Can a lawyer who is a principal of a collection agency accept client referrals from it and refer clients to it?
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This page answers the general question as of 1983. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.
Plain-English summary
The committee was asked whether a lawyer may accept clients referred to him by a collection agency of which he is a principal, and whether he may refer clients to that agency. It noted that N.Y. State 371 (1975) had generally allowed an attorney to accept referral cases from a collection agency that selected him, where the agency had the client's authorization to make the selection and the attorney knew of that authorization, but that opinion did not address a lawyer who is a principal of the referring agency.
The committee drew on its dual-practice line: N.Y. State 536 (1981) allowed a law firm to run a financial planning service from the same office and accept as legal clients persons first introduced through the planning activities, assuming no unlawful solicitation, and N.Y. State 493 (1978) allowed a lawyer to run a real estate brokerage from the same office. It recognized that after Bates v. State Bar of Arizona many advertising restrictions were removed, but that it remains a violation of the Code (DR 2-103(A)) to solicit employment in violation of any statute or court rule, citing Judiciary Law section 479 and Matter of Koffler and Matter of Greene. The committee said it is not its province to decide questions of law and offered no opinion on whether the proposed conduct would violate the law against solicitation. Assuming no such violation, and assuming full disclosure to the clients of the relationship between the collection agency and the lawyer, it found no ethical impropriety in the lawyer accepting clients referred by the agency he owns and referring clients to it. The questions were answered in the affirmative.
Currency note
This opinion was issued in 1983, before New York replaced the Code of Professional Responsibility with the Rules of Professional Conduct in 2009 (payment for recommendations and referral arrangements now appear at Rule 7.2, and law-related services such as a collection business at Rule 5.7). New York's advertising and solicitation rules have changed since this opinion. 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 accept clients referred by a collection agency he owns?
A: Yes, the committee held it is not improper, assuming no unlawful solicitation and full disclosure to clients of the lawyer's relationship to the agency.
Q: Can the lawyer refer his clients to the collection agency?
A: Yes, on the same conditions of disclosure and no unlawful solicitation.
Q: Did the committee decide whether this violates the solicitation statutes?
A: No. The committee said it is not its province to decide questions of law and offered no opinion on Judiciary Law section 479 or the solicitation case law.
Background and rules framework
The opinion applied DR 2-103(A) (soliciting employment in violation of a statute or court rule), read against Bates and the committee's dual-practice opinions, to a lawyer's ownership of a collection agency that exchanges referrals with him. The closest current Model Rule analogues are Rule 7.2 (advertising; referral arrangements) and Rule 5.7 (responsibilities regarding law-related services).
Citations and references
Rules of Professional Conduct:
- MR 7.2 (advertising; referral arrangements)
- MR 5.7 (responsibilities regarding law-related services)
- NY DR 2-103(A)
Statutes:
- Judiciary Law section 479 (unlawful solicitation; not decided)
Cases:
- Bates v. State Bar of Arizona, 433 U.S. 350 (1977), lawyer advertising
- Matter of Koffler, 51 N.Y.2d 140 (1980), solicitation
Other opinions cited:
- N.Y. State 371 (1975): accepting referrals from a collection agency that selected the lawyer
- N.Y. State 536 (1981); N.Y. State 493 (1978): dual practice from the same office
See also
- NY State Bar Op. 565: Marketing-firm solicitation and fee sharing
- NY State Bar Op. 559: Law school alumni directory of graduates
- NY State Bar Op. 556: Dual practice advertising and title insurance
Source
- Landing page: https://nysba.org/opinion-549/
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