Does a creditor's lawyer who confesses judgment on a cognovit note have a conflict of interest with the debtor?

Plain-English summary

A lawyer asked whether the 2007 shift from the former Code of Professional Responsibility to the Rules of Professional Conduct changed the analysis in Advisory Opinion 93-3, which had approved a lawyer's confessing judgment against a debtor under a warrant of attorney in a cognovit note. The concern was that Prof. Cond. R. 1.7(c) might now create a conflict of interest. The Board reaffirmed the substance of Opinion 93-3 and updated it.

The Board concluded that no conflict analysis under Rule 1.7 is needed. Citing DiBenedetto v. Miller, it reasoned that a lawyer confessing judgment under a cognovit provision represents only the creditor and has no attorney-client relationship with the debtor, so there can be no Rule 1.7(c) conflict between the lawyer and the debtor. The Board noted that R.C. 2323.13 authorizes the confession of judgment (with the statutory warning and the warrant produced for the court), and that the U.S. Supreme Court upheld Ohio's cognovit statute in D.H. Overmyer Co. v. Frick Co. The Board reaffirmed that the practice is proper when the warrant authorizes the creditor's attorney to confess judgment or contains an express conflict waiver and otherwise complies with law, and it withdrew Opinion 93-3.

In practice

The opinion holds that, under the Ohio rule as it stood at the time, signing a confession of judgment on a cognovit note for a creditor does not require a Rule 1.7 conflict analysis, because the confessing lawyer represents only the creditor and forms no attorney-client relationship with the debtor. Per the opinion, the practice is proper so long as the confession of judgment complies with applicable law, including R.C. 2323.13.

Common questions

Q: Does a creditor's lawyer confessing judgment on a cognovit note represent the debtor too?

A: The opinion concluded no; citing DiBenedetto v. Miller, the lawyer represents only the creditor and has no attorney-client relationship with the debtor.

Q: Is signing a cognovit confession of judgment a Rule 1.7(c) conflict of interest?

A: The opinion concluded it is not; because there is no attorney-client relationship with the debtor, no Rule 1.7 conflict arises, provided the confession complies with applicable law.

Q: Did this opinion change the earlier guidance in Opinion 93-3?

A: The opinion reaffirmed the substance of Opinion 93-3 under the current Rules and case law, and formally withdrew and superseded it.

Background and rules framework

The opinion interprets Ohio Prof. Cond. R. 1.7 (conflict of interest: current clients) (Model Rule 1.7) and applies Ohio's cognovit-note statute, R.C. 2323.13. It treats the existence of an attorney-client relationship, rather than the conflict rule itself, as the threshold question.

Citations and references

Rules of Professional Conduct:

• Ohio Prof. Cond. R. 1.7 (conflict of interest: current clients) (Model Rule 1.7)

Statutes:

• R.C. 2323.13 (confession of judgment by warrant of attorney; cognovit notes)

Cases:

• D.H. Overmyer Co. v. Frick Co., 405 U.S. 174 (1972), constitutionality of cognovit notes
• DiBenedetto v. Miller, 180 Ohio App.3d 69, 2008-Ohio-6506 (1st Dist.), no attorney-client relationship with the debtor

Other opinions cited:

• Ohio BPC Op. 93-3 (superseded and withdrawn by this opinion): confession of judgment under a cognovit note

See also

• Ohio BPC Op. 2014-002: Conflicts in a Part-Time County Prosecutor's Firm
• Ohio BPC Op. 2013-004: Cross-Examining a Former Criminal Client

Source

• Landing page: https://ohioadvop.org/advisory-opinion-index/
• Original PDF: https://www.ohioadvop.org/wp-content/uploads/2017/04/Op_14-003.pdf

Original opinion text

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

BOARD OF COMMISSIONERS ON GRIEVANCES & DISCIPLINE
65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
Telephone: 614.387.9370 Fax: 614.387.9379
www.supremecourt.ohio.gov

DAVID E. TSCHANTZ RICHARD A. DOVE
CHAIR SECRETARY
PAUL M. DE MARCO HEIDI WAGNER DORN
VICE- CHAIR COUNSEL

                                      OPINION 2014-3
                                   Issued August 8, 2014

                        Confession of Judgment Pursuant to
                       Warrant of Attorney in a Cognovit Note

SYLLABUS:

It is proper under the Ohio Rules of Professional Conduct for an attorney to sign an
answer confessing judgment against a debtor pursuant to a warrant of attorney in a
cognovit note when requested to do so by a creditor’s attorney, provided that the
confession of judgment does not violate applicable law. Advisory Opinion 93-3 is
superseded and withdrawn.

QUESTION PRESENTED:

Is Advisory Opinion 93-3 valid following the change from the Ohio Code of
Professional Responsibility to the Ohio Rules of Professional Conduct, or does a conflict
of interest arise under Prof.Cond.R. 1.7(c) when a lawyer executes a confession of
judgment for a cognovit note?

APPLICABLE RULE:

Rule 1.7 of the Ohio Rules of Professional Conduct

OPINION:

    A lawyer seeks the Board’s guidance on whether a conflict of interest arises when

a lawyer executes a confession of judgment for a cognovit note under Prof.Cond.R.
1.7(c). Advisory Opinion 93-3 holds that it is proper under the former Ohio Code of
Professional Responsibility for an attorney to sign an answer confessing judgment
against a debtor pursuant to a warrant of attorney in a cognovit note. Advisory
Op. 2014-3 2

Opinion 93-3 further states that it is improper under the former Code of Professional
Responsibility for a creditor’s attorney to confess judgment pursuant to warrant of
attorney in a cognovit note, unless the warrant of attorney contains an express waiver of
conflict of interest or specifies that the creditor’s attorney may confess judgment.

