Legal Skill And Judgment.

The practice of law “cannot be easily defined.” Unauthorized Practice ofLaw

Comm. v. State, Dep ’t ofWorkers’ Comp, 543 A.2d 662, 665 (R.I. 1988). An important factor,

however, is the extent to which the activity in question involves the exercise of legal skill and

judgment. Transactional work has been held to be the practice of law when it “require[s] in

many aspects a high degree of legal skill, a wide experience with men and affairs, and great

capacity for adaptation to difficult and complex situations.” R.I. Bar Ass ’n v. Auto. Servs. Ass ’n,

179 A. 139, 144 (R.I. 1935) (quoting In re Opinion ofthe Justices t0 the Senate (Mass), 194

N.E. 3 13, 3 17 (Mass. 1935)). In contrast, licensed attorneys axe not needed to perform work that

is routine, repetitive, or that calls for expertise that is held equally by non-lawyers. See In re

Town ofLittle Compton, 37 A.3d 85, 92 (R.I. 2012) (noting that non-lawyers handling labor

arbitrations are likely well-versed in the “law of the shop”); Dep ’t. 0f Workers’ Comp, 543 A.2d

at 666 (upholding statute authorizing non-attomey employee assistants to perform “relatively

simple and repetitive functions” in connection with workers’ compensation hearings).

Many jurisdictions have decided that residential real estate closings and related

functions are routine and can be performed competently by non-lawyers without harming the

public. Even in some of the states that do require an attorney at the closing, the requirement is

limited to buyer/seller transactions.

For example, over twenty years ago, the Supreme Court ofNew Jersey held that

“the public interest does not require that the parties [to a residential real estate transaction] be

deprived of the right to choose to proceed without a lawyer.” In re Opinion N0. 26 ofComm. 0n

Unauthorized Practice ofLaw, 654 A.2d 1344, 1345 (NJ. 1995). The New Jersey court reached

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this conclusion based on an extensive evidentiary record of divergent settlement practices

between the northern and southern parts of the state. As the court trenchantly observed about the

practice in South Jersey, where non-attorney closings were routine:

It would take a volume to describe each and every risk to which

the seller and buyer have exposed themselves without adequate

knowledge. But it takes a very short sentence to describe what

apparently occurs: the deal closes, satisfactory to buyer and seller

in practically all cases, satisfactory both at the closing and

thereafter.

1d. at 135 1. The court pointed out that at every step of a real estate transaction, from the signing

of the purchase contract through the settlement, a “full understanding” of the risks would require

the advice of counsel. Id. at 1352. Nevertheless, the court acknowledged that the public had not

suffered any discernible harm from being allowed to buy and sell real estate without an attorney:

While the risks 0f non-representation are many and serious, the

record contains little proof of actual damage to either buyer or t

seller. Moreover, the record does not contain proof that, in the

aggregate, the damage that has occurred in South Jersey exceeds

that experienced elsewhere. In this case, the absence of proof is

particularly impressive, for the dispute between the realtors and the

bar is of long duration, with the parties and their counsel singularly

able and highly motivated t0 supply such proof as may exist. The

South Jersey practice also appears to save money. For the record

demonstrates what is obvious, that sellers and buyers without

counsel save counsel fees.

Id. at 1346.

The Supreme Court 0f Kentucky also had an extensive evidentiary record in front

of it when it considered whether~to ban non-attorneys from handling real estate closings. The

court rej ected the Kentucky Bar Association’s argument that the mere “potential for legal

questions and issues to arise at the closing” required the presence of an attorney. Countrywide

Home Loans v. Ky. Bar Ass ’n, 113 S.W.3d 105, 122 (Ky. 2003). Based 0n the evidence, the

court found that closings were ministerial:

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We believe the changes in the secondary market have had little

effect on the essential nature of the closing, itself, except to the

extent that those changes have standardized and proliferated the

documents at closing. Because most of the closing documents are

prepared by the lender and legal issues are almost always resolved

prior to the closing, the closing agent’s role at the closing table is

to present the documents to the parties, to instruct the parties where

to sign, and to disburse funds.

Id. at 1 19. The court noted that “in those few instances where legal questions do arise, lay

closing agents are properly trained to answer only if they can do so by reading from the

document itself without providing any additional explanation. If they cannot do so, they are

trained to halt the closing so that the parties may seek legal counsel.” Id. at 119-120.

The Michigan Supreme Court similarly has emphasized that mortgages and deeds

“have become ‘so standardized that to complete them for usual transactions requires only

ordinary intelligence rather than legal training.”’ Dressel v. Ameribank, 664 N.W.2d 151, 156-

57 (Mich. 2003) (internal citations omitted). “To insist that only a lawyer can draft such

documents would impede numerous commercial transactions without protecting the public, i.e.,

would not further the purpose 0f restricting the practice of law to trained and licensed attorneys.”

Id.

The Illinois Supreme Court has held that the preparation of notes and mortgages

by non-lawyers is permitted When done by a party to the transaction for its own benefit. This

“pro se exception” applies when “the party preparing the legal documents does so for his or her

own benefit in a transaction to which the preparer is a party.” King v. First Capital Fin. Servs.

Corp, 828 N.E.2d 1155, 1163 (111. 2005). In King, there was no dispute that “the lenders

prepared the notes and mortgages for their own use in transactions to which they were panics.”

