(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

IN RE OPINION NO. 26 OF THE COMMITTEE ON THE UNAUTHORIZED PRACTICE OF LAW
(A-73/74-94)

Argued January 5, 1993 -- Remanded June 4, 1993
Reargued October 11, 1994 -- Decided March 13, 1995

PER CURIAM

    Opinion No. 26 of the Committee on the Unauthorized Practice of Law (Committee) was issued in response to an inquiry from the State Bar Association whether the residential real estate closing practice in South Jersey, which consists largely of closings in which neither the buyer nor the seller is represented by counsel, constitutes the unauthorized practice of law. In its Opinion, the Committee concluded that the ordering of a title search by the broker, the preparation of conveyancing and other documents by title officers, their clearing of title questions, and the activities of both brokers and title officers at the closing, where neither the buyer nor the seller is represented by counsel, were activities that constitute the unauthorized practice of law.    

    The Committee later clarified its Opinion, explaining that it did not intend to prohibit a buyer or a seller from proceeding without counsel, but that the specified activities by the non-lawyers in the South Jersey practice indeed were the unauthorized practice of law. Opinion No. 26 was interpreted to mean that the right of a seller or buyer to proceed without counsel was a theoretical one in view of the fact that those who helped in the transaction were able to do so only by engaging in the unauthorized practice of law.

    Because of the significance of the issues, the Supreme Court stayed the effect of Opinion No. 26 pending its review. Following briefing and oral argument, the Court remanded the matter to retired Superior Court Judge Edward S. Miller, sitting as a Special Master, to develop a more complete record. After sixteen days of hearings, Judge Miller issued a report. He strongly favored a requirement that buyers and sellers be represented by an attorney; nonetheless, in light of the circumstances and prior case law on related matters, Judge Miller recommended that the Court allow the South Jersey practice to continue subject to various conditions.

    In support of his recommendations, Judge Miller found no proof of actual damage arising from the South Jersey practice. The judge did find that many of the activities undertaken by brokers and title officers, taken in isolation, involved the practice of law, but that if informed of the risks and of the conflicting interests of the brokers and title officers, sellers and buyers should have the right to choose not to be represented by counsel. Judge Miller recommended several conditions concerning the drafting of relevant documents and the rendering of legal advice.
    
HELD: The practice of conducting residential real estate closings or settlements without the presence of attorneys to represent the seller and the buyer shall not constitute the unauthorized practice of law so long as the broker conforms to specific conditions -- the broker must notify both buyer and seller of the conflicting interests of brokers and title companies in these matters and of the general risk involved in not being represented by an attorney. If the conditions are not met, the broker and the title officer, if the latter is aware of the broker's failure to meet the conditions, are engaged in the unauthorized practice of law. Attorneys with that knowledge who participate in the transaction are guilty of unethical conduct.

1. The Court described the formalities of a residential real estate transaction and addressed the basic differences between the practice of non-attorney representation in South Jersey and attorney-represented closings elsewhere. The Court found that a South Jersey closing is generally less expensive but noted the risks of non-attorney representation at each phase of the real estate transaction and the potential conflicts of interest of brokers and title officers in such matters. (pp. 14-24)

2. The important aspects of a real estate transaction involve the practice of law. The prohibition against the unauthorized practice of law serves to protect the public against unskilled and unlearned advice in legal matters. That prohibition is not, however, automatic. The most important question in determining whether certain actions constitute the unauthorized practice of law is whether the public interest is disserved by permitting such conduct. That determination must be based on practical considerations and common sense, using a complete and detailed record that includes the extent, length of existence, effect, and result of the performance of similar acts by non-attorneys and a showing of the public need for such service. (pp. 24-35)

3. The theme of prior case law is clear. It is the public interest that determines the outcome of any prohibition and that in serving that public interest, it may be necessary to impose conditions to insure that the public is served. Today's holding is consistent with previous treatment of this issue. (pp. 35-48)

4. The record clearly shows that the South Jersey practice has been conducted without any demonstrable harm to sellers or buyers, that it saves money, and that those who participate do so of their own choosing, presumably with some knowledge of the risks involved. The record also fails to demonstrate that brokers are discouraging the parties from retaining counsel or that the conflict of interest that pervades the practice has caused material damage to participating sellers and buyers. The Court believes that the parties should retain counsel. Given the history and experience of the South Jersey practice, however, the Court concludes that the public interest will not be compromised by allowing the practice to continue so long as the parties are adequately informed of the conflicting interests of brokers and title officers and of the risks involved in proceeding without a lawyer. (pp. 48-55)

5. The matter is referred to the Civil Practice Committee for a recommendation in respect of the practical means of achieving the notice requirement the Court imposes. In the meantime, the Court adopts an interim notice requirement (see Appendix A) with which the broker must comply by attaching it to the proposed contract of sale as its cover page. The notice may be appropriately revised if the broker represents the buyer or is a dual agent. Brokers shall inform the buyer and seller that they must read this written notice before executing the contract. At the beginning of the closing or settlement, the title officer in charge shall ask both the buyer and the seller whether, how, and when they received notice and shall keep a record of that inquiry and the responses. A broker who fails to comply with these conditions, will have engaged in the unauthorized practice of law. In addition, others who participate in the transaction, excluding the buyer and seller, who know that the required notice has not been given, will also be engaged in the unauthorized practice of law. An attorney continuing to participate in the transaction will be subject to discipline for unethical conduct. (pp. 55-57)

6. Brokers may order title searches and abstracts. An attorney retained by the broker or title company may draft conveyance documents only on written request of the party on whose behalf the document is to be prepared. The title company may participate in clearing up minor objections to title. Further, brokers have a duty to inform the seller or buyer of a situation where independent counsel is needed. The Court also refers several of Judge Miller's other recommendations to the Civil Practice Committee; the issue of certification of real estate attorneys was referred to the Board on Trial Attorney Certification. (pp. 57-61)

7. This decision will not become effective until sixty days from the date of the opinion. It will apply to all real estate contracts subject to this opinion that are thereafter executed and to the transactions based on those contracts. (pp. 61-62)

The decision of the Committee on the Unauthorized Practice of Law, Opinion No. 26, is AFFIRMED IN PART and REVERSED IN PART. Judgment is entered declaring the rights of the participants in New Jersey residential real estate transactions in accordance with this opinion.