   The Board reaffirms the advice contained in Advisory Opinion 93-3, but

acknowledges that the opinion must be updated to reflect the current Rules of
Professional Conduct and the recent case law.

   As background, Ohio Revised Code Section 2323.13 authorizes an attorney to

confess judgment against a debtor, if the attorney has a valid warrant to do so. By
signing the cognovit note that contains a warrant of attorney to confess judgment, a
debtor consents in advance to a creditor obtaining a judgment against the debtor
without notice or hearing. R.C. 2323.13(A)-(D).

    Under R.C. 2323.13, an attorney who confesses judgment is required to produce

the warrant of attorney at the time of judgment for the court in order to make the
confession. R.C. 2323.13(A). Without the warrant of attorney, courts lack authority to
render judgment on the note. R.C. 2323.13(D). The warrant must include a warning as
to the rights being relinquished:

          Warning – By signing this paper you give up your right to
          notice and court trial. If you do not pay on time a court
          judgment may be taken against you without your prior
          knowledge and the powers of a court can be used to collect
          from you regardless of any claims you may have against the
          creditor whether for returned goods, faulty goods, failure on
          his party to comply with the agreement, or any other cause.
          R.C. 2323.13(D).

   The United States Supreme Court has determined that Ohio’s cognovit note

statute is constitutional. D.H. Overmyer Co. v. Frick Co., 405 U.S. 174, 92 S.Ct. 775, 31
L.Ed.2d 124 (1972). In Overmyer, the Supreme Court held that the debtor, in the
execution and delivery to the creditor of the cognovit note, “voluntarily, intelligently,
and knowingly waived the rights it otherwise possessed to pre-judgment notice and
hearing, and that it did so with full awareness of the legal consequences.” Id. at 187.
Ohio courts continue to recognize the validity of cognovit notes in commercial
transactions when executed in accordance with the statute. See, First Nat’l Bank of
Op. 2014-3 3

Findlay v. Trout, 58 Ohio St. 347, 353, 51 N.E. 27 (1898); Union Sav. Ass’n v. Home Owners
Aid, Inc., 18 Ohio App.2d 97, 247 N.E.2d 335 (8th Dist. 1969); DiBenedetto v. Miller, 180
Ohio App.3d 69, 72, 2008-Ohio-6506, 904 N.E.2d 554 (1st Dist.); Huntington Nat’l. Bank v.
Burda, 10th Dist. No. 08AP-658, 2009-Ohio-1752; Orange City Golf Club, L.L.C. v. MCGC
Gold, L.L.C., 2nd Dist. No. 24865, 2012-Ohio-2415; K One Ltd. Partnership v. Kahn, 10th Dist.
No. 13AP-830, 2014-Ohio-2079.

   Here, the requester is concerned that the change from the Code of Professional

Responsibility to the Rules of Professional Conduct may alter the validity of Advisory
Opinion 93-3. Specifically, the requester’s concern is that under the current rules a
conflict of interest may arise under Rule 1.7(c) that prevents an attorney from confessing
judgment under a warrant of attorney contained in a cognovit note. The Board
acknowledges the uniqueness of the act of confessing judgment pursuant to a warrant
of attorney in a cognovit note, but does not find such an act to be a violation of the
Rules of Professional Conduct.

   Prof.Cond.R. 1.7 governs conflicts of interest, and provides a conflict analysis to

determine whether a conflict of interest exists under the rule. However, a conflict
analysis under Prof.Cond.R. 1.7 is not necessary with regard to confession of judgment
under a cognovit note.

    When an attorney confesses judgment against a debtor in favor of a creditor

under a cognovit provision of a contract that attorney represents only the creditor, and
not the debtor, as that attorney is only acting as authorized under both contract and the
statute. DiBenedetto v. Miller, 180 Ohio App.3d 69, 72, 2008-Ohio-6506, 904 N.E.2d 554 ¶
15 (1st Dist.). As a result, a creditor’s attorney does not have an attorney-client
relationship with the debtor in such a proceeding. Id. at ¶ 16.

  In the case of a cognovit note, the confessing attorney’s client is the creditor, not

the debtor. Therefore, there can be no conflict of interest under Prof.Cond.R. 1.7(c)
because an attorney-client relationship does not exist between the confessing attorney
and the debtor. Further, an attorney is specifically authorized by law under R.C.
2323.13 to confess judgment pursuant to a warrant of attorney in a cognovit note,
provided the warrant of attorney contains a provision that the creditor’s attorney may
confess judgment or contains an express waiver of conflict of interest, and otherwise
complies with the law.
Op. 2014-3 4

   Therefore, the Board reaffirms that it is proper under the Ohio Rules of

Professional Conduct and the current case law for an attorney to sign an answer
confessing judgment against a debtor pursuant to a warrant of attorney in a cognovit
note when requested to do so by a creditor, provided that the confession of judgment
complies with applicable law.

Upon issuance of this opinion, the Board withdraws Advisory Opinion 93-3.

Advisory Opinions of the Board of Commissioners on Grievances and Discipline are
informal, nonbinding opinions in response to prospective or hypothetical questions
regarding the application of the Supreme Court Rules for the Government of the Bar
of Ohio, the Supreme Court Rules for the Government of the Judiciary, the Ohio
Rules of Professional Conduct, the Ohio Code of Judicial Conduct, and the
Attorney’s Oath of Office.