Id. There was also no dispute that the lenders did not “h[o]ld themselves out as providing legal

services in connection With the loan transactions.” Id. The Illinois Supreme Court rejected the

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argument that the lenders had engaged in the unauthorized practice 0f law merely because they

charged document preparation fees. Id. at 1173-1 174.

The Pennsylvania Supreme Court long ago held that title insurance companies are

not engaged in the unauthorized practice of law. Instead, the acts necessary to issue a title

insurance policy are part 0f the title company’s ordinary course of business:

In order to decide whether defendant will insure a title, defendant

must first examine and pass upon the instrument or instruments

evidencing the transfer. Its charter authorizes all steps necessary

for the enjoyment of its corporate franchise. If examination of the

instrument discloses defects that the insurer thinks must be

corrected before the title can be insured, it must of course be

redrawn in the interest of both insurer and insured. Drawing the

instrument correctly in the first place is no more unauthorized

practice of law than examining or approving it after it has been

drawn, or returning it for correction after it has been found t0 have

been erroneously drawn.

LaBrum v. Commonwealth Title C0. ofPhiladelphia, 358 Pa. 239, 244, 56 A.2d 246, 248 (1948);

see id. at 56 A.2d 246, 250 (“There is in the present case no holding out as lawyer; the legal

work complained of is not general but merely incidental t0 the title insurance which defendant’s

charter authorizes.”).

Other jurisdictions have likewise determined that title insurance company

practices are not the unauthorized practice of law. See Ticor Title Ins. C0. v. Smith, 794 S.W.2d

734, 738 (Tenn. App. 1990) (“It is not necessary t0 be a lawyer in order t0 ascertain 0r review

the status of the title t0 real property for the purpose of issuing a title insurance policy. . . . The

statute is clear that non-attomeys may engage in the title insurance business without engaging in

the practice of law.”); W. Va. Code § 30-2-5 (“This section shall not apply . . . to a corporation

or voluntary association lawfully engaged in examining and insuring the titles to real property”).

The Committee takes the position that “conducting a real estate closing is the

practice of law in Rhode Island because a real estate closing is an important transaction with

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monumental legal consequences.“ Defining the practice of law based on the “legal

consequences” casts too wide a net. Id. For example, there are also important legal

consequences that flow from the documents executed at the beginning of a real estate

transaction, such as offers to purchase, purchase and sales agreements, extensions, and addenda,

as well as from leases and other documents that state law currently allows real estate licensees to

prepare. R.I.G.L. § 11-27-16 (a)(7). Likewise, the circumstances surrounding the purchase of an

automobile often involve the review and execution of multiple legal documents and matters of

financing reminiscent of a real estate closing, but it is not the unauthorized practice of law for

auto-dealership personnel t0 walk vehicle buyers through that process. The Committee’s

analysis threatens to undercut other exemptions from the definition of the practice of law, and

pile substantial additional legal fees on Rhode Island consumers, based solely 0n the vague and

infinitely disputable contention that the “legal consequences” of a transaction are such that.

consumers should be deprived of the choice to hire a lawyer 0r not. The appropriate inquiry,

rather, is whether the activity at issue is “relatively simple and repetitive.” See Dep ’t 0f Workers

Comp, 543 A.2d at 666. The closing and settlement services that the Committee found are the

practice of law are routine and repetitive. Non-lawyers have been performing such tasks in

Rhode Island for years and should be permitted to continue to do so.

‘ See In re William E. Paplauskas, Jr., Committee Report dated May 9, 201 8 (“Paplauskas

Report”) at 21; In re SouthCoast Title & Escrow, Committee Report dated June 7, 2018

(“SouthCoast Report”) at 30; In re Daniel S. Balkun and Balkun Title & Closing, Ina,

Committee Report dated June 7, 201 8 (“Balkun Report”) at 47.

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B. The Court Should Not Prohibit Non-Lawvers From Acting In Wavs That TheLegislature Has Determined Fill A Public Need.

1. Rhode Island Statutes Provide That The Closing. Title, And Settlement

Services At Issue Are Not The Unauthorized Practice Of Law.

In addition to considering the degree of legal skill, experience, and adaptability

called for under the circumstances, the Court “must also weigh the public policy interests

involved.” Town ofLittle Compton, 37 A.3d at 92; see also Dep ’t 0f Workers’ Comp, 543 A.2d

at 665 (the practice of law should not be “subject to such rigid and traditional definition as to

ignore the public interest”). On the subj ect of public interest, the elected Legislature’s

determinations are given substantial weight:

[T]he General Assembly has without interference by this court

permitted a great many services that would have come within the

definition of the practice of law to be performed by insurance

adjusters, town clerks, bank employees, certified public

accountants, interstate commerce practitioners, public accountants* * *, as well as employee assistants. The plain fact of the matter

is that each of these exceptions enacted by the Legislature

constituted a response t0 a public need. In each instance the

Legislature determined that the persons authorized to carry out the

permitted activities were qualified to do so.

Dep ’t of Workers’ Comp, 543 A.2d at 664-65 (emphasis added).

In the context of real estate transactions, the General Assembly has long deemed

it to be in the public interest to exclude the activities 0f title insurance companies ffom the

definition of the practice of law. As set forth in R.I. Gen. Laws § 11-27-16,

(a) Nothing in §§ 11-27-2 — 11-27-11 or §§ 11-27-16 — 11-27-

18 [which concern the practice of law] shall be construed to limit ‘

or prevent: I

(1) Any corporation, or its officers or agents, lawfully

engaged in the insuring of titles to real property from

conducting its business, and the drawing of deeds,

mortgages, and other legal instruments in or in connection

with the conduct of the business of the corporation.

