Ethics Opinion No. 1
Adopted March 27, 1931
On February 25, 1931, there was filed with the State Bar of Oklahoma the following application for an opinion:
February 25, 1931.
The State Bar,
Oklahoma City, Oklahoma.
Our business consists of real estate and property management which includes a complete service for the disposition, care and maintenance of property.
In connection with this business we are daily confronted with legal questions regarding titles, etc., to such an extent that we have incorporated a legal department within our business.
In the further enlargement of our scope of business, we would like to know if it would be unethical in our general advertising to call attention in a conservative manner to the services offered by our institution, one of which would be our legal department.
Very truly yours,
Victor Mead Company, Inc.
John S. Kerfoot,
It will be noted that the applicant for the opinion is a corporation and, of course, is not, and under the laws of this State could not be, a member of the State Bar, licensed as such to practice law in the State. Therefore, its proposed course of conduct cannot be considered as the proposed course of conduct of a member of the Bar, licensed to practice law in the State of Oklahoma.
Assuming however, that the applicant desires to be advised in the premises its attention is directed to sections 46 and 48 of the State Bar Act which are as follows:
Sec. 46: Only Active Members May Practice Law. No person shall practice law in the State subsequent to the first meeting of The State Bar unless he shall be an active member thereof as hereinbefore defined.
Sec. 48: Unlawful Practice a Misdemeanor. Any person other than a non-resident attorney, who, not being an active member of The State Bar, or who after he has been disbarred or while suspended from membership in The State Bar, as by this Act provided, shall practice law, shall be guilty of a misdemeanor.
It is the opinion of the Board of Governors of The State Bar that the consummation of the plan proposed by the applicant would involve it in the practice of law.
See State ex rel. Lundin v. Merchants’ Protective Corp., 1919, 105 Wash. 12, 177 P. 694;
People ex rel. Lawyers’ Institute of San Diego v. Merchants’ Protective Corp., 1922, 189 Cal. 531, 209 P. 363;
In re Co-operative Law Co., 1910, 198 N.Y. 479, 92 N.E. 15, 32 L.R.A.,N.S., 55, 139 Am.St.Rep. 839;
Meisel and Co. v. National Jewelers’ Board of Trade, 1915, 90 Misc. 19, 152 N.Y.S. 913;
In re Pace, 1915, 170 App. Div. 818, 156 N.Y.S. 641;
In re Duncan, 1900, 83 S.C. 186, 65 S.E. 210, 211, 24 L.R.A.,N.S., 750.
The foregoing cases hold, in accordance with the general rule that the “practice of law” is not limited to the conduct of cases in court, but, in a larger sense, includes the legal advice and counsel and the preparation of legal instruments and contracts, by which legal rights are secured.
It repeatedly has been held that a lay agency does not change the character of its acts by furnishing duly licensed attorneys to render the service which it agrees to perform, as those attorneys are merely its agents, under its control and in its employ for that purpose. If a lay agency is not entitled to practice law directly, it is not entitled to do so indirectly by employing licensed attorneys to carry on that portion of its activities for it. See cases above cited.
Inasmuch as the propositions involved have not been heretofore passed upon by the Board of Governors, it may not be amiss to quote from the cases cited.
In People ex rel. Lawyers’ Institute of San Diego v. Merchants’ Protective Corporation, 189 Cal. 531, 209 P. 363, 366, it was said:
“This brings us to the final question, which is as to whether such a corporation thus organized, thus employing attorneys as its agents and representatives, and thus dispensing legal advice, counsel, information, and services of the sort usually and generally furnished by regularly admitted and licensed attorneys and counselors to their clients in the practice of their profession, is engaged in the practice of law. The authorities, which are practically unanimous, furnish but one answer to this question, and that answer is well expressed in the case of State ex rel. Lundin v. Merchants’ Protective Ass’n, supra, wherein the Supreme Court of Washington, quoting from Ruling Case Law, says:
“‘The practice of the law is not a business that is open to a commercial corporation. “Since, as has been seen, the practice of law is not a lawful business, except for members of the bar who have complied with all the conditions required by statute and the rules of the courts, and as these conditions cannot be performed by a corporation, it follows that the practice of law is not a lawful business for a corporation to engage in. As it cannot practice law directly, it cannot do so indirectly, by employing competent lawyers to practice for it, as that would be an evasion which the law will not tolerate.”‘ 2 R.C.L. 946; In re Co-operative Law Co., 198 N.Y. 479, 92 N.E. 15, 32 L.R.A.,N.S., 55, 139 Am. St.Rep. 839, 19 Ann.Cas. 879.
