Adopted February 23, 1934

The Board is in receipt of the following request for an advisory opinion:

“The Retail Merchants Association of this city has asked me to take charge of their collections. This is an association of various retailers who employ a secretary and pay monthly dues. The secretary keeps a file of credit ratings and makes credit reports to the members, and also publishes a weekly bulletin which is circulated only among the members of the association. From time to time, merchants bring past due accounts to the secretary for collection. The secretary makes a notation in her records and then hands the account to their collector. The collector goes ahead with the matter, and thereafter communicates direct with the merchant for whom the account is being handled. There is no division of fees with the association on collections and no money is paid by the association for this service, but the collections are handled on a contingent basis, a percentage of the amount collected being retained as fee. The collection service, although paid for in addition to the membership fee, and although no portion of the membership fee or dues goes to pay for the collection service, is a part of the consideration which the merchant receives by reason of his membership.

“Will you kindly advise me whether an attorney can accept employment of this nature in view of the Rules of Professional Conduct, particularly Rule 37 as amended, and if not, whether a layman accepting such employment would be engaged in unauthorized practice of law.”

In response:

The principles involved are fully discussed in Advisory Opinions:

No. 1 (Vol. 25, State Bar Reports, page 161);

No. 31 (Vol. 26, State Bar Reports, page 203);

No. 49 (March 1933, State Bar Journal); and

No. 64 (December 1933, State Bar Journal).

Rule 29 of the Rules of Professional Conduct interdicts the solicitation of business by a member of the bar either personally or by indirection. As said in Advisory Opinion No. 1: “It follows that he cannot properly enter into any relations with another to have done for him that which he cannot properly do himself.”

It is the opinion of the Board that if the proposed relationship contemplates the rendition of legal services such as forcing collections by suit, it would violate the provisions of Rules 29 and 37 of the Rules of Professional Conduct; otherwise, if the proposed relationship contemplates the mere business of collecting accounts by importunity or otherwise, without suit, because that does not constitute the practice of law.

But in the last hypothesis, a member of the bar who assumes such relationship will undoubtedly be under the suspicion of improper conduct. Paraphrasing the language in Advisory Opinion No. 36 (Vol. 26 State Bar Reports, page 214), if he is engaged in the lay business of collecting accounts for compensation as a collection agency, his conduct is disapproved of as having a tendency to lower the dignity of the profession in that he combines his lay business with his law practice in such a way as to obtain business as a collecting agent because he is a lawyer, or to obtain business as a lawyer because he is engaged in the lay business of collecting accounts. In the opinion it was said:

“This sort of combination of lay business with the practice of law has been condemned by the Committee on Professional Ethics of the New York County Lawyers Association in answer to question 114, wherein is held that, though a lawyer is not prohibited by any accepted standard from engaging in a lay business while practicing law, he must conduct such lay business with due observance of the standards of conduct required of him as a lawyer; and that in conducting such lay business, he must not use it as a means of obtaining law business, nor must he use the fact that he is a member of the bar as a means to obtain lay business.”

In this connection the Board restates what it has had repeated occasion to state, “a member of the bar should not only avoid all impropriety, but should likewise avoid the appearance of impropriety.”