Can a lawyer report a client to a credit bureau to pressure the client into paying an unpaid fee?

Plain-English summary

A lawyer proposed that, rather than refer a delinquent fee account of under $1,500 to a collection agency, the lawyer would report the client to a credit bureau, which would disseminate the information on authorized credit inquiries, in the hope that the resulting impairment of the client's credit would prompt payment. The Committee concluded the practice should not be permitted in Alaska except with the client's knowing consent.

The opinion's foremost concern was that referral to a credit bureau is at best an indirect method of collecting the fee, whose only direct effect is to sully the client's credit rating. It concluded the probability of collection by that method was too small to justify it, that the practice could intimidate and embarrass a client without producing payment or even direct collection efforts, and that this is not befitting of the legal profession. The opinion found the practice directly contrary to EC 2-23, which requires attorneys to avoid public conflict over fees whenever possible, and noted the risk of needless harm under EC 7-9 and EC 7-10.

The opinion also concluded that disclosing a client's name and delinquent fee amount, with the intention that the information be used freely by third parties, may constitute an unauthorized disclosure of a client "secret" under DR 4-101(A) and (B). Because the credit bureau would not be collecting the fee for the attorney, the disclosure exception in DR 4-101(C)(4) was unavailable. The opinion concluded that referral of client information to a credit bureau should not be permitted except with the knowing consent of the client under DR 4-101(C)(1).

Currency note

This opinion was issued in 1986, before the Alaska Bar Association's adoption of the 2009 revisions to the Alaska Rules of Professional Conduct (and before Alaska adopted the Rules of Professional Conduct at all; it applies the former Code of Professional Responsibility). Subsequent rule amendments or later opinions may have changed the analysis; the Alaska Bar revisited the credit-bureau question in Ethics Opinion 2000-03. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer report a non-paying client to a credit bureau?

A: The opinion concluded a lawyer may not, except with the client's knowing consent, because the disclosure of the client's name and delinquent-fee information may be an unauthorized disclosure of a client secret.

Q: Why doesn't the fee-collection exception allow it?

A: The opinion concluded the DR 4-101(C)(4) exception (disclosure to collect a fee) does not apply, because the credit bureau is not collecting the fee for the attorney; its role is only to disseminate the information.

Q: What if the client consents?

A: The opinion concluded referral may be permitted with the client's knowing consent under DR 4-101(C)(1).

Background and rules framework

The opinion applied DR 4-101 of the former Alaska Code of Professional Responsibility, the confidences-and-secrets rule analogous to Model Rule 1.6, focusing on the definition of a "secret," the consent exception (DR 4-101(C)(1)), and the fee-collection exception (DR 4-101(C)(4)). It also invoked the ethical considerations counseling against public fee disputes (EC 2-23) and against needless harm (EC 7-9, EC 7-10).

Citations and references

Rules of Professional Conduct (former Code; cf. Model Rules):

• DR 4-101 (preservation of confidences and secrets; consent and fee-collection exceptions) (cf. Model Rule 1.6)
• EC 2-23 (avoiding public controversy over fees); EC 7-9, EC 7-10 (avoiding needless harm)

See also

• AK Bar Ethics Op. 2000-03: Client to Credit Bureau
• Alaska Ethics Op. 87-1: Non-Refundable Retainers

Source

• Landing page: https://alaskabar.org/ethics-discipline/ethics-opinions/adopted-ethics-opinions-chronological/
• Original PDF: https://alaskabar.org/wp-content/uploads/86-3.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Ethics Opinion No. 86-3
Referral of Client Identity to Credit Bureau.
A lawyer has proposed that when a client owes a delinquent fee of under
$1,500, rather than refer the account to a collection agency, the lawyer intends
to report the client to a credit bureau. The credit bureau would disseminate
that information whenever it received an authorized request about the client's
credit status. By impairing the client's ability to obtain credit, it is hoped that
the client will pay the account.
The Committee's foremost concern is that referral of the client's
delinquent status to a credit bureau is at best an indirect method of collecting
the unpaid fee. The only direct effect is to sully the client's credit rating. The
Committee concludes that the probability of collection by such indirect
methods as referral to a credit bureau is too small to justify its use. Referral to
the credit bureau may intimidate and embarrass a client without ever resulting
in payment of the fee or even direct efforts to collect the fee. This kind of
activity is not befitting of the legal profession. It is directly contrary to EC 2-23,
which requires attorneys to avoid public conflict over fees whenever possible. It
may lead to the infliction of needless harm. EC 7-9, EC 7-10.
The disclosure of a client's name and delinquent fee amount with the
intention that this information be used freely by third parties may constitute
an unauthorized disclosure of a client "secret." DR 4-101(A), (B). Since the
credit bureau will not be collecting the fee for the attorney, the exception
allowing disclosure contained in DR 4-101(C)(4) is unavailable.
The Committee believes the referral of any client information to a credit
bureau should not be permitted in Alaska, except with the knowing consent of
the client. DR 4-101 (C)(1).
Adopted by the Alaska Bar Association Ethics Committee on August 26, 1986.
Approved by the Board of Governors on September 5, 1986

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