“The essential element underlying the relation of attorney and client is that of trust and confidence of the highest degree growing out of the employment and entering into the performance of every duty which the attorney owes to his client in the course of such employment. It is the existence of this essential element as the basis of said relation which has called into being the various statutory regulations governing the admission of attorneys and counselors at law and which embody certain requirements of character, integrity, and learning as the prerequisite of such admissions to the right and privilege of practicing law. It is the possession or reputation for the possession of these personal qualifications which constitutes, as a rule, the main inducement for the formation of the personal and confidential relation of attorney and client. The intervention of a corporation between the membership it secures and the attorneys it employs, which corporation can in and of itself possess none of these qualifications, obviously leaves out of view the necessity for their existence. The essential relation of trust and confidence between attorney and client cannot be said to arise where the attorney is employed, not by the client, but by some corporation which has undertaken to furnish its members with legal advice, counsel, and professional services. The attorney in such a case owes his first allegiance to his immediate employer, the corporation, and owes, at most, but an incidental, secondary, and divided loyalty to the clientele of the corporation.”
In re Co-operative Law Co., 198 N.Y. 479, 92 N.E. 15, 16, 32 L.R.A.,N.S., 55, the following language is used:
“The practice of law is not a business open to all, but a personal right, limited to a few persons of good moral character, with special qualifications ascertained and certified after a long course of study, both general and professional, and a thorough examination by a state board appointed for the purpose. The right to practice law is in the nature of a franchise from the state conferred only for merit. It cannot be assigned or inherited, but must be earned by hard study and good conduct. It is attested by a certificate of the Supreme Court, and is protected by registration. No one can practice law unless he has taken an oath of office and has become an officer of the court, subject to its discipline, liable to punishment for contempt in violating his duties as such, and to suspension or removal. It is not a lawful business except for members of the bar who have complied with all the conditions required by statute and the rules of the courts. As these conditions cannot be performed by a corporation, it follows that the practice of law is not a lawful business for a corporation to engage in. As it cannot practice law directly, it cannot indirectly by employing competent lawyers to practice for it, as that would be an evasion which the law will not tolerate. ‘Quando aliquid prohibetur ex directo, prohibetur et per obliquium.’ Co.Lit. 223.
“The relation of attorney and client is that of master and servant in a limited and dignified sense, and it involves the highest trust and confidence. It cannot be delegated without consent, and it cannot exist between an attorney employed by a corporation to practice law for it, and a client of the corporation, for he would be subject to the directions of the corporation, and not to the directions of the client. There would be neither contract nor privity between him and the client, and he would not owe even the duty of counsel to the actual litigant. The corporation would control the litigation, the money earned would belong to the corporation, and the attorney would be responsible to the corporation only. His master would not be the client but the corporation, conducted it may be wholly by laymen, organized simply to make money and not to aid in the administration of justice which is the highest function of an attorney and counselor at law. The corporation might not have a lawyer among its stockholders, directors, or officers. Its members might be without character, learning or standing. There would be no remedy by attachment or disbarment to protect the public from imposition or fraud, no stimulus to good conduct from the traditions of an ancient and honorable profession, and no guide except the sordid purpose to earn money for stockholders. The bar, which is an institution of the highest usefulness and standing, would be degraded if even its humblest member became subject to the orders of a money-making corporation engaged not in conducting litigation for itself, but in the business of conducting litigation for others. The degradation of the bar is an injury to the state.
“A corporation can neither practice law nor hire lawyers to carry on the business of practicing law for it any more than it can practice medicine or dentistry by hiring doctors or dentists to act for it.”