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The predecessor to § 1 1-27-1 6(a)(1) was enacted in 1 91 7,2 and revised to its substantially present

form in 1935.3

Further, the General Assembly clearly understood that the title insurance practices

it was permitting under § 11-27-16(a) included not only the “drawing of deeds, mortgages and

other legal instruments,” id., but also determining insurability and handling closings.4 Under the

Rhode Island Title Insurers Act, a “title insurance agent” or “agent” means:

an authorized person, other than a bona fide employee of the title

insurer who, on behalf 0f the title insurer, performs the following

acts, in conjunction with the issuance of a title insurance report or

policy:

(i) Determines insurability and issues title insurance reports 0r

policies, or both, based upon the performance or review of a search

or abstract 0f title; and

(ii) Performs one 0r more of the following functions:

(A) Collects 0r disburses premiums, escrow 0r security

deposits or other funds;

(B) Handles escrows, settlements or closings;

2P.L. 1917, ch. 1494, § 2 (“This section [concerning the unlawful practice of law] shall not

apply . . . to a corporation lawfully engaged in the examination and insuring of titles to real i

property”).

3P.L. 1935, ch. 2190, § 1 provides:

Nothing in this section or the next preceding section [concerning the unlawful

practice of law] shall be construed to limit or prevent: . . . Any corporation or its

officers or agents, lawfully engaged in the insuring of titles to real property from

conducting its business, and the drawing of deeds, mortgages, and other legal

instruments in or in connection with the conduct of the business of such

corporation.

4 The Legislature has also repeatedly and as recently as 2015 declined to enact proposed

revisions to R.I. Gen. Laws § 11-27-2 that would have rendered the title insurance and real estate

closing/settlement services at issue here the “practice of law.” See H. 5630, 2015 Gen. Assemb.,

Jan. Sess. (R.I. 2015); H. 5566, 2009 Gen. Assemb., Jan. Sess. (R.I. 2009); H. S936, 2003 Gen.

Assemb., Jan. Sess. (R.I. 2003); H. 7462, 2002 Gen. Assemb., Jan. Sess. (R.I. 2002); H. 6001,

2001 Gen. Assemb., Jan. Sess. (R.I. 2001).

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(C) Solicits or negotiates title insurance business; or

(D) Records closing documents.

R.I. Gen. Laws § 27-2.6-3(17). The “business of title insurance” is defined as including

“[g]uaranteeing, warranting 0r otherwise insuring the correctness of title searches” and

“[h]andling of escrows, settlements or closings.” Id. § 27-2.6-3(18)(ii)(B) and (C).

The Legislature’s determination that title insurance companies and their agents

are qualified t0 assess insurability and handle loan closings is also reflected in Title 19 ofthe

General Laws concerning “Financial Institutions.” Title 19 defines “loan-closing services” as

“providing title services, including title searches, title examinations, abstract preparation,

insurability determinations, and the issuance of title commitments and title insurance policies,

conducting loan closings, and preparation of loan-closing documents when performed by, or

under the supervision of, a licensed attorney, licensed title agency, or licensed title insurance

company.” R.I. Gen. Laws § 19-14-103) (emphasis added).

The Committee’s recommendation fails to assign the proper weight to the

Legislature’s assessment of the public interest. Instead, the Committee appears to assume that

attorneys are more competent to conduct real estate closings than non-attorneys. This

assumption is not supported by the record, and even if true, does not answer the question

presented here — whether the public interest demands that standardized, repetitive and highly

regulated functions must only be performed by attorneys, at substantial additional cost t0 the

consumer.

Rhode Island does not have a procedure which would allow for a licensed

attorney to hold himself/herself out as a real estate expert certified by the Rhode Island Supreme

Court. See R.I. Rule of Prof. Cond. 7.4. There is no evidence, moreover, that non-attomey

closing specialists and paralegals versed in real estate closings do not have the qualifications to

12

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perform the services they are presently performing. See Joyce Palomar, The War Between

Attorneys and Lay Conveyancers — Empirical Evidence Says “Cease Fire! ”, 31 Conn. L. Rev.

423, 520 (1 999) (“The only clear conclusion . . . is that the evidence does not substantiate the

claim that the public bears a sufficient risk from lay provision of real estate settlement services to

warrant blanket prohibition of those services under the auspices of preventing the unauthorized

practice of law.”); see also Leslie C. Levin, The Monopoly Myth and Other Tales About the

Superiority ofLawyers, 82 Fordham L. Rev. 261 1, 2615 (2014) (“[T]here is little evidence that

lawyers are more effective at providing certain legal services or more ethical than qualified

nonlawyers”). In fact, there is good reason t0 think Ithat requiring lawyers t0 handle all closings

will not necessarily improve consumer protection in comparison to allowing experienced non-

attomey closing specialists t0 perform those services. See, e.g., State v. McDonald, 157 A.3d

1080 (R.I. 201 7) (affirming conviction of real estate attorney for embezzlement of funds

intended to be disbursed to pay off residential mortgage).

A recent academic survey of unauthorized practice of law enforcement concluded

that, as to real estate transactions, “the lines drawn by some courts seem arbitrary at best.”

