Can an Oklahoma lawyer who collects a commercial claim forwarded by a lay collection agency remit part of the contingent fee to that forwarder?

Plain-English summary

A St. Louis corporation in the general collection business forwarded a claim to an Oklahoma attorney over an attorneys' list on a 15 percent contingent-fee basis, of which the local attorney was to retain 10 percent as his fee and remit 5 percent to the forwarder. The forwarder was not a law firm and was not represented by an attorney; it forwarded the claim itself. The inquiry asked whether the Oklahoma attorney would violate the rules by remitting the agreed share to the forwarder.

The Board of Governors pointed to Rule 36, which, while prohibiting division of fees except with another lawyer, contained an exception: the established custom of sharing commissions at a commonly accepted rate, upon collections of commercial claims between forwarder and receiver, though one be a lawyer and the other not, was not condemned, where not prohibited by statute. The Board concluded this was the only rule touching the subject and that the Oklahoma attorney would not be violating any of the rules of professional conduct.

The Board added a historical observation: Rule 36 was one of the canons of professional ethics of the American Bar Association, and there was then a movement in the ABA to strike out the exception for collection agencies, on the view that a bar member should never split fees with a layman or lay organization.

Currency note

This opinion was issued in 1931, decades before Oklahoma replaced its original Rules of Professional Conduct (patterned on the ABA Canons of Professional Ethics) with the Oklahoma Rules of Professional Conduct (adopted 1988) and the later Ethics 2000 revisions. The rule number cited here, Rule 36, belongs to that superseded canon-era code; the forwarder-commission exception it relied on was later removed from the ABA canons and does not correspond to the current Oklahoma Rules of Professional Conduct, which prohibit fee division with nonlawyers. Subsequent rule amendments and 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 Treat this page as historical context, not current guidance.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: Could a lawyer split a collection fee with a lay forwarding agency in 1931?

A: The opinion concluded yes for commercial-claim collections, because Rule 36 expressly excepted the established custom of sharing commissions between forwarder and receiver, even where one is a lawyer and the other is not.

Q: Why did this differ from the general bar on sharing fees with non-lawyers?

A: The opinion explained that Rule 36's general prohibition carried a specific exception for the customary sharing of commissions on commercial-claim collections between forwarder and receiver, where not prohibited by statute.

Q: Did the Board signal that this exception might change?

A: Yes. The opinion noted a movement in the American Bar Association to strike the collection-agency exception, on the view that a bar member should never split fees with a layman or lay organization.

Background and rules framework

The opinion applied Rule 36 of the then-current Oklahoma Rules of Professional Conduct, drawn from the ABA Canons of Professional Ethics, which permitted fee division only with another lawyer but excepted the customary sharing of commissions between forwarder and receiver on commercial-claim collections. That exception was later removed, and the prohibition on sharing fees with nonlawyers corresponds in current practice to the modern fee-division rule, though the opinion predates the Model Rules and made no such citation.

Citations and references

Rules of Professional Conduct:

• Rule 36 (1929 Oklahoma Rules of Professional Conduct): no division of fees except with another lawyer, with an exception for the established custom of sharing commissions between forwarder and receiver on commercial-claim collections where not prohibited by statute.

See also

• Okla. Bar Ethics Op. 6: Sharing a Fee With the Client
• Okla. Bar Ethics Op. 7: Fees Returned to Loan Co.
• ABA Formal Op. 464: Fee Division Across Jurisdictions

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-10/

Original opinion text

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

Approved November 20, 1931

The opinion of the Board of Governors is asked upon the following state of facts:

"A, a corporation of St. Louis, doing a general collection business forwards a claim to B, an attorney in Oklahoma, for collection, over an attorneys' list, the claim being forwarded on a contingent fee basis of 15%, 10% of which the local attorney is to retain as his fee, and 5% of which he is to remit to the forwarder. The A corporation, not being a law firm but doing business under a corporate name and the claim not being forwarded by an attorney representing the corporation, the claim being forwarded by the collection agency itself."

The direct inquiry being:

"Will the attorney in Oklahoma violate any of the rules of professional conduct in remitting the agreed percent of the fee to the forwarder?"

Attention is called to Rule 36 of the rules of professional conduct, which provides as follows:

"No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility. But the established custom of sharing commissions at a commonly accepted rate, upon collections of commercial claims between forwarder and receiver, though one be a lawyer and the other not (being a compensation for valuable services rendered by each), is not condemned hereby, where it is not prohibited by statute."

This is the only rule touching the subject of the inquiry. The answer to the inquiry is that the Oklahoma attorney would not be violating any of the rules of professional conduct in the premises stated.

This rule constitutes one of the rules of the canons of professional ethics of the American Bar Association. It is interesting to note that there is a very decided movement in the American Bar Association to strike out the exception in Rule 36 as to collection agencies, it being the contention that under no circumstances should a member of the bar be allowed to split his fees with a layman or a lay organization. In the judgment of the Board of Governors this would be a consummation devoutly to be wished for.