CHIEF JUSTICE WILENTZ, and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and STEIN join in the Court's opinion. JUSTICE COLEMAN did not participate.                         SUPREME COURT OF NEW JERSEY
                        A-73/ 74 September Term 1994

IN RE OPINION NO. 26 OF THE

COMMITTEE ON THE UNAUTHORIZED

PRACTICE OF LAW

     Argued January 5, 1993 -- Remanded June 4, 1993 --          Reargued October 11, 1994 -- Decided March 13, 1995

On review of an opinion of the Supreme Court Committee on the Unauthorized Practice of Law.

Joseph M. Clayton, Jr. argued the cause for appellant New Jersey Land Title Association (Mr. Clayton, attorney; Mr. Clayton and John R. Weigel, on the briefs).

Arthur M. Greenbaum argued the cause for appellant New Jersey Association of Realtors (Greenbaum, Rowe, Smith, Ravin & Davis, attorneys; Mr. Greenbaum and Barry S. Goodman, of counsel; Mr. Greenbaum, Mr. Goodman, Jessica R. Mayer, and Luke J. Kealy, on the briefs).

Sarah T. Darrow, Deputy Attorney General, argued the cause for respondent Committee on the Unauthorized Practice of Law (Deborah T. Poritz, Attorney General of New Jersey, attorney; Joseph L. Yannotti, Assistant Attorney General, of counsel).

Michael A. Casale and John McGoldrick argued the cause for amicus curiae New Jersey State Bar Association (Colasanti, Ermel & Casale, attorneys; Mr. Casale on the briefs).

Robert M. Washburn submitted a brief on behalf of amicus curiae Builders League of South Jersey, Inc. (Sherman, Silverstein, Kohl, Rose & Podolsky, attorneys).

Sydney V. Stoldt, Jr., submitted a brief on behalf of amicus curiae Bergen County Bar Association (Stoldt & Horan, attorneys; Mr. Stoldt and Dorothy A. Kowal, on the brief).

Arthur J. Abramowitz submitted a brief on behalf of amicus curiae Camden County Bar Association (Mr. Abramowitz, attorney; Mr. Abramowitz and Edward D. Sheehan, on the brief).

Carol J. Truss submitted a brief on behalf of amici curiae Monmouth County Bar Association and Middlesex County Bar Association (Gross, Hanlon, Truss & Messer, attorneys; Ms. Truss, James E. Berube, Jr., Paul M. Griffin, Michael B. Steib, I. Mark Cohen, Leslie Vincent, and Alan M. Klatsky, on the brief).

PER CURIAM

    We again confront another long-simmering dispute between realtors and attorneys concerning the unauthorized practice of law. See New Jersey State Bar Ass'n v. New Jersey Ass'n of Realtor Bds., 93 N.J. 470 (1983). Title companies are also involved. Our resolution of the dispute turns on the identification of the public interest. Since our decision today permits sellers and buyers in real estate transactions involving the sale of a home to proceed without counsel, we find it necessary to state the Court's view of the matter at the outset. The Court strongly believes that both parties should retain counsel for their own protection and that the

savings in lawyers fees are not worth the risks involved in proceeding without counsel. All that we decide is that the public interest does not require that the parties be deprived of the right to choose to proceed without a lawyer.

    The question before us is whether brokers and title company officers, who guide, control and handle all aspects of residential real estate transactions where neither seller nor buyer is represented by counsel, are engaged in the unauthorized practice of law. That many aspects of such transactions constitute the practice of law we have no doubt, including some of the activities of these brokers and title officers. Our power to prohibit those activities is clear. We have concluded, however, that the public interest does not require such a prohibition. Sellers and buyers, to the extent they are informed of the true interests of the broker and title officer, sometimes in conflict with their own interests, and of the risks of not having their own attorney, should be allowed to proceed without counsel. The South Jersey practice, for it is in that part of the state where sellers and buyers are most often unrepresented by counsel in residential real estate transactions, may continue subject to the conditions set forth in this opinion. By virtue of this decision, those participating in such transactions shall not

be deemed guilty of the unauthorized practice of law so long as those conditions are met. Our decision in all respects applies not only to South Jersey, but to the entire state.

    Under our Constitution, this Court's power over the practice of law is complete. N.J. Const. art. 6, § 2, ¶ 3. We are given the power to permit the practice of law and to prohibit its unauthorized practice. We have exercised that latter power in numerous cases. In re Application of N.J. Soc'y of Certified Public Accountants, 102 N.J. 231 (1986); New Jersey State Bar Ass'n v. New Jersey Ass'n of Realtor Bds., 93 N.J. 470 (1983); Cape May County Bar Ass'n v. Ludlam, 45 N.J. 121 (1965); New Jersey State Bar Ass'n v. Northern N.J. Mortgage Assocs., 22 N.J. 184 (1956); In re Baker, 8 N.J. 321 (1951); Stack v. P.G. Garage, 7 N.J. 118 (1951).