In State ex rel. Lundin v. Merchants’ Protective Corporation, 105 Wash. 12, 177 P. 694, 696, the Court said:
“The practice of the law is a personal right, and, that the public may not be imposed upon by the unworthy, the law requires that those engaged in practice shall be men of good moral character and with certain qualifications and a degree of learning to be ascertained by the agents, not of the courts, but of the whole people speaking through the legislative body. The right to practice law attaches to the individual and dies with him. It cannot be made a subject of business to be sheltered under the cloak of a corporation having marketable shares descendible under the laws of inheritance. One engaged in the practice of the law is subject to personal discipline for misconduct, and to penalties for violating the ethics of the profession that could not possibly attach to a corporate body.
“When stripped of all fabrication, the respondent has taken money from its subscribers under a contract of retainer to care for their legal business to the extent declared in its certificate of membership. This the law, as well as the policy of the law governing the admission and conduct of attorneys, forbids.”
It is the opinion of the Board that the rendering of legal services to its customers, present or prospective, by the applicant, through its legal department, whether gratuitously rendered or rendered for profit directly or indirectly, pursuant to the proposed advertisement or otherwise, would constitute a violation of section 48 of the State Bar Act and would therefore be reprehensible.
The observation is made that were a member of the State Bar to engage in an advertising campaign such as is proposed by the applicant, he would be guilty of a violation of Rule 29 of the Rules of Professional Conduct adopted by the Board of Governors and approved by the Supreme Court of the State, which, in part is as follows:
“The publication or circulation of ordinary simple business cards, being a matter of personal taste or local custom, and sometimes of convenience, is not per se improper. But solicitation of business by circulars or advertisements, or by personal communications or interviews, not warranted by personal relations is unprofessional. It is equally unprofessional to procure business by indirections through touters of any kind, whether allied real estate firms or trust companies advertising to secure the drawing of deeds or wills or offering retainers in exchange for executorships or trusteeships to be influenced by the lawyer.”
Assuming further, that the applicant is desirous of being fully advised in the premises, the Board of Governors is of the opinion that those members of its legal department, who are assumed to be members of the State Bar, who should knowingly participate in the proposed plan would be guilty not only of the violation of Rule 29 of the Rules of Professional Conduct, but would also be particeps criminis in the violation of Section 48 of the State Bar Act. As said in In re Pace, supra [170 App. Div. 818, 156 N.Y.S. 645], which was a proceeding against certain members of the bar in which they were charged with assisting a corporation to practice law:
“It may be taken, therefore, as the law in this state, that it is unlawful for a corporation, whether domestic or foreign, to practice law in the state, and that any member of our bar who assists a corporation in violating the law in this respect is himself guilty of wrongdoing.”
The foregoing conclusions, in our judgment, are based upon the law and upon sound considerations of public policy. Society has seen fit, for its own benefit and protection, to limit the practice of law to those individuals whom it has found duly qualified in education and character. The permissive right conferred on the lawyer as an individual is a limited privilege subject to withdrawal if he fails to maintain proper standards of moral and professional conduct. Neither this privilege, nor any responsibility or duty connected therewith, can be delegated to or shared with a layman. The lawyer cannot share his professional responsibility with a layman or a lay agency. This of itself is sufficient to render it improper for a lawyer to allow his services to be sold or dealt in by any layman or lay agency.
There is another reason why such a practice is abhorrent. The essential dignity of the profession forbids a lawyer to solicit business or exploit his professional services. It follows that he cannot properly enter into any relations with another to have done for him that which he cannot properly do for himself.
It must therefore hold that the furnishing, selling or exploiting of the legal services of members of the Bar is derogatory to the dignity and self respect of the profession, tends to lower the standards of professional character and conduct and thus lessens the usefulness of the profession to the public, and that a lawyer who co-operates with, or makes it possible for, others to commercialize the profession and to bring it into disrepute by allowing his services to be exploited, or dealt in like merchandise, is guilty of conduct unbecoming a member of the State Bar of Oklahoma.