Deborah L. Rhode & Lucy Buford Ricca, Protecting the Profession 0r the Public? Rethinking

Unauthorized Practice Enforcement, 82 Fordham L. Rev. 2587, 2601 (2014) (discussing Real

Estate Bar Ass ’rz v. Nat ’l Real Estate Info. Servs., 946 N.E.2d 665 (Mass. 201 1) (hereinafter

“REBA”)). The survey also concluded that there was n0 evidence 0f consumer harm to support

most instances of alleged unauthorized practice of law:

Although bar leaders and case doctrine insist that broad

prohibitions on unauthorized practice serve the public, support for

that claim is notable for its absence. Outside a few contexts such

as immigration, foreclosures, and trusts and estates, it is rare for

customers to assert injury, or for suits to be filed by consumer-

protection agencies. As noted earlier, three-quarters of

13

12/7/201 8 9:24 AM

jurisdictions reported that fewer than half of their complaints camefrom consumers or clients, and two-thirds of respondents could not

recall a specific case of injury in the last year. Of those who did

identify a case, almost all involved immigration. So too, the vast

maj ority of UPL [unauthorized practice of law] lawsuits filed

against cyber-lawyer products are brought by lawyers or

unauthorized-practice committees and generally settle without

examples of harm.

Id. at 2605 (emphasis added). In light of these realities, the express pronouncements from the

Legislature discussed above, and the long-standing practice of non-lawyers’ role in real estate

transactions in Rhode Island and elsewhere in the United States, the Court should decline to

adopt the Committee’s recommendations.

2. The Committee’s Disregard 0f Rhode Island Statutory Law Runs CounterTo The Committee’s Reasoning And Rhode Island Precedent ConcerningThe Unauthorized Practice Of Law.

The Committee’s failure t0 give proper deference to R.I. Gen. Laws §§ 1 1-27-16,

27-2.6-3(17) and (1 8), and 19-14-1(13) is not only problematic as a matter ofpolicy, but

deficient as a matter of law. The Committee’s legal analysis flies in the face of both REBA, to

which the Committee turned for guidance, and this Court’s precedents. The decision in REBA

and this Court’s rulings indicate that Iong-standing practice in the jurisdiction and statements of

the legislature should guide whether particular conduct is the practice of law. Dep ’t 0f Workers’

Comp. , 543 A.2d at 666 (“we are dealing with a question of first impression and are relying to a

great extent upon the legislative findings”); Town ofLittle Compton, 37 A.3d at 93 (deferring to

“long-standing involvement of nonlawyer union employees at public grievance arbitrations” and

declining to limit that involvement as unlawful practice of law). To that end, the Committee’s

refusal to defer t0 the General Assembly is not only wrong as a practical matter, but a‘legal one.

14

12/7/201 8 9:24 AM

a. Applied To Rhode Island, The Logic Of REBA Results In AConclusion Opposite To The Committee’s.

When it comes to whether the conduct of real estate closings constitutes the

practice 0f law, the Committee acknowledged that there was no uniform opinion among the

states and based its decision, in large part, on the Massachusetts Supreme Judicial Court’s

decision in REBA. That decision turned to what was the “common and long-standing practice in

the Commonwealth” to assess the role 0f attorneys in the settlement of real property conveyances

and what would and would not constitute the unauthorized practice of law:

As a matter of common and long-standing practice in the

Commonwealth, an attorney must be involved in the closing or

settlement of real property conveyances, a fact that the parties here

d0 not dispute. Some States do not require that an attorney

conduct these closings. We decline here to follow their lead and :

overturn our established practice.

REBA, 946 N.E.2d at 684 (internal citations omitted). The REBA court also noted the

Massachusetts legislature’s own determination (through the enactment of M.G.L. ch. 93 § 70 in

1972) that attorneys for the lender in a purchase money first mortgage transaction must certify

title for the mortgagor and mortgagee. Id. at 687 n.46.

Applying REBA’S reasoning here, however, leads to a conclusion completely

contrary to the Committee’s. While acknowledging that in Rhode Island notary closings are

“evidently a common practice throughout the state,” Paplauskas Report at 16, the Committee

summarily and erroneously dismissed the implications of that practice and recommended that it

be overturned. The Committee also brushed aside the clear, contrary statements (and consequentI

longstanding practice) enshrined in law by the General Assembly for decades. See R.I. Gen.{I

Laws §§ 11-27-16, 19-14-1(13), 27-2.6-3(17)(ii)(B) & (18)(ii)(C). Therefore, one need go noVI

further than the logic ofREBA — the very case on which the Committee relied — to conclude that

the Committee was in error.

15

12/7/201 8 9:24 AM '

'

b. This Conclusion, Moreover, Is Reinforced Bv This Court’s OwnPrecedents.

This Court has made clear for over eighty years that the thrust of reserving the

practice of law to duly licensed attorneys is “to ensure that the public welfare will be served and

promoted.” Town ofLittle Compton, 37 A.3d at 85 (internal quotation marks omitted). The

Court’s assessment of the public welfare has been guided by legislative findings, as well as

practice and custom.

For example, in Dep ’t 0f Workers’ Comp. , this Court concluded that the practice

of “employee assistants” aiding employees during informal workers’ compensation hearings did

not constitute the unauthorized practice of law. 543 A.2d at 665-66. In approving such “lay

representation” in “informal hearings” over workers’ compensation issues, this Court relied “t0 a

great extent upon the legislative findings that declare the necessity for an informal prompt

hearing in the event 0f controversy.” Id. at 666.