    The question of what constitutes the unauthorized practice of law involves more than an academic analysis of the function of lawyers, more than a determination of what they are uniquely qualified to do. It also involves a determination of whether non-lawyers should be allowed, in the public interest, to engage in activities that may constitute the practice of law. As noted later, the conclusion in these cases that parties need not retain counsel to perform limited

activities that constitute the practice of law and that others may perform them does not imply that the public interest is thereby advanced, but rather that the public interest does not require that those parties be deprived of their right to proceed without counsel. We reach that conclusion today given the unusual history and experience of the South Jersey practice as developed in the record before us.

    We determine the ultimate touchstone -- the public interest -- through the balancing of the factors involved in the case, namely, the risks and benefits to the public of allowing or disallowing such activities. In other words, like all of our powers, this power over the practice of law must be exercised in the public interest; more specifically, it is not a power given to us in order to protect lawyers, but in order to protect the public, in this instance by preserving its right to proceed without counsel.

    We believe that parties to the sale of a family home, both seller and buyer, would be better served if each were represented by counsel from the beginning to the end of the transaction, from contract signing through closing. We are persuaded, however, that they should continue to have the right to choose not to be represented. They should, of

course, be informed of the risks. The record fails to demonstrate that the public interest has been disserved by the South Jersey practice over the many years it has been in existence. While the risks of non-representation are many and serious, the record contains little proof of actual damage to either buyer or 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 to 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. We believe, given this record, that the parties must continue to have the right to decide whether those savings are worth the risks of not having lawyers to advise them in what is almost always the most important transaction they will ever undertake. We realize this conclusion means that throughout the transaction, sellers and buyers may not have the benefit of their own counsel but will look to brokers and title officers, often with conflicting interests, for practical guidance and advice.

    Opinion No. 26 of the Committee on the Unauthorized Practice of Law, 130 N.J.L.J. 882 (March 16, 1992), was issued in response to an inquiry, one of many, from the New Jersey State Bar Association. The inquiry sought a determination of whether the South Jersey practice constituted the unauthorized practice of law. That practice, described in detail later, concerns the sale of a home generally financed by a purchase money mortgage. The essence of the South Jersey practice is that from the beginning of the transaction to the end, neither seller nor buyer is represented by counsel. Every aspect of the transaction is handled by others, every document drafted by others, including the contract of sale, affidavit of title, bond and mortgage. The Committee on the Unauthorized Practice of Law (the Committee), relying largely on our decisions in New Jersey State Bar Association v. New Jersey Association of Realtor Boards, 93 N.J. 470 (1983); Cape May County Bar Association v. Ludlam, 45 N.J. 121 (1965); New Jersey State Bar Association v. Northern New Jersey Mortgage Associates, 32 N.J. 430 (1960), and its own prior determination in Opinion No. 11 of the Committee on the Unauthorized Practice of Law, 95 N.J.L.J. 1345 (December 28, 1972), ruled that the ordering

of a title search by the broker, the preparation of conveyancing and other documents by title officers, their clearing of title questions, and indeed the activities of both broker and title officers at the closing itself, where neither buyer nor seller was represented by counsel, that all of these activities constituted the unauthorized practice of law. The decision was interpreted widely as prohibiting the South Jersey practice, in effect prohibiting a seller and buyer from proceeding with the sale of a home without counsel.

    On July 20, 1992, the Committee issued a notice to the bar and the public, clarifying its opinion. 131 N.J.L.J. 910 (July 20, 1992). The Committee explained that it did not intend to prohibit a seller or a buyer from proceeding in these matters without counsel. But at the same time the Committee adhered to its determination concerning what constituted the unauthorized practice of law in these matters, without in any way changing that determination. The result, it appeared to many, was that the right of seller and buyer to proceed without counsel was theoretical, for those whose help they would inevitably require to go through with the transaction seemed, by virtue of the Committee's opinion, to be able to give such help only by engaging in the unauthorized practice of law. Given the concerns of both potential sellers

and buyers, as well as those of brokers and title officers, and given the fact that the South Jersey practice had continued for so long, we stayed the effect of Opinion No. 26 pending review by this Court.

    Following briefing and oral argument by those interested in the matter -- the organized bar, brokers, title officers -- we remanded the matter to develop a fuller record, referring it to Judge Edward S. Miller, as Special Master, for that purpose. After sixteen days of hearing, Judge Miller rendered his report to us. While personally strongly favoring a requirement that sellers and buyers be represented by counsel, Judge Miller recommended essentially that we allow the South Jersey practice to continue subject to certain conditions.

    The hearing conducted by Judge Miller, leading to his findings and recommendations, is critical to our decision. It was directed not only at determining the extent of the practice of law engaged in by non-lawyers, a circumstance generally known and relatively uncomplicated, but more so at the consequences and implications of the practice. The purpose of the remand was to examine in depth the many factors that would enable this Court to determine whether and to what

extent allowing parties to proceed without counsel in such transactions disserved the public interest. That remand was similar to the action taken by this Court in other unauthorized practice of law cases described later, although the depth and detail of both our inquiry and Judge Miller's hearing and report went beyond most such remands. We asked that the scope of the remand include not only all of the factual aspects of the South Jersey practice, but also its impact on buyers and sellers including both costs and risks; the knowledge of the parties of those risks, and of the conflicting interests of brokers and title officers; the frequency of transactions in which neither party is represented by counsel; comparable advantages and disadvantages to consumers in South Jersey transactions as compared to transactions where both are represented by counsel; the actual incidence of problems in both cases; remedies available to both buyers and sellers for damage caused by brokers or title officers; consumer satisfaction; and other matters. Judge Miller responded to all of our inquiries, and his recommendations covered the issues posed as well as some that arose during the hearings.

