Opinion ID: 1417990
Heading Depth: 2
Heading Rank: 5

Heading: Carolina Title Services Matter

Text: Respondent closed approximately five real estate transactions in a two-week period for Carolina Title Services (CTS). There were no licensed attorneys employed by CTS. Pursuant to an arrangement between respondent and CTS, CTS prepared the closing documents and respondent reviewed the title abstract and closing documents and attended the closings as attorney for the borrowers. The HUD-1 Settlement Statements showed respondent as the settlement agent and respondent signed the settlement statements in that capacity. However, respondent represents his signature was added without his knowledge by non-lawyer staff of CTS. For a period of time, respondent left disbursement of the proceeds from the transactions to be completed by the non-lawyer staff of CTS. During this period, respondent was under the impression, from discussions with the manager of CTS, that another attorney, William J. McMillian, III, was overseeing the disbursement of the proceeds of the transactions, the recordation of documents, and any other aspects of the closings required to be performed by an attorney. Respondent relied on those representations from the manager, but did not discuss the arrangement with McMillian. McMillian did, in fact, have a close working relationship concerning the closing of real estate transactions with CTS and respondent was aware of that relationship. Respondent was paid by way of checks drafted on McMillian's trust account, signed by the manager of CTS, and transmitted to respondent by CTS rather than McMillian. All of the checks were returned due to insufficient funds; therefore, respondent was not paid for his services in the transactions. Respondent later learned that McMillian was not involved in the transactions, that the manager of CTS had signature authority on McMillian's trust account, and that disbursements were being made by CTS without supervision by a licensed attorney. Thereafter, respondent insisted that all disbursements on real estate transactions with CTS be made by respondent through respondent's trust account. Respondent is now aware that the manager of CTS had directed the bank to sweep all funds out of McMillian's IOLTA trust account each day into the manager's personal bank account, which later resulted in a considerable shortage of funds in McMillian's trust account; however, respondent was unaware of that arrangement during the time respondent allowed CTS to handle the disbursement of funds from real estate transactions. Respondent now recognizes that, as a result of his reliance on incorrect information from the manager of CTS, respondent assisted one or more of the non-lawyer employees of CTS to engage in the unauthorized practice of law. Respondent maintains he discontinued participating in the closing only arrangement with CTS when he learned that representations made to him regarding the involvement of McMillian in other aspects of the transactions were incorrect. In one case, respondent reviewed the closing documents but was unable to attend the closing due to a scheduling conflict. Respondent retained attorney Stephen M. Pstrak to attend the closing in his place. However, respondent did not advise the clients of the limited scope of Pstrak's representation. Neither respondent nor Pstrak did any further work on the matter after the closing. Shortly thereafter, McMillian was placed on interim suspension by this Court and his trust account, used by CTS for disbursement of funds from the transaction, was frozen by the attorney appointed to protect the interests of McMillian's clients. In the Matter of McMillian, 350 S.C. 216, 565 S.E.2d 765 (2002). Some time later, respondent was advised that the transaction had not been completed. The clients had to retain another attorney to complete the closing, which took approximately one year. Respondent was never paid for the closing, but paid Pstrak for his participation. Respondent contends he was under the mistaken impression on the occasion of the closing that McMillian would be handling the disbursement of the funds and recordation of the closing documents when, in fact, he now knows McMillian was not involved in the transaction and it was, instead, being handled by non-lawyer employees of CTS without the supervision of a licensed attorney. Respondent now recognizes that it was his responsibility to see that the transaction was properly closed and that the proceeds from the transaction were disbursed in accordance with the settlement statement since Pstrak, as his designee, signed as settlement agent under respondent's authorization and direction, and that it was his further responsibility to have assisted the clients in removing the impediments to closing once respondent was advised that the transaction had not been completed. However, due to respondent not supervising the non-lawyer employees of CTS after closing, respondent was unaware that the transaction had not been completed until some time later by the new attorney for the clients.