FOR IMMEDIATE RELEASE                                          AT
WEDNESDAY, SEPTEMBER 10, 1997                      (202) 616-2771
                                               TDD (202) 514-1888


    JUSTICE DEPARTMENT URGES KENTUCKY BAR TO ALLOW NON-LAWYERS
              TO PARTICIPATE IN REAL ESTATE CLOSINGS

    Bar Opinion Would Likely Raise Prices, End Consumer Choice


     WASHINGTON, D.C. -- The Justice Department today issued a
letter urging the Kentucky Bar Association Board of Governors to
reject a proposed opinion that would prevent non-lawyers from
competing with lawyers to perform real estate closings in the
state. 
 
     The Department's Antitrust Division said that the opinion
would likely raise real estate closing costs and give consumers
fewer choices.

     "Kentuckians are likely to see their real estate closing
costs increase without competition for these services," said Joel
I. Klein, Assistant Attorney General in charge of the
Department's Antitrust Division.  "Consumers should be able to
choose the service that's best for them.  We should not adopt a
rule that would make it more costly and difficult to buy a home."

     The proposed opinion would require consumers to use a lawyer
for settlement when they buy and sell property, when they
refinance their mortgages, or when they get a home equity loan.

     The Kentucky Bar Association's Board of Governors will
consider the proposed opinion at its Friday, September 12
meeting.  The opinion, proposed by the Kentucky Bar Association's
Unauthorized Practice Committee, must be approved by the Board of
Governors and Kentucky Supreme Court to be binding.

     Currently, Kentuckians can use a non-lawyer settlement
service, such as a bank, title company, or realtor.  Many banks
provide closings services for refinancings and home equity loans
at no additional cost.

     Klein said that the opinion would raise prices in two ways.
"First, it would force Kentuckians who would prefer not to pay
for a lawyer at closing to do so.  Second, without competition
from non-lawyers, the fees lawyers charge are likely to go up--resulting in higher prices, even for those consumers who would
use a lawyer anyhow," said Klein.

     The Kentucky proposal would overturn a 1981 state opinion
which held that non-lawyers could provide settlement services. 
Since this opinion was issued, non-lawyer services have
increasingly offered closing services in northern Kentucky,
Louisville, Lexington, and other parts of the state. 

     Consumers may be less likely to have legal questions at
closing today than in the past because increasingly standardized
forms are used for mortgages, the Department said.  Also, legal
questions are particularly less likely to arise when home equity
loans and refinancings are involved, because the homeowner has
already gone through the closing process for the property once
before.

     The proposed opinion would not guarantee that a lawyer will
actually be at the closing.  Lawyers would be allowed to delegate
closing duties to their lay employees.  Lay closing personnel not
in the employ of lawyers could not, however, perform closings. 

     Many consumers may of course want to hire their own attorney
to provide legal advice, negotiate disputes, or offer other
protections.  But the issue posed by the Bar opinion is whether
non-attorney closing services should be eliminated as an
alternative for those who wish to use them.

     Consumers in much of the country can choose between lawyers
and non-lawyer services, the Department said. 
 
     In September 1996, the Department issued a similar letter to
the Virginia State Bar.  Since 1996, both Virginia and New Jersey
have considered and rejected bans on non-lawyer closing services.

     Uninformed consumers can be protected by measures far less
anticompetitive than an outright ban on non-lawyer closings, the
Justice Department wrote.  For example, the New Jersey court
required written notice of the risks involved in closing without
an attorney.

     In the early 1980s, private bar associations tried to stop
competition from non-lawyers in real estate closings and trust
and estate services through amendments to local bar association
rules.  The Justice Department sued these associations for
violating the antitrust laws and obtained court orders
prohibiting the illegal conduct.
     
     Certain official state actions, even if anticompetitive,
ordinarily do not violate the antitrust laws.  As a result,
approval by the Kentucky Supreme Court would likely protect the
rule proposed here from a later suit by federal antitrust
agencies.  This is one reason why the Justice Department chose to
express its concerns through the attached letter.
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97-380