    Judge Miller found that there had been no proof of actual damage resulting from the South Jersey practice, or

more accurately that whatever problems existed did not in the aggregate exceed those in matters where the parties were represented by counsel, that many of the activities undertaken by brokers and title officers, taken in isolation, did not involve the practice of law in any sense, and that, if informed of the risks, and of the interests of those who might otherwise be thought to represent them -- including the conflicting interests of the brokers and title officers - sellers and buyers should have the right to decide whether or not to have counsel.

    Judge Miller found that when both buyer and seller are represented by counsel, the fees in South Jersey are lower than those in North Jersey. Although he made no explicit finding on the point, implicit in all of his findings is the obvious fact that the unrepresented buyers and sellers in the South Jersey practice save the entire counsel fee they would otherwise have to pay, a fairly substantial sum. He was strongly of the opinion that those savings were not worth the risk that inevitably existed where either seller or buyer went unrepresented. Given this Court's prior decisions on related matters, however, he concluded that the judiciary could not, or would not, mandate representation, but rather that all of the foregoing circumstances called for a determination

allowing the continuation of the South Jersey practice subject to various conditions. He recommended that the Court allow brokers to order title reports, contrary to the opinion of the Committee; that only attorneys be allowed to draft the bargain and sale deed, but where that drafting was not accompanied by true representation and advice of counsel, it could be done by others only through the explicit request in writing of the seller; that any other similar conveyancing documents, presumably the bond and mortgage, could be drafted by lawyers representing the title company, again only at the specific written request of either the buyer or mortgagee;See footnote 1 that neither the broker nor the title officers present at the closing, or at any other time, could render legal advice; that while the title company could attempt to resolve certain kinds of problems affecting the title, such as arranging to pay off prior mortgages and judgment liens, it could not attempt to resolve others, or presumably give any advice concerning others, such as restrictions on use, easements, and rights of way. Finally, he recommended that the practice, especially the South Jersey practice, of title companies conducting settlements where both buyer and seller are unrepresented be

allowed, thereby disagreeing with the Committee's conclusion that such conduct constituted the unauthorized practice of law. He agreed with the Committee's condemnation of conduct that encourages the parties not to retain counsel.

    Judge Miller so ruled even though it was his opinion that practically every aspect of a real estate transaction involving the sale of a home constituted the practice of law. As he put it, if he thought he had the power, he would require that both seller and buyer be represented by counsel.

    While technically the matter now before us is the review of the opinion of the Committee, R. 1:22-7(b) and R. 1:19-8, we now have the benefit of a full hearing, along with the findings of fact and recommendations that are part of the Special Master's report. The subsequent oral argument and briefing by the parties who participated in that hearing, the New Jersey State Bar Association, the New Jersey Association of Realtors and the New Jersey Land Title Association, focused on both Opinion No. 26 and Judge Miller's report. Our decision today, substantially in accord with Judge Miller's recommendations, affirms portions of Opinion No. 26 and reverses others. Specifically, we rule as follows: a real estate broker may order a title search and abstract; an

attorney retained by a title company or a real estate broker may not prepare conveyance documents for a real estate transaction except at the specific written request of the party on whose behalf the document is to be prepared; a title company may not participate in the clearing of certain legal objections to title, see infra at 58; and the practice of conducting closings or settlements without the presence of attorneys shall not constitute the unauthorized practice of law. We hold further, however, that unless the broker conforms to the conditions set forth later in this opinion, all participants at the closing who have reason to believe those conditions have not been complied with will be engaged in the unauthorized practice of law, and any attorney with similar knowledge so participating in such a transaction will have committed unethical conduct.

    Although the variations are numerous, the South Jersey practice complained of typically involves residential real estate closings in which neither buyer nor seller is represented by counsel, and contrasts most sharply with the North Jersey practice if one assumes both parties are

represented there. Obviously, that is not always the case: the record shows that about sixty percent of the buyers and about sixty-five percent of the sellers in South Jersey are not represented by counsel. In North Jersey, only one half of one percent of buyers, and fourteen percent of sellers, proceed without counsel.

    In North Jersey, when both seller and buyer are represented by counsel, they sign nothing, agree to nothing, expend nothing, without the advice of competent counsel. If, initially without counsel, they sign a contract of sale prepared by the broker, they ordinarily then retain counsel who can revoke that contract in accordance with the three-day attorney review clause. They are protected, and they pay for that protection. The seller in North Jersey spends on average $750 in attorney fees, and the buyer in North Jersey spends on average $1,000. The buyer in South Jersey who chooses to proceed without representation spends nothing. The South Jersey seller whose attorney does no more than prepare the deed and affidavit of title, usually without even consulting with the seller, spends about $90. South Jersey buyers and sellers who are represented throughout the process, including

closing, pay an average of $650 and $350, respectively.See footnote 2 Savings obviously do not determine the outcome of this case; they are but one factor in the mix of competing considerations.

    The typical South Jersey transaction starts with the seller engaging a broker who is ordinarily a member of the multiple listing system. The first broker to find an apparently willing buyer gets in touch with the seller and ultimately negotiates a sale price agreeable to both. The potential buyer requires financing arrangements which are often made by the broker. Before the execution of any sales contract the broker puts the buyer in touch with a mortgage company to determine if the buyer qualifies for the needed loan.

    At this preliminary stage, no legal obligations of any kind are likely to have been created, except for those that arise from the brokerage relationship itself.

    Assuming the preliminary understanding between the seller and buyer remains in effect, the broker will present the seller with the standard form of contract used in that area (usually a New Jersey Association of Realtors Standard Form of Real Estate Contract). That form includes, pursuant to our opinion in New Jersey State Bar Association v. New Jersey Association of Realtor Boards, 93 N.J. 470 (1983), notice that the attorney for either party can cancel the contract within three business days. If the seller signs the contract, and does not within three days retain counsel, the seller will have become legally bound to perform numerous obligations without the benefit of any legal advice whatsoever, some of which may turn out to be onerous, some costly, some requiring unanticipated expense, and some beyond the power of the seller to perform, with the potential of substantial liability for such nonperformance. Many sellers will not understand just what those obligations are, and just what the risks are. Not only has the seller not retained a lawyer, the only person qualified to explain those risks. Worse yet, the only one the seller has had any contact with in the matter is the broker, whose commission depends entirely on consummation of the transaction, and whose interest is primarily -- in some cases it is fair to say exclusively -- to get the contract signed and the deal closed.

