Can a lawyer represent a credit bureau and also handle the collection matters it forwards, with the bureau gathering the litigation information and the lawyer's secretary working on the bureau's premises?

Plain-English summary

A lawyer retained by a credit bureau described an arrangement in which the bureau, in addition to its own collection work, would forward collection and litigation matters for its creditor patrons to the lawyer. The lawyer would handle litigated matters from his own law office in the individual creditor's name, while a part-time secretary located on the bureau's premises (with a separate mailing address and phone) would process the non-litigated matters. The bureau would obtain from the creditor the information and "suit requirements" needed to substantiate claims, and collections would pass through the lawyer's account before remittance to the bureau and then the creditors.

The committee concluded that the lawyer could properly represent the bureau in its own affairs. It held that it was not permissible for the lawyer's secretary to work from the bureau's premises, relying on ABA Informal Decision 612 and New York authorities treating shared offices with a collection agency as improper indirect advertising and as inserting a lay intermediary between lawyer and client in violation of Canon 35. Surveying ABA Opinion 294 and its conditions, and ABA Informal Decision C-735, the committee said the fee-payment mechanics here appeared to satisfy the criteria, but warned that the arrangement must not let the lawyer benefit, even indirectly, from the bureau's solicitation or advertising. It was particularly concerned that the bureau, rather than the lawyer, would gather the information to process suit papers, since that work calls for professional judgment; to comply with Canon 35 the committee said the lawyer must himself institute the procurement of information necessary for litigation. Finally, under Canon 6, the lawyer should be sensitive to any conflicting interests between the bureau and its patrons.

Currency note

This opinion was issued in January 1967, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Canons 6, 27, 28, 34, 35, and 47. The professional-independence and fee-division concerns are now addressed by Rule 4-5.4 of the Rules Regulating The Florida Bar, the unauthorized-practice concern by Rule 4-5.5, lawyer advertising and solicitation by Rules 4-7.11 through 4-7.22, and conflicts by Rule 4-1.7 (Model Rules 5.4, 5.5, 7.1, and 1.7). Court decisions on lawyer advertising including Bates v. State Bar of Arizona, 433 U.S. 350 (1977), have since changed the framework for restrictions on publicity. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Could the lawyer represent the credit bureau in its own affairs?

A: Yes. The committee said there was no objection to the attorney representing the bureau directly in its own interests, meaning advising it on its own rights and responsibilities.

Q: Could the lawyer's secretary work out of the credit bureau's office?

A: No. The committee said it was not ethically permissible for the secretarial employee to perform the lawyer's functions from the bureau's premises, following ABA Informal Decision 612 on shared offices with a collection agency.

Q: Could the bureau gather the information needed to prepare the lawsuits?

A: No. The committee said procuring the information necessary for litigation should be done by the lawyer, because it calls for professional judgment, and that leaving it to the bureau would approach a violation of Canon 35 by inserting a lay intermediary between lawyer and client.

Q: What about the risk of indirect advertising or solicitation?

A: The committee warned that if the arrangement let the lawyer become a beneficiary, even indirectly, of the bureau's solicitation of patrons or its advertising, the proposal would be improper.

Background and rules framework

The opinion applied a cluster of former Canons: Canon 6 (conflicting interests), Canon 27 (advertising and solicitation), Canon 28 (stirring up litigation), Canon 34 (division of fees), Canon 35 (intermediaries between lawyer and client), and Canon 47 (aiding the unauthorized practice of law). Those concerns now map to Rule 4-5.4 (professional independence and fee division), Rule 4-5.5 (unauthorized practice), Rules 4-7.11 through 4-7.22 (advertising and solicitation), and Rule 4-1.7 (conflicts) of the Rules Regulating The Florida Bar; the Model Rule analogues are Rules 5.4, 5.5, 7.1, and 1.7. The committee drew heavily on ABA and New York ethics opinions construing the same canons in the collection-agency context.

