Ethics Counsel

Ethics Opinion No. 72

Adopted June 22, 1934

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

(a) “May an attorney represent a collection agency in suits in local courts, the fee to be paid by the agency and the suits to be filed in the name of the owners of the accounts with their consent where the collection agency has the claim for collection upon a contingent fee basis and the attorney fee will be paid out of the fee due to the agency?”

(b) “Can the collection agency be represented by an attorney where the fees are charged to the owner of the account but the fee to be paid by the agency out of its commission, the fee to be either a flat one or on a contingent basis?”

(c) “Can a collection agency be represented where assignments are taken of the account to the collection agency for the purpose of filing suit but where no money was actually paid by the agency for the account?”

Assuming that all the inquiries refer to “fees” in connection with suits as distinguished from collection commissions, all the inquiries are answered in the negative.

Rule 36 of the rules of professional conduct provides:

“No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility.”

Rule 37, provides:

“The professional services of a lawyer should not be exploited by any lay agency, personal or corporate, which intervene between client and lawyer. A lawyer’s responsibility and qualifications are individual. He should avoid all relations which direct the performance of his duties by or in the interest of such intermediary. A lawyer’s relation to his client should be personal, and the responsibility should be direct to the client. …

A lawyer may accept appointment from any organization such as an association, club or trade organization, to render legal services in any matter in which the organization, as an entity, is interested, but this employment should not include rendering of legal services to the members of such organization in respect to their individual affairs.”

The taking of assignments by the collection agency, as contemplated in inquiry (c) does not alter the situation, being a mere subterfuge.

The provisions of Rules 36 and 37 are clear and unambiguous and, now appearing as recently amended, taken in connection with the provisions of Rule 29 interdicting the use of touters to secure business, are designed to prevent the commercialism of the profession and its consequent demoralization.

In addition to the foregoing, Cause No. 9 of the Causes for Disbarment, etc., provides as a cause for disciplinary proceedings:

“That he (a member of the bar) has divided or agreed to divide fees for legal services with anyone other than another attorney entitled to practice law and if the fee is earned or received in a cause pending in court, then only with an attorney of record therein.”