    After the seller signs the contract, the broker delivers it to the buyer for execution. The buyer may not know if the description of the property is precisely that assumed to be the subject of the purchase. The buyer may have no idea if the title described in the contract is that with which he would be satisfied, no sound understanding of what the numerous obligations on the part of the seller mean, and no fair comprehension of whether all of the possible and practical concerns of a buyer have been addressed by the contract. No lawyer is present to advise or inform the buyer; indeed, there is no one who has the buyer's interest at heart, only the broker, whose interests are generally in conflict with the buyer's. Although the record does not dispose of the issue, and although Judge Miller explicitly left it undecided, he noted concern that the broker, through his or her actions, may lead the buyer to believe that the broker is looking out for the buyer's interests. Therefore, without independent advice, the buyer signs the contract. If no attorney is retained within three days, the buyer is bound by all of its terms.

    For both seller and buyer, it is that contract that substantially determines all of their rights and duties. Neither one of them can be regarded as adequately informed of

the import of what they signed or indeed of its importance. At that point the broker, who represents only the seller and clearly has an interest in conflict with that of the buyer (the broker's interest is in consummation of the sale, the buyer's in making certain that the sale does not close unless the buyer is fully protected) performs a series of acts on behalf of the buyer, and is the only person available as a practical matter to explain their significance to the buyer. The broker orders a binder for title insurance, or a title commitment to make sure that the buyer is going to get good title. The buyer has no idea, and hopefully never will have, whether the broker ordered the right kind of title search, a fairly esoteric question that only an experienced attorney can determine.

    The broker also orders numerous inspection and other reports, all primarily of interest to the buyer, to make certain that not only is the title good, but that there are no other problems affecting the premises, the house and their use. Those reports can have substantial legal consequences for both seller and buyer. For example, at what threshold dollar amount of required repairs should the seller (or the buyer) be able to cancel the contract? At what dollar amount should the buyer ignore the repairs? At what dollar amount

should the buyer be able to compel the seller to make the repairs, and within what time frame? At this stage of the transaction the help of a lawyer could be invaluable, and the advice of a broker problematic.

    The seller in the meantime is happy to hear from no one, for it suggests there are no problems. Eventually, the seller is told that a deed will be arriving drafted by an attorney selected by the broker, the instrument that our decisions clearly require may be drafted only by the seller's attorney. Cape May County Bar Ass'n v. Ludlam, 45 N.J. 121 (1965). Of course, the purpose of that ruling was to assure competent counsel in the drafting of such a uniquely legal document, but "competent" always meant counsel who understood the entire transaction. In South Jersey, the attorney selected by the broker, while theoretically representing the seller, may be primarily interested in the broker, the source of the attorney's "client" and the likely source of future "clients," and consequently primarily interested in completing the sale. That attorney is likely to prepare a deed satisfactory to the title company -- in fact that attorney often does not even contact the seller. He or she may have no idea of anything in the contract of sale other than the description of the land and the fact that a

certain kind of deed is required. No advice on the substance of the transaction comes from such an attorney even though the seller may get the impression that, since an attorney drafted the deed, the seller's interests are somehow being protected. In fact, the only protection those interests ever received, other than those that happened to appear in the form contract, is in the numbers inserted in that contract, the total purchase price, the down payment, and the closing date, for those are probably the only terms of that contract fully understood by the seller.

    The buyer's position is even worse when the closing occurs. The seller will at least know that he or she got paid. Legal training is not required for that fact, even though there is no practical assurance that the seller will not thereafter be sued. The buyer, on the other hand, wants something that is largely incomprehensible to almost all buyers, good and marketable title, one that will not result in problems in the future. What the buyer gets before closing is a "title binder," a piece of paper that may suggest something about the quality of the seller's title, but that is very much in need of explanation for any substantial understanding of its meaning. The title company is required to mail to the

unrepresented buyer notice of any exceptions or conditions associated with the title insurance policy. N.J.S.A.
17:46B-9. This notice, which must be sent five days prior to the closing, must also notify the buyer of the right to review the title commitment with an attorney. Ibid. If the buyer chooses not to retain an attorney, there is no one to give the buyer that understanding other than the broker and the title agent. The broker's knowledge will often be inadequate, and the conflicting interest apparent. The title company similarly has a conflicting interest, for it too is interested in completion of the transaction, the sine qua non of its title premium. But the title company is also interested in good title, for it is guaranteeing that to the mortgage company, as well as to the buyer. "Good title", however, may be one on which the title company and the mortgagee are willing to take a risk, but one on which a buyer might or should not be willing to, if the buyer knew what the risk was. Again, there is no one to tell the buyer what those risks are, and in some cases the explicit exceptions found in a title policy, those matters that the title company will not guarantee, are of the greatest importance. The significance of those matters is conceded by all to be something that only attorneys can give advice on, and it is contended by all that they never give such advice. Yet such exceptions exist, and

title still closes, and the buyer is totally unrepresented by counsel. One must assume that somewhere, somehow, the buyer is satisfied that there is nothing to worry about, leading to the inescapable conclusion that either the broker or the title officer provides some modicum of assurance or explanation.