Citations and references

Rules of Professional Conduct:

• Canons 6, 27, 28, 34, 35, 47 [Canons of Professional Ethics; see current Rules 4-1.7, 4-5.4, 4-5.5, and 4-7.11 through 4-7.22]

Other opinions cited:

• ABA Formal Opinion 294 (1958): conditions for compliance with Canons 34 and 35 in collection work
• ABA Informal Decision 612 (1962): shared office with a collection agency
• ABA Informal Decision C-735 (1963): direct attorney-client relationship in forwarded collections
• New York City Bar Opinions 89, 153, 377, 381, 474, 568
• New York County Lawyers Association Opinions 47, 147, 220, 260, 323, 363

Other authorities cited:

• Resh, "Collection Agencies — The Case Against Assignment for the Purpose of Suit," 32 Unauthorized Practice News 1 (Summer 1966)

See also

• FL Bar Ethics Op. 67-15: Trust-Company Referral
• FL Bar Ethics Op. 67-14: Broker-Hired Deed Drafting
• FL Bar Ethics Op. 67-11: Counsel to Estate-Protection Service

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-66-72/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-66-72.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 66-72
January 11, 1967
Advisory ethics opinions are not binding.
An attorney may represent a credit bureau in connection with its own affairs. With respect to the attorney's handling collections and litigation for individual clients of the bureau it would be improper to delegate to the bureau the procurement of the information necessary for litigation. It would be improper for the lawyer to locate his part-time secretary on the premises of the bureau. The attorney should be sensitive to any conflicts of interest between the bureau and its clients.
Canons: 6, 27, 28, 34, 35, 47
Opinions: ABA 294; ABA Informal 612, C-735; New York City 89, 153, 377, 381, 474, 568; New York County 47, 147, 220, 260, 363.
Chairman MacDonald stated the opinion of the committee:
A member of The Florida Bar advises that he has been retained by a credit bureau (hereafter the "Bureau") in his locality, which in addition to the normal services presumably rendered by such an agency performs a collection function. In addition to the representation of the direct interest of the Bureau he advises that he has been requested by the Bureau to handle collections and necessary litigation for various creditor patrons of the Bureau when the efforts of the Bureau do not meet with success. The relationship formed at this juncture would be directly between the attorney and the creditors with the understanding that any claims delivered to the lawyer on behalf of the creditor by the Bureau would be subject to the sole authority and supervision of the attorney. However, the Bureau apparently would perform the function of obtaining from the creditor necessary information and what the inquirer terms "suit requirements" (which we interpret to mean documentation and other data necessary legally to substantiate the claim).
In those instances in which litigation would be required suit would be instituted by the attorney in the name of the individual creditor and such cases would be administered from his law office, which is not physically connected with or related to the office of the Bureau. Conversely, those claims which do not involve litigation would be handled by a part-time secretarial employee of the attorney who would be located at the office of the Bureau, but who would be possessed of a post office mailing address and telephone separate from the Bureau and who would be subject to the supervision of the attorney from time to time in the processing of such matters. We are not told the relative proportion of the litigated and non-litigated matters. Collections received from debtors by the lawyer would be processed through his account. Accountings and remittances would be forwarded in turn by him to the Bureau for subsequent remittance directly to the creditors.
We are not informed whether the effect of the foregoing is to provide the attorney with exclusive representation of all of the creditor patrons of the Bureau, nor are we aware whether the arrangement would result in the handling of all of the affairs processed through the Bureau for any one particular client. It is implicit that the Bureau has been authorized by its individual patrons to recommend or procure counsel and to receive and remit funds collected by such counsel on behalf of the creditors involved, and in any event we so assume for purposes of this inquiry.
In such context we thus are requested to comment as to the ethical propriety of the foregoing in general, with the secondary consideration as to whether our basic conclusion would be altered if the part-time secretarial employee located in the Bureau were to be relocated in the office of the attorney.
We conclude with no difficulty that there is no objection to the attorney representing the Bureau in its own affairs. We understand this representation to consist of advising the Bureau as to its own rights and responsibilities or to otherwise render legal services of immediate and direct concern to the Bureau. We do not understand that the inquiry poses the problem of the Bureau taking assignments of claims in order to become a party in interest or to prosecute claims in its own name. That consideration would be one fraught with significant problems from ethical and unauthorized practice of law standpoints. See Resh, "Collection Agencies—The Case Against Assignment for the Purpose of Suit," 32 Unauthorized Practice News page 1, Summer, 1966.