Likewise, in Town osz'ttle Compton, this Court refrained from declaring

“nonlawyer representation of unions at labor arbitrations” the unauthorized practice of law. See

37 A.3d at 92, 95. Although the Legislature had not expressly deemed this “common practice in

Rhode Island” as outside the practice of law, this Court nonetheless declined t0 disturb the status

quo in recognition of “the long-standing involvement of nonlawyer union employees at public

grievance arbitrations” and the disruptive “impact on all public labor arbitrations throughout this

state” that a contrary decision would entail. See id. at 92-95.

These precedents support rej ecting the Committee’s recommendations. As in

Dep ’t of Workers’ Comp, 543 A.2d at 665-66, the Legislature has weighed in and declared it to

be in the public interest t0 exclude the title insurance and real estate closing/settlement services

subj ect to the Committee’s recommendations from the definition 0f the practice of law. See R.I.

16

12/7/201 8 9:24 AM

Gen Laws. §§ 11-27-16, 19-14-1(13), 27-2.6-3(17)(ii)(B) & (18)(ii)(C). Similarly, like Town 0f

Little Compton, the activities at issue here are “long-standing,” 37 A.3d at 95, and “common

practice in Rhode Island,” id. at 92. Indeed, the grounds for deeming the subject title insurance

and real estate closing/settlement services not the practice of law are even firmer here, because

unlike in Town ofLittle Compton, id. at 94, there are multiple legislative pronouncements

expressly declaring the conduct at issue outside the practice of law. See R.I. Gen Laws. §§ 11-

27-16(a)(1), 19-14-1(13), 27-2.6-3(17)(ii)(B) & (18)(ii)(C).5

C. The Committee Fails To Distinguish Between The Several Tvpes Of Real Estate

Closings, Manv Of Which Do Not Involve Residential Sales.

The Committee’s reports do not define the term “real estate transaction.” While

the reports focus 0n residential purchase transactionsf the ultimate recommendations are much

more generic. For example, the Committee recommends that only an attorney should handle a

“real estate closing,” and describes a “closing” as “where all parties in a real estate conveyancing

transaction come together to transfer their interests.” SouthCoast Report at 30 (quoting REBA,

946 N.E.2d at 684); see also Paplauskas Report at 17; Balkun Report at 47. This potentially

sweeps in not only purchase transactions, but also mortgage refinancings and home equity loans.

From a lender’s point of view, secured real estate loans take many different forms

from purchase money mortgages to refinancings, second mortgages and home equity loans and

lines of credit. Andrew G. Pizor et al., Mortgage Lending 36-37, 46-47 (2d ed. 2014). The

5 In short, common practice and legislation are not extraneous to the legal question of whether

any given conduct constitutes the unauthorized practice of law — those questions go to the heart

of the issue. See Town ofLittle Compton, 37 A.3d at 92-95. Those questions, based on the facts

and the law here, indicate that the Committee’s recommendation is wrong.

6 See SouthCoast Report at 31 (“The Committee recognizes that buying a home is often the

single most significant purchase people make. At the point of a scheduled closing, emotions are

high, time is of the essence, and the average buyer and seller are unaware of the pitfalls that maybe lurking in the shadows.”); Balkun Report at 48 (same); Paplauskas Report at 21 (same).

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12/7/201 8 9:24 AM

practices and procedures adopted by the lender of secured real estate loans vary considerably.

See id. Traditionally, closed endedxpurchase money secured real estate loans and refinance loans

would be processed through the lender’s mortgage department with ultimate delivery into the

secondary mortgage market;7 whereas the refinance loan, second mortgage loan and home equity

line of credit would, for the most part, be held in the lender’s loan portfolio and administered by

the lender’s consumer loan department. Office of the Comptroller of the Currency, Residential

Real Estate 3-5 (2017) (hereinafter “OCC Handbook”) (“Home equity loan and line underwriting

and processing functions may also be handled by personnel trained in consumer credit functions

and use a consumer loan platform”).8

There are considerable differences in the procedures and risks applicable to each

of these types of loans, with higher standards and the assumption of lower risks applicable to the

purchase money secured loan. See id. at 3-5 (discussing characteristics for residential mortgage

loans which are typically sold on the secondary market, such as “specific underwriting

standards”). Conversely, home equity lines of credit are offered for the most part to customers as

little to no cost consumer loans. See id. at 5-6 (“First, home equity loans and lines of credit

products are typically acquired from existing customers through the bank’s branch locations or

consumer lending activities”). The risk assumptions in these types of loans are more flexible

and thus minimize the need for the traditional title abstract that is required in a purchase money

mortgage. Compare id. at 5-6, 23-24 (discussing home equity credit originations, and noting

“[t]he closing ofhome equity loans and lines is less formal than a mortgage loan closing”) with

7 See generally Pizor et al. at 6-7, 24 (discussing lender’s options to retain loan in portfolio or

sell into secondary market).

8 The OCC Handbook is available at: https://www.occ.gov/publications/publications-bv-

type/comptrollers—handbook/residential-real-estate-lending/pub-c11~1'esidential—real~estate.pdf.

18

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id. at 15-21 (discussing mortgage loan originations); see also Justin Pritchard, How Home Equity

Loans Work: Pros and Cons, The Balance, https://www.thebalance.com/home-equitv-loans—m (last updated Oct. 30, 2018) (“[H]ome equity loans are relatively safe loans for banks to

make”). As such, requiring an attorney to close these loans would add considerable cost to the

consumer. See infia at 19-20.