    The day for closing arrives and everyone meets, usually at the offices of the title company. Seller and buyer are there, each without an attorney; the broker is there, and the title officer is there, representing both the title company and the mortgagee. The funds are there. And the critical legal documents are also on hand: the mortgage and the note, usually prepared by the mortgagee; the deed, along with the affidavit of title, prepared by the attorney selected by the broker or by the title company; the settlement statement, usually prepared by the title company, indicating how much is owed, what deductions should be made for taxes and other costs and what credits are due; and the final marked-up title binder, which evidences the obligation of the title company to issue a title policy to the buyer, and which at that point is probably practically meaningless to the buyer. All are executed and delivered, along with other documents, and the funds are delivered or held in escrow until the title company arranges to pay off prior mortgages and liens.

    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.

    As noted above, this transaction in its entirety, the sale of real estate, especially real estate with a home on it, is one that cannot be handled competently except by those trained in the law. The most important parts of it, without which it could not be accomplished, are quintessentially the practice of law. The contract of sale, the obligations of the contract, the ordering of a title search, the analysis of the search, the significance of the title search, the quality of title, the risks that surround both the contract and the title, the extent of those risks, the probability of damage, the obligation to close or not to close, the closing itself, the settlement, the documents there exchanged, each and every one of these, to be properly understood must be explained by an attorney. And the documents themselves to be properly

drafted, must be drafted by an attorney. Mixed in with these activities are many others that clearly do not require an attorney's knowledge, such as the ordering of inspection and other reports, and the price negotiation. But after that, even though arguably much can be accomplished by others, practically all else, to be done with full understanding, requires the advice of counsel.

    As this Court's prior treatment of the subject shows, the prohibition against non-lawyers engaging in activities that are the practice of law is not automatic.See footnote 3 Having

answered the question whether the practice of law is involved, we must decide whether the public interest is served by such prohibition. Not every such intrusion by laymen into legal matters disserves the public: this Court does not wear public interest blinders when passing on unauthorized practice of law questions. We have often found, despite the clear involvement of the practice of law, that non-lawyers may participate in these activities, basing our decisions on the public interest in those cases in allowing parties to proceed without counsel.

    Practically all of the cases in this area are relatively recent. They consistently reflect the conclusion that the determination of whether someone should be permitted to engage in conduct that is arguably the practice of law is governed not by attempting to apply some definition of what constitutes that practice, but rather by asking whether the public interest is disserved by permitting such conduct. The resolution of the question is determined by practical, not theoretical, considerations; the public interest is weighed by

analyzing the competing policies and interests that may be involved in the case; the conduct, if permitted, is often conditioned by requirements designed to assure that the public interest is indeed not disserved.

    In Auerbacher v. Wood, 142 N.J. Eq. 484 (E. & A. 1948), our then highest court held that someone who performs the usual functions of a labor relations consultant is not guilty of the unauthorized practice of law. The court noted that the issue could not be determined by reference to any satisfactory definition. "What constitutes the practice of law does not lend itself to precise and all inclusive definition. There is no definitive formula which automatically classifies every case." Id. at 485. The court noted that in drawing the line between that which is and is not permitted, "guidance is to be found in the consideration that the licensing of law practitioners is not designed to give rise to a professional monopoly, but rather to serve the public right to protection against unlearned and unskilled advice and service in matters relating to the science of the law." Id. at 486. In In re Baker, 8 N.J. 321, 334 (1951), this Court, holding respondents in contempt for their unauthorized practice of law, similarly observed that "[t]he reason for prohibiting the unauthorized practice of the law by laymen is not to aid the legal

profession but to safeguard the public from the disastrous results that are bound to flow from the activities of untrained and incompetent individuals," those not only lacking the many years of preparation, but also the high standards of professional conduct imposed on members of the bar and enforced by the Court.

    In a case involving some of the same questions now before us, New Jersey State Bar Association v. Northern New Jersey Mortgage Associates, 22 N.J. 184 (1956), an appeal was taken from the trial court's dismissal of a suit alleging unauthorized practice of law, the trial court concluding that the Supreme Court had exclusive jurisdiction over such matters. The action had been brought by the New Jersey State Bar Association and five individual attorneys. The practice complained of was quite similar to that found in South Jersey, although in fact the business was conducted in North Jersey. The defendants, in the business of searching titles, acting as agents for title companies, and handling the closing of transactions involving sellers, buyers, and mortgagees, admitted that they prepared bonds, mortgages and other instruments connected with titles and mortgage loans, and that the services performed incidental to closing included the

giving of legal advice in connection with those transactions. Id. at 190-92.

    We ruled that our exclusive power over the practice of law did not divest a court of chancery (the trial court) of its jurisdiction to enjoin the unauthorized practice of law. Id. at 193. We further ruled that the individual plaintiffs could maintain the action only if they could show irreparable damage to their own individual financial interests, and since they could not, the dismissal of the action as to them was affirmed. Id. at 196, 199. The Bar Association, however, was placed on a different footing, for in its attempts to enjoin the unauthorized practice of law it sought to protect the public interest, for the protection of which an injunction could be granted. Id. at 194, 196. In that respect the action was deemed to be "on behalf of the public." Id. at 194.

    In analyzing the Bar Association's claim to represent the public interest, we noted that, concerning the nature of the right to practice law, the more recent attitude in New Jersey has been "that admission to our bar is a privilege granted in the interest of the public to those who are morally fit and mentally qualified, solely for the purpose of

protecting the unwary and the ignorant from injury at the hands of persons unskilled or unlearned in the law" and that "[a]ttorneys enjoy rights peculiar to themselves, not enjoyed by those outside the profession, but only as an incident to the public welfare." Id. at 195. We further noted that the licensing of attorneys "`is not designed to give rise to a professional monopoly, but rather to serve the public right to protection against unlearned and unskilled advice and service in matters relating to the science of the law.'" Ibid. (quoting Auerbacher v. Wood, supra, 142 N.J. Eq. at 486).

