Can a lawyer send a demand letter threatening to sue someone who owes a client money?

Plain-English summary

The Committee addressed the ethics of collection letters, that is, letters lawyers send to third parties demanding payment of debts owed to clients. It concluded that collection letters are proper as long as principles of honesty and fairness are observed, and it answered "Yes, with some qualifications."

A lawyer may demand that third parties pay debts owed to clients and may send such letters before suit is filed and before the debtor is represented by counsel. If the debtor is represented in connection with the debt, the lawyer may not communicate directly with the debtor unless the other lawyer consents (former SCR 182). Letters must be accurate and truthful: under SCR 181(1), a lawyer must not knowingly make a false statement of material fact or law to a third person, and SCR 203 makes dishonest or deceitful conduct misconduct. Demand letters must be sent in good faith for settlement, not to harass or burden (former SCR 184), so the lawyer should investigate enough to be satisfied the debt is actually owed.

The opinion permitted a general threat of litigation if the debt is not paid, but tempered by truth and accuracy: a lawyer should not state suit will be brought when it will not (for example, when the claim is too small to justify litigation) or claim costs or attorneys' fees that could not be awarded (citing NRS 73.040, which bars fee awards in small claims). Letters should be dignified, should not threaten dire consequences, and may not say nonpayment will injure the debtor's credit or moral standing. The Committee also concluded a lawyer may not threaten criminal prosecution, directly or indirectly, to collect a civil debt; although the Model Rules dropped the express prohibition that had appeared in Model Code DR 7-105(A), the opinion reasoned such a threat amounts to extortion and is reached by other rules. Finally, collection letters should not contain legal advice (other than advice to seek counsel); detailed explanations of the grounds for recovery and post-judgment consequences are best left to the debtor's own attorney.

Currency note

This opinion was issued in 1986, before Nevada's 2006 adoption of the current Nevada Rules of Professional Conduct (the renumbered Rules 1.0 et seq. that replaced the former Supreme Court Rules) and the related Ethics 2000-based revisions. The duties discussed are now reflected in Rule 4.1 (truthfulness to third persons), Rule 4.2 (contact with represented persons), Rule 4.4 (respect for third persons' rights), and Rule 8.4 (misconduct). Subsequent rule amendments or later opinions may have changed the analysis. 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 threaten to sue a debtor who has not been sued yet?

A: Per the opinion, yes, if the lawyer reasonably believes the claim and the intent to sue are legitimate; the lawyer must not threaten suit that will not actually be brought.

Q: Can a collection letter threaten criminal charges if the debt is not paid?

A: No. The opinion concluded that threatening criminal prosecution, directly or indirectly, to collect a civil debt is improper, reasoning it amounts to extortion even though the Model Rules omit the express Model Code prohibition.

Q: Can the lawyer write directly to a debtor who has a lawyer?

A: No. The opinion stated that if the debtor is represented in connection with the debt, the lawyer may not contact the debtor directly without that lawyer's consent (former SCR 182).

Q: Can the demand letter explain the legal consequences of nonpayment?

A: The opinion advised against it. Beyond advice to seek counsel, detailed explanations of grounds for recovery and post-judgment remedies constitute legal advice and should be left to the debtor's own attorney.

Background and rules framework

The opinion interprets the Nevada rules then governing dealings with non-clients: SCR 181(1) (now Rule 4.1, truthfulness in statements to others), SCR 182 (now Rule 4.2, communication with a represented person), SCR 184 (now Rule 4.4, respect for the rights of third persons), and SCR 203 (now Rule 8.4, misconduct), with reference to Model Code DR 7-105(A) and NRS 73.040.

Citations and references

Rules of Professional Conduct:

• Model Rule 4.1 / former Nev. SCR 181(1) (false statement of material fact or law to a third person)
• Model Rule 4.2 / former Nev. SCR 182 (communication with a represented person)
• Model Rule 4.4 / former Nev. SCR 184 (using means that only harass or burden a third person)
• Model Rule 8.4 / former Nev. SCR 203 (dishonesty, fraud, deceit, misrepresentation)
• Model Code DR 7-105(A) (1980) (former express bar on threatening criminal prosecution to gain civil advantage)

Statutes:

• NRS 73.040 (1985) (attorneys' fees barred in small claims actions)

See also

• No sibling opinions yet indexed.

Source

• Landing page: https://nvbar.org/for-lawyers/ethics-discipline/ethics-opinions/
• Original PDF: https://nvbar.org/wp-content/uploads/opinion_02.pdf