There were over 41 ,000 mortgage transactions in Rhode Island in 2017 where the

mortgage amount exceeded $1,000, according to data collected by the Warren Group.9 The cost

of mandating attorney-only closings can be estimated by comparing the average closing fee in

Massachusetts (where land conveyancing is the practice of law, see REBA) to the average closing

fee in Rhode Island (where such practices are not). Based on closing fee averages collected and

published by a widely-accepted industry source, Bankrate.com, in 2017, the average cost for the

purchaser of a single family home in Massachusetts is $174 higher than in Rhode Island.

Increasing the average cost of the approximately 41,000 Rhode Island mortgage closings by

$174 translates into an additional cost to Rhode Islanders of $7,134,000. If average closing costs

in a larger group of “attorney-only” states mentioned in the Committee’s reports are considered,

the gap is even larger. The data, based again 0n the closing fee averages compiled by

Bankrate.com in 201 7, is set forth in the table below.

9 Established in 1872, the Warren Group collects and compiles data on real estate sales and

ownership throughout New England. A copy of the Warren Group’s findings is at Appendix A.

19

12/7/201 8 9:24 AM

Bankrate.comClosing Costs Data

Model A2‘2tzizzi;::°:;:%°r

Attorney Only CT $686

Attorney and Title Co FL $434

Attorney Only GA $721

Attorney and Title Co ME $580

Attorney Only MA $744

Attorney and Title Co NH $542

Attorney Only NY $947

Attorney Only NC $71 8

Attorney and Title C0 RI $570

Attorney Only SC $723

Attorney and Title Co TX $456

Attorney Only Avg $756.50

Attorney and Title Co Avg $516.10

Difference Avg.

$240. 1 0

Differences state to state

RI to MA $174 higher in MARI to CT $1 16 higher in CTRI to NY $377 higher in NY

This Court has considered the economic effects that its resolution of unauthorized

practice of law questions will have on the public. In Town ofLittle Compton, for example, this

Court considered whether appearing on behalf of a labor union at a labor arbitration proceeding

was the practice of law. 37 A.3d at 86. Even though the union’s lay representative “acted in

ways normally attributed to the practice of law,” the court declined to require that an attorney be

hired. Id. at 94-95. The court noted that “prohibiting this practice and requiring both the labor

1°Attorney, closing, and settlement fee information for all 50 states can be found by following

each state’s respective link in the table appearing on Bankrate.com at: https://www.bankrate.com

/finance/mortgages/closing-costs/united-states.aspx.

20

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union and management to retain a lawyer may formalize an arbitration proceeding, delay its

conclusion, and raise the cost for both parties.” Id. at 93. The Court further noted that “[a]ny

decision t0 limit the practice of nonlawyer representation in public labor arbitrations will

undoubtedly have an impact on all public labor arbitrations throughout this state.” Id. at 95.

As in Town ofLittle Compton, the Committee’s recommendation, if adopted, Will

“undoubtedly have an impact” on thousands of real estate transactions throughout the state every

year. Id. As to each individual transaction, the Committee’s recommendation is likely to “delay

its [the transaction’s] conclusion, and raise the cost for both parties.” Id. at 93. See also In re

Opinion N0. 26 ofComm. 0n Unauthorized Practice ofLaw, 654 A.2d at 1346 (“the record

demonstrates what is obvious, that sellers and buyers without counsel save counsel fees”). There

are strong public policy reasons not to disturb the existing practices of market participants.

These existing practices are already regulated by federal” and state lending laws” and largely

standardized due to the securitization of many loan portfolios. See OCC Handbook at 3

(observing that there are traditionally two forms of residential mortgage loans (government!

mortgage loans and conventional mortgage loans), which “have limits 0n the maximum amount i

that may be borrowed” and “have specific underwriting standards”).

HSee, e.g., 15 U.S.C. § 1635 (providing for right to rescind a non-purchase money security

interest on a principal dwelling (e.g., home equity loans and transactions that refinance purchase-

money mortgages) within three days of the closing or receipt of the notice of the right to

rescind); see also 12 C.F.R. §§ 1024.1 et seq. (regulations from the Consumer Financial

Protection Bureau (“CFPB”) implementing federal Real Estate Settlement Procedures Act); 12

C.F.R §§ 1026.1 et seq. (regulations from the CFPB implemenfing federal Truth in Lending

Act).

12See, e.g., R.I. Gen. Laws § 5-20.8-2 (describing disclosure requirements for sales of real

estate).i

21

12/7/201 8 9:24 AMW

'

Additionally, title companies (insurers and agents) are separately licensed and

regulated in Rhode Island by the Department of Business Regulation.” Title agents are in turn

subj ect t0 strict standards and regular monitoring by the title insurance companies. As the

Kentucky Supreme Court concluded after examining title industry practices in detail:

The evidence shows that national title insurance underwriters

require their agents, whether attorneys 0r non—attorneys, to carry

errors and omissions insurance. And, most of the title industry

representatives testified that these same underwriters exercise strict

control over their agents by periodically monitoring their use of

funds and their competence.

Countrywide Home Loans, 113 S.W.3d at 120-21.

Even in the absence of the scrupulous oversight that exists in Rhode Island and

elsewhere, there are powerful incentives for title agents to provide high quality, competent

service in order to stay in business and avoid negligence claims. Id. (“What we commonly refer

to as a ‘malpractice claim,’ is nothing more than a legal negligence claim, and lay closing agents

are equally subj ect to common law negligence claims if their negligence results in damages.”).