    The case was remanded to the Chancery Division to develop a more complete record, similar to the remand in this case to the Special Master. The host of issues set forth by the Court on which further evidence was required before a determination could be made are similar to those in this matter on which we sought further information, at least in the sense that they asked more than questions obviously directed at specific conduct that might constitute the practice of law: the questions sought to know more about the business that was going on, the relationships between the parties, the possibility that independent counsel was being discouraged, the charges made, the exact fee and compensation arrangements, and the percentage of occasions when parties were represented

by counsel, id. at 199, all obviously for the purpose of enabling the Court to make a sound decision based on the public interest rather than one premised on some abstract definition of the practice of law.

    After remand and plenary hearing, this Court again certified the appeal, on its own motion, from the trial court's dismissal of the charge that defendants were engaged in the unauthorized practice of law. New Jersey State Bar Ass'n v. Northern N.J. Mortgage Assocs., 32 N.J. 430 (1960). In passing on the issues the Court repeated again that the restrictions against the practice of law by non-lawyers "are designed to serve the public interest by protecting `the unwary and the ignorant from injury at the hands of persons unskilled or unlearned in the law.'" Id. at 436 (citation omitted). Noting that "the line between such activities and permissible business and professional activities by non-lawyers is indistinct," id. at 437, and that some fields may in some areas properly overlap the law, we went on to observe that "each individual set of circumstances must be passed upon `in a common-sense way which will protect primarily the interest of the public and not hamper or burden that interest with impractical and technical restrictions which have no

reasonable justification.'" Ibid. (quoting Gardner v. Conway, 48 N.W.2d 788, 797 (Minn. 1951)).

    The message is clear: not only is the public interest the criterion for determining what is the unauthorized practice of law, but in making that determination practical considerations and common sense will prevail, not impractical and technical restrictions that may hamper or burden the public interest with no reasonable justification. That language is from a court that previously had remanded the case to get the full record that would give it all of the facts that would enable it to determine that public interest. The title company, the company that had succeeded to the interests of defendants in the prior case, claimed that on the basis of the entire record its activities did not constitute the unauthorized practice of the law. By then the measuring rod was clear, for the title company's contention was that "the public policy of this State" compelled that conclusion. Id. at 447. The Court disagreed, but not with the standard against which the issue would be determined, for it found that by enjoining the practices involved in the case "the public interest will not be disserved but on the contrary will be significantly advanced." Ibid. There, the public interest consisted of removing "unwarranted charges imposed by the

Title Company on purchasers" and encouraging "parties to obtain the important protection of independent counsel." Ibid.

    In State v. Bander, 56 N.J. 196 (1970), we sounded the same theme, although in a different context. There we held that the disorderly persons act definition of the unauthorized practice of law did not cover a broker who had prepared a contract for the sale of land even though that conduct, as implied by the decision, clearly constituted the practice of law. We concluded that even if it was the unauthorized practice of law, the broker not being an attorney, the Legislature was free to exclude it (as it did) from its criminal sanctions without offending this Court's exclusive power to determine what constitutes the unauthorized practice of law: in other words, while we may have that exclusive power, it does not prevent the Legislature from criminalizing only certain conduct that constitutes the unauthorized practice of law, leaving others unaffected by the criminal law, although still vulnerable to such prohibitions and remedies as this Court may devise outside of the criminal law. As a result of that conclusion, we noted that we did not have to reach the question "whether defendant's actions constituted an unauthorized practice of law." Id. at 202. The

significance of the case, insofar as the present issue is concerned, was in our subsequent discussion of that issue, which "was partially explored at the oral argument" of the case. Ibid.

    It developed that the problem has so many ramifications that it could not be intelligently considered on the present record. As to that issue it is suggested that an answer might be obtained in a separate suit for an injunction against the type of acts undertaken by defendant or for a declaratory judgment. In this manner a complete and detailed record could be made disclosing, inter alia, the extent, length of existence, effect and result of the performance of similar acts by real estate brokers generally and the public need for such service. This Court could then give a valued and intelligent reply to such an inquiry.

    That opinion, commenting on an activity that clearly involved the practice of law -- the drafting of a contract for the sale of land by a non-lawyer -- suggested our approach to the public interest standard that governed determinations of what constituted the unauthorized practice of law. It was an interest to be determined not by any abstract definition, but by a "complete and detailed record," including "the extent, length of existence, effect and result of the performance of similar acts by real estate brokers," and ultimately a record that would show "the public need for such service." That is,

of course, precisely the record developed thereafter in order to determine that specific issue, the public interest in the right of parties to decline legal representation in the drafting of real estate sales contracts. New Jersey Ass'n of Realtor Bds., supra.

    Although the public interest standard for determination of the issue of unauthorized practice of law remained intact, Opinion No. 11 of the Committee on the Unauthorized Practice of Law, 95 N.J.L.J. 1345 (Dec. 28, 1972), reached a conclusion on it different from what we have determined in this case. The issue there was practically identical to that now before us. What was involved was the South Jersey practice. The Committee decided, contrary to our decision today, and based largely on the decision in Northern New Jersey Mortgage Associates, supra, 32 N.J. at 430, that title companies are engaged in the unauthorized practice of law when they issue a title search or policy or abstract at the request of a broker and that they are similarly guilty when they conduct real estate settlements on their premises without the presence of an attorney for any of the parties to the transaction. While the facts in the case were somewhat different from those here (the Committee finding that the parties to the transaction were discouraged by brokers from retaining counsel, that this