We likewise have no difficulty in concluding that it is not ethically permissible for the secretarial employee to perform functions at the instance of the attorney employer from the premises of the Bureau. In Informal Decision 612 (December 11, 1962), the Committee on Professional Ethics of the American Bar Association summarized the appropriate authorities and concluded that it was improper for an attorney representing a collection agency to share an office suite with the collection agency. It was pointed out that ordinarily there would be direct or indirect advertising on the part of the collection agency, necessarily ultimately resulting in indirect advertising benefiting the attorney in contravention of Canon 27. The Committee of the New York County Lawyers Association in Opinion 260 (1928) reached the same conclusion, relying on earlier opinions rendered by that Committee emphasizing the importance of not permitting a credit collection agency to become an intermediary between client and attorney. Such intervention is of course violative of present Canon 35, itself initially adopted in 1928.
Considering, therefore, the basic proposal on the assumption that all services rendered by the attorney of a nature ordinarily to be rendered from the locale of the law office will be performed in his existing law office, we come nevertheless to a situation which has been of considerable concern to ethics committees for more than half a century. See Opinion 47 (1914) of the Committee of the New York County Lawyers Association. On the one hand, there apparently has been an increasing necessity to recognize the commercial reality of modern business practices and the social desirability of providing an expeditious means of enforcing payment of the enormous credit volume engendered by an ever expanding economy. On the other hand, there has been the equally important necessity of insuring that all activities of lawyers in such efforts squarely conform to historically justified ethical requirements. In particular there has been concern to avoid involvement of lawyers with illicit solicitation and advertising, and to avoid separation of the lawyer from the client by a lay intermediary. These concerns, which are articulated in the various ethical opinions over the years, even antedate in some instances their present expression in the Canons of Ethics, particularly Canons 27, 28 and 35. Moreover, since the amendment of Canon 34 in 1933 there has been the important necessity of assuring that any fee arrangement avoided improper division with laymen. Finally, there has been the ever present necessity of precluding the cooperation of a lawyer in the unauthorized practice of law, such concern now being expressed in Canon 47.
Numerous ethical opinions have considered myriad types of arrangements between lawyers and collection agencies. They include New York County Lawyers Association Opinions 47 (1914); 147 (1918); 220 (1924); 260 (1928); and 323 (1933); Association of the Bar of the City of New York Opinions 89 (1928-29); 153 (1930); 377 (1936); 381 (1936); 474 (1939); and 568 (1941).
The Committee on Professional Ethics of the American Bar Association in its relatively recent Opinion 294 (1958) summarized its position in such situations as follows:
The following minimal conditions are requisite to compliance with Canons 34 and 35:
(a) It is recognized that the lay forwarder in performing a non-legal service separate and apart from the legal services rendered by the receiving attorney, is entitled to be paid therefor by the creditor upon the basis of the service rendered by the forwarder, separate and apart from the legal services rendered by the receiving attorney.
(b) The attorney in the collecting of claims with or without suit is engaged in the practice of law and his conduct must conform to the requirements of the Canons of Professional Ethics; and any compensation earned by the attorney in his commercial practice, whether denominated "collection commission" or "suit fee" is a fee for legal services.
(c) No division of fees for legal services is proper, except with another lawyer based upon a division of service or responsibility.
(d) The receiving attorney shall not under any guise or form share his fee for legal services with a lay agency, personal or corporate, without prejudice, however, to the right of the lay forwarder to charge and collect from the creditor proper compensation for non-legal services rendered by the lay forwarder which are separate and apart from the services performed by the receiving attorney.
(e) When the lay forwarder, as agent for the creditor, forwards a claim to an attorney, the direct relationship of attorney and client shall then exist between the attorney and the creditor, and the forwarder shall not interpose itself as an intermediary to control the activities of the attorney.
More recently in an informal decision No. C-735 (1963) the Committee held:
If, when you receive a claim for collection, there does not arise a direct and personal attorney-client relationship between you and the creditor, or if the agency, rather than the creditor, directs and controls your performance of your legal services in connection with your collection efforts, there is a violation of Canon 35.