Given the oversight already in place and the substantial pecuniary and public policy costs

‘3R.I. Gen. Laws § 27-2.4-3 (requiring insurer to obtain license); id. § 27-2.4-8 (providing that

insurance commissioner must approve applications for an insurance license); id. § 27-24-21

(authorizing insurance commissioner to promulgate rules and regulations); R.I. Gen. Laws § 27-

2.6-7 (setting minimum capital requirements for title insurers); id. § 27-.2.6-13 (requiring title

insurers to use title insurance agents licensed by Rhode Island).

22

12/7/201 8 9:24 AM

involved, the Court should rej ect the Committee’s invitation to define the title insurance and real

estate closing/settlement services at issue here as the practice of law.”

D. The Court Should Not Declare That Powers 0f Attorney And Residency Affidavits

Can Be Prepared Only Bj An Attorney.

The Committee recommends that this Court ban non-attomeys from preparing

powers of attorney (“POA”) and residency affidavits “on behalf of a party to a real estate

transaction.” Balkun Report at 63-64. Both types of documents are common and standardized

(as are, for that matter, mortgages, promissory notes, purchase and sales agreements and other

documents typical of real estate transactions). See R.I. Gen Laws § 18-16-2 (a statutory short

form power 0f attorney); Seller’s Residency Affidavit from the State of Rhode Island — Division

of Taxation, available at http://www.tax.ri.20v/forms/ 1997/pers/7130.pdf; Palomar, 31 Conn. L.

Rev. at 442 (“In fact, the residential real estate transaction has become standardized in large

part”). The public interest will not be served by mandating that an attorney prepare these

standard documents for every real estate transaction. See id. at 520.

The Committee’s recommendation regarding POA use also raises a concern to

banks and credit unions because of the implications for the non-real estate context. Amici note

that standard form POAs are used regularly by branch personnel in opening accounts or in

meeting the specific needs of their customers. These POAs are provided by the lender 0r in

some instances are provided by the customer. A substantial number of retail banking clients are

'4 As noted above, the Committee’s analysis could potentially be applied to purchase and sale

contracts and other documents executed at the beginning of a real estate transaction that the

General Assembly has determined may be prepared by real estate licensees. The public interest

would not be served by such an expansive (and expensive for consumers) reinterpretation of the

practice of law, in part because real estate licensees are also already subject to protective

licensing requirements. See, e.g., R.I. Gen. Laws § 5-20.5-4 (providing for licensing

examination for real estate brokers and salespersons); id. § 5-20.5-25 (requiring real estate

licensees to carry errors and omissions insurance); id. § 5-20.5-5 (requiring real estate licensees

to fund a Real Estate Recovery Account).

23

12/7/201 8 9:24 AM

seniors and these customers generally want a family member with POA authority in the event of

their hospitalization or other emergency. This segment 0f clients may also have mobility issues

and are on fixed incomes. The added inconvenience of obtaining and driving to or getting a ride

t0 an attorney’s office could create a hardship, not to mention the attomey’s fee to prepare the

document. For younger customers and the millennial population, a POA is often requested to

ensure that their affairs are taken care ofwhen they either travel or work abroad, are on military

deployment, or are single without a joint account holder.

To meet these needs, banks and credit unions have been routinely providing POA

forms for decades. In Amici’s experience, most POAs are approved by a lender’s legal

department, there is no charge t0 the customer for this service and the POAs are in complete

compliance with current Rhode Island state law. To ensure that customers have full disclosure, it

is a common practice within the industry to have verbiage containing important customer

information at the top of the form advising customers of things they should understand before

signing the document. In light of these safeguards, as well as the longstanding common practice,

this Court should reject the Balkun Report’s recommendation. See Town osz'ttle Compton, 37 I

A.3d at 92—95. i

E. The Committee’s Recommendations Do Not Address Rule 1.7 Of The Rules OfProfessional Conduct .

The Committee’s recommendations also do not address the issue of which parties

the closing attorney represents and avoids a key practical problem with its conclusion — conflicts.

The Committee appears to expect that in most transactions a closing attorney will represent

multiple clients:

[T]he closer has a number of duties to the clients, including

protecting the interest of their clients in the transaction, ensuring

marketable title, and effectuating a valid conveyance.

24

12/7/201 8 9:24 AM

Accordingly, the Committee recommends that the Supreme Court

reserve this important function t0 duly licensed lawyers.

See SouthCoast Report at 3 1. The Committee’s emphasis on the “pitfalls” of buying a home, id.,

would seem to acknowledge that a buyer, seller and lender have foreseeable conflicts of interest

within the meaning of R.I. Rule of Professional Conduct 1.7. As set forth in Comment 8 to Rule

1.7, “[e]ven where there is no direct adverseness, a conflict exists if there is a significant risk that

a lawyer’s ability to carry out an appropriate course of action will be materially limited as a

result of the lawyer’s other responsibilities 0r interests.” Thus, if one attorney is the closer, that

attorney would need to consider for each transaction whether a conflict waiver is needed and, if

so, obtain informed consent in writing before proceeding with the representation. A reasonable

investigation into the potential for a conflict would likely add additional cost.