practice was encouraged when title companies paid rebates to referring brokers for their business, and that apparently practically all documents were drafted by the title company) their similarity is remarkable. Indeed, if that opinion were to be followed we would be obliged to declare the acts challenged before us the unauthorized practice of law. The critical difference, of course, is that there was no showing in that case before the Committee similar to that found in the record before us of the impact on the public interest in allowing the South Jersey practice to continue. Apparently, all that the Committee had before it was an unadorned description of what occurs prior to and during the closing, without any evaluation of its benefits and detriments, without any evaluation of the advantages and disadvantages to the public. For present purposes, however, Opinion No. 11 is of note in its firm adherence to the standards set by the prior cases. In determining the issue the Committee said, "the measuring rod is the public interest," 95 N.J.L.J. at 1345, and asked, "Does this practice serve the public interest?" Id. at 1360. Its conclusion was that it did not. In support of its ultimate conclusion prohibiting settlements without the presence of attorneys, the Committee said, "Since the practice does constitute the practice of law and such practice by a lay corporation or person is not in the public interest, it

constitutes the unauthorized practice of law." Ibid. (emphasis added). It is of course remarkable that despite Opinion No. 11 the South Jersey practice flourished, leading ultimately to Opinion No. 26, the matter before us today.

    The public interest standard in determining what constitutes the unauthorized practice of law was again applied in In re Education Law Center, 86 N.J. 124 (1981). Despite the clear prohibition against the practice of law by corporations, long a part of our jurisprudence and then codified by Rule 1:21-1(c), we held that a public interest law firm, a non-profit corporation, would not be engaged in the unauthorized practice of law if it adhered to certain conditions specified in our opinion. We recognized that there was an absolute prohibition against the practice of law by corporations, and that the reasons for that prohibition -- the potential conflict of interest between loyalty to the client and loyalty to the corporation -- could exist as strongly when that practice was engaged in by non-profit corporations that charged no fee as it could with for-profit corporations receiving a fee. Id. at 136. In the case of the non-profit public interest law firm, the conflicting loyalty might be to the social, political, or legislative goals of the firm; with the ordinary corporation, its business, along with the profit

motive, provides the obvious conflict. Noting that the Education Law Center was unquestionably engaged in the practice of law through its attorney employees, we nevertheless held that its practice was not unauthorized. Quoting from Auerbacher, supra, we reiterated the principle that our power to regulate the practice of law was not designed to create a monopoly for lawyers but rather to serve the public. Id. at 133. Noting the important contributions that public interest law firms such as the Education Law Center have made and will continue to make, we decided that "[c]onsiderations of public policy thus lead us to conclude that if other considerations impel such entities to organize as non-profit corporations, it may be possible for such corporations to practice law, provided certain rigorous standards are met, notwithstanding the general prohibition of R. 1:21-1(c)." Id. at 137.

    The case is important not only for the recognition that "competing policy considerations call for an exemption of
non-profit corporations operating for charitable and benevolent purposes" from the otherwise applicable "policies on which the general prohibition of the practice of law by corporations is based," id. at 140, but also for the approach to the resolution of the problem taken by the Court. Noting

that the petitioner in that case, the Education Law Center, had scrupulously avoided any possibility of conflict on the part of its attorney employees that might dilute in the least their total loyalty to their clients (including a strict policy of noninterference in any way with the handling of the case once assigned to the attorney, and the selection of cases to be represented through a committee of the corporation that consisted solely of lawyers), we conditioned our ruling by imposing similar requirements on other public interest law firms. Id. at 139-40. Only if those conditions were met would the practice of law, otherwise unauthorized, be permissible. That is the approach we take in this case, the imposition of conditions to assure the public interest is not disserved, as well as that taken in the important cases involving the preparation of real estate contracts by brokers, New Jersey Association of Realtor Boards, supra, and inheritance tax returns by accountants, In re Application of New Jersey Society of Certified Public Accountants, 102 N.J. 231 (1986).

    In what is undoubtedly the clearest example of the dominating influence of the public interest in this area, we decided in New Jersey Association of Realtor Boards, supra, that real estate brokers may draft contracts for the sale of

residential property if the contract contains a prominent clause informing the parties of their right, through counsel, to cancel it within three days. While our decision took the form of the approval of a settlement reached between the brokers and the bar, our approval was explicitly based on a finding by Justice Sullivan, sitting as the trial judge, that the settlement was in the public interest, a finding with which we concurred. The initially proposed settlement of the matter had previously been submitted to us and subjected to a public hearing, but after being informed that the settlement had unraveled, we remanded the matter for trial to Justice Sullivan. At that trial a new settlement was arrived at and again subjected to a public hearing before the trial court.

    Noting the position of those who objected to the settlement in its entirety, Justice Sullivan concisely summed up the entire law in this area with the observation that "[t]he basic question is how is the public interest best served." New Jersey State Bar Ass'n v. New Jersey Ass'n of Realtor Bds., 186 N.J. Super. 391, 396 (Ch. Div. 1982). He concluded that "the settlement is in the public interest" and that the three-day cancellation clause "affords adequate protection to purchasers and sellers of residential real estate or lessors and lessees thereof." Id. at 398. In so

concluding, he noted that it had been asserted "without contradiction that `[n]o State in the Country has prohibited Brokers from completing form contracts in connection with residential property sales.'" Id. at 396. The record in this case also demonstrates that the conduct in question is permitted in many other states.

    Again, conduct that would clearly constitute the unauthorized practice of law was permitted based on the public interest, and again permitted only if it conformed to conditions that assured the public interest would indeed not be disserved. In affirming Justice Sullivan's approval we noted that the record supported his conclusion that the settlement would "protect the public interest." New Jersey Ass'n of Realtor Bds., supra, 93 N.J. at 473. And anticipating the possibility of further needed amendments to assure that the public interest was served, we referred to the "further possible modification of the present accord pursuant to the exercise of the Court's const