If your employment and compensation are by the agency in its own behalf rather than on behalf of the creditor, and the agency is indebted to you for your legal fees whether or not it receives full reimbursement from the creditor, . . . it would appear that your client is the agency and not the creditor, and that you are permitting your professional service to be used in aid of the unauthorized practice of law by an agency which is employed and compensated by the creditor to furnish legal services as well as legitimate collection agency services. This would be violation of Canon 47.
The foregoing relates principally to the propriety of the mechanics of fee payment. In this instance, the criteria are apparently satisfied. It is equally important, however, that the arrangement not permit the lawyer to be the beneficiary of unethical solicitation or advertising. In a situation analogous to the instant one, with the exception that the remittances were apparently direct to the client, the Committee on Professional Ethics of the Association of the Bar of the City of New York held in Opinion 377 (1936) as follows:
1. In the opinion of the Committee such conduct on the part of the attorney as set forth is not professionally improper provided that there is no solicitation or procurement of business in violation of Canon 27 of the Canons of Professional Ethics of the American Bar Association and provided that the professional services of the attorney are in no way controlled or exploited in violation of Canon 35 of said Canons.
2. The Committee assumes that the collection agency was not organized nor is it conducted for the purpose of fostering the interests of the attorney. Upon this assumption the Committee is of the opinion that when the need of an attorney's services arises, the agency may, if requested (and the request be unsolicited) recommend for the handling of the professional matter any attorney in whom it has confidence, provided the attorney does not share his fee with the agency, nor pay, directly or indirectly, any consideration for the recommendation. Under the circumstances as shown by the question, however, since the attorney is the tenant of the collection agency and leases part of its office space, and since the recommendation of the attorney is regular and habitual and is made with his knowledge and approval, and since it is to the interest of the collection agency that the attorney obtain business because of the obligation of the attorney to the collection agency for the payment of rent, it would seem professionally improper for the attorney to act for the customers of the collection agency. The situation has the same quality as any other organized system of solicitation of professional employment except that it is not done for direct compensation.
We are not told any details as to the manner in which authority is procured from the creditor patron by the Bureau to appoint counsel, the freedom of choice permitted such client, the frequency or exclusiveness of such designation, or similar details. Thus we can only point out the pitfalls encountered in possible aspects of the proposal. In other words, if the effect of the arrangement is to permit the attorney to become a beneficiary, albeit indirectly, of the solicitation of collection patrons by the Bureau or of the Bureau's advertising, in our judgment the proposal is improper. Thus the New York County Committee commented in Opinion 147 (1918):
. . . But the regular and habitual recommendation of the lawyer, done with his knowledge and approval, and without any specific request for such recommendation on the part of the patron, has the same quality as any other organized system of solicitation of professional employment, with the single exception that it is free from the taint of being done for compensation.
We particularly are concerned that the Bureau as contrasted with the attorney will procure from the client the information and data necessary to process the suit papers. It is our feeling that this is work which ordinarily should be performed by a lawyer because on most occasions a professional judgment, even though routine, is exercised in ascertaining the nature and extent of information required. Thus to leave such functions to the Bureau would approach a violation of Canon 35 by permitting the intervention of the lay intermediary between the attorney and the creditor client.
We thus conclude that the attorney can properly represent the Bureau directly in its own interests, but that any function he performs should not include the location of his personnel within the confines of the Bureau. The actual mechanics are not sufficiently related for us to comment on other particulars, but in our judgment the proposal must comply with the various ethical authorities cited, and must avoid even indirect benefits stemming from solicitation and advertising. In order to comply with Canon 35, it is essential that the attorney institute the procurement of information necessary for litigation from the client. Finally, the attorney in accord with Canon 6 should be sensitive to any conflicting interests of the Bureau and its patrons.