The Committee’s view that real estate closings are the practice of law because of i

the “monumental” legal consequences would seem likely to have the unintended impact of

requiring all parties to obtain their own counsel, at substantial extra cost. Other courts that have

considered this issue “have found an inherent conflict of interest when a service provider’s own

attorneys purport to represent 0r furnish legal services t0 the provider’s customers. Such dual

representations have drawn universal condemnation, often accompanied by ominous references

t0 the local professional ethics rules.” In re First Escrow, Ina, 840 S.W.2d 839, 848 (Mo. 1992)

(citing cases). As the Supreme Court of Kentucky has observed:

The only way to ensure this benefit of independent counsel that the

[Kentucky Bar Association] considers so important is to require all

parties to the transaction to obtain their own counsel. Although werecognize that persons with the financial wherewithal to do so maywish to retain independent counsel for a real estate closing, we also

recognize that for us to require parties t0 have independent counsel

would substantially increase the transactional costs associated with

a home purchase and thus run contrary to the public’s interest.

25

12/7/201 8 9:24 AM '

Countrywide Home Loans, Ina, 113 S.W.3d at 123. In recognition of the potential for conflicts

of interest, and the additional costs that would need to be incurred in the form of additional

attomeys’ fees to address it, this Court should adopt the reasoning of the Kentucky Supreme

Court and reject the Committee’s determination that a real estate closing is the practice of law.

CONCLUSION

For the foregoing reasons, this Court should rej ect the Committee’s

recommendations and determine that the title insurance and real estate closing/settlement

services at issue are not the practice 0f law.

Respectfully submitted,

RHODE ISLAND BANKERSASSOCIATION, RHODE ISLANDMORTGAGE BANKERS ASSOCIATION,INC., RHODE ISLAND ASSOCIATIONOF REALTORS®, INC, COOPERATIVECREDIT UNION ASSOCIATION,EQUITY NATIONAL TITLE ANDCLOSING SERVICES, INC. and

LINCOLN ABSTRACT & SETTLEMENTSERVICES, LLC

By] ei Attorneys,

PAR/T DGE SNOW & HAHN LLP

\ aul M. Kessimian (#7127)

40 Westminster Street, Suite 1100

Providence, RI 02903

(401) 861-8200

(401) 861-8210 FAX11aylor@psh.com

pkessimian@psh.com

Eobert K. Taylor (#65 14)

I

DATED: November 30, 2018

26

12/7/201 8 9:24 AM

CERTIFICATE OF SERVICE

I hereby certify that on the 30th day ofNovember, 2018 copy of the foregoing

document was sent by prepaid first class mail addressed to the following:

Robert A. D’Amico, II, Esq. Michael W. Field, Esq.

James V. Burchfield, Jr., Esq. Assistant Attorney General

D’Amico Burchfield, LLP R.I. Dept. of Attorney General

536 Atwells Avenue 150 South Main Street

Providence, RI 02903 Providence, RI 02903

Gregory Piccirilli, Esq. Lauren E. Jones, Esq.

Sciacca & Piccirilli Jones Associates

121 Phenix Avenue 72 South Main Street

Cranston, RI 02920 Providence, RI 02903

Thomas M. Dickinson, Esq. Steven M. Richard, Esq.

Law Office of Thomas M. Dickinson Nixon Peabody LLP13 12 Atwood Avenue One Citizens Plaza, Suite 500

Johnston, RI 02919 Providence, RI 02903‘

Thomas W. Lyons, Esq. J. Richard Ratcliffe, Esq.i

Strauss, Factor, Laing & Lyons Ratcliffe Harten Galamaga LLP ='

One Davol Square, Suite 305 40 Westminster Street, Suite 700f

Providence, RI 02903 Providence, RI 02903i

Zachary A. Cunha, Esq. Thomas M. Bergeron, Esq.

Assistant U.S. Attorney Rhode Island Supreme Courti

Office of the U.S. Attorney 250 Benefit Street .I

50 Kennedy Plaza, 8th Floor Providence, RI 02903

Providence, RI 02903

Matthew L. Fabisch, Esq. Giovanni Cicione, Esq.

Fabish Law Offices Cameron & Mittleman

4474 Post Road 301 Promenade Street

East Greenwich, RI 02818 Providence, RI 02908

273413234.1/16045-2

12/7/201 8 9:24 AM

12/7/201 8'924 AM

The Warren Group Order 'Count Request’ Report Septemberzs, 2018

The Warren Group Job Name: Equity National Order- Sales Rep: William D Vlsconti

280 Summer Street

Boston. MA 021 10

phone: (617) 428 5100

www.thewarrengroup.com

09/28/201 8-H

Record Count Descrlptlon:

All Transactions with the following selection criteria:

Location:

State: RI

Counties: Not Selected

Towns: Not Selected

Zipcodes: Not Selected

Address Level: All records

Phone Level: AH records

Sales z Mortgage Transacglon Details:

Sales Dates: Gremer than 01/01/2017 and less than 12/31/201 7

Sales Price: Not Selected

Mortgage Dates: Not Selected

Mortgage Amount: Greater than $1 .000

Mthat: Not Selected

Loan-to-Value Ratio: Not Selected

Lenders:

Lender Groups: Not Selected

Individual Lenders: Not Selected

Prefim Usage;

Property Use Groups: Not Selected

Propefly Use Codes: Not Selected

Record Count Results:

Group Description Count

Bristol 2104

Kent 7638

Newport 3685

Providence 22038

Washington 5863

Total Record Count: 41328

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