Can a salaried in-house lawyer collect statutory attorney's fees in his employer's foreclosures and turn them over to the employer?

Plain-English summary

The Board was asked (a) whether an attorney paid a stipulated yearly salary to handle all of a loan company's legal matters, including foreclosure suits, would violate Rule 36 by collecting and turning over to the company the total attorney's fee collected in foreclosure proceedings where the annual amount collected exceeds his salary; and (b) whether the same rule would apply to an attorney representing the Home Owners Loan Corporation or the Commissioners of the Land Office of Oklahoma.

As to (a), the Board answered that Advisory Opinion No. 7 fully resolved the question, treating such conduct as interdicted under Rule 36 and under Cause 9 of the Causes for Disbarment, which covers dividing or agreeing to divide fees for legal services with anyone other than another attorney entitled to practice law. The Board cited Hamilton v. Burgess, in which the Alabama Supreme Court held that a note or mortgage stipulation for the creditor's attorney's fees is in reality a contract to pay the attorney only an amount actually and reasonably earned, not exceeding the stipulated sum, construed it as a contract of indemnity saving the creditor from loss, and held that any agreement by which the creditor or his attorney collects more under guise of attorney's fees than the attorney is to receive is oppressive, unlawful, and void, and that any agreement to split fees is highly objectionable. As to (b), the Board said that in its view the rule is of universal application and applies to the Home Owners Loan Corporation and the Commissioners of the Land Office, but that the law in Oklahoma had been declared otherwise, citing ex rel. Mothershead v. Commissioners of Land Office.

Currency note

This opinion was issued in 1937, 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 bar on sharing legal fees with non-lawyers persists in modern rules, though the rule text and numbering have changed and the treatment of salaried in-house and statutory fees has developed. 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 Treat this page as historical context, not current guidance.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 salaried company lawyer collect statutory attorney's fees and hand them to his employer?

A: No. The opinion held that, where the fees collected exceed his salary, turning them over to the loan company is an improper division of fees with a non-lawyer under Rule 36 and Cause 9 of the Causes for Disbarment.

Q: Did the rule apply to lawyers for the Home Owners Loan Corporation or the Land Office?

A: The Board said the rule was of universal application and applied to them, but noted that Oklahoma case law (Mothershead) had been declared otherwise as to the Land Office.

Background and rules framework

The opinion applied Rule 36 of the canon-era Oklahoma Rules of Professional Conduct (no division of legal fees except with another lawyer) and Cause 9 of the Causes for Disbarment. It relied on Oklahoma Advisory Opinion No. 7 and on Hamilton v. Burgess and ex rel. Mothershead v. Commissioners of Land Office. It predates the Model Rules and made no Model Rule citation.

Citations and references

Rules of Professional Conduct:

• Rule 36 (1929 Oklahoma Rules of Professional Conduct): no division of fees for legal services except with another lawyer based on a division of service or responsibility.
• Cause 9 of the Causes for Disbarment: dividing or agreeing to divide fees for legal services with anyone other than another attorney entitled to practice law.

Cases:

• Hamilton v. Burgess, 233 Ala. 4, 170 So. 348 (Ala. 1936): a mortgage attorney's-fee stipulation is a contract of indemnity for a reasonable fee only; any agreement to collect more under guise of fees, or to split fees, is unlawful.
• ex rel. Mothershead v. Commissioners of Land Office, 135 Okl. 107, 274 P. 473 (Okla. 1929): cited as Oklahoma law declared otherwise as to the Land Office.

Other opinions cited:

• Oklahoma Advisory Opinion No. 7: salaried-collection fee division interdicted by Rule 36.

See also

• Okla. Bar Ethics Op. 126: Collection agencies and law lists as lay intermediaries
• Okla. Bar Ethics Op. 107: Sharing collection fees with a non-lawyer forwarder

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-131/

Original opinion text

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

Adopted February 26, 1937

The Board of Governors is in receipt of the following inquiry:

"Please advise: (a). Whether an attorney who is paid a stipulated yearly salary to represent a loan company in all of its legal matters, including prosecution of foreclosure suits, would violate rule 36 by collecting and turning over to his client the total attorney's fee collected in such foreclosure proceedings, where the amount collected per annum exceeds his annual salary. (b). If such conduct would be interdicted as to a private loan company, would the same rule apply to an attorney who represents the Home Owners Loan Corporation or the Commissioners of the Land Office of the State of Oklahoma?"

In response to (a):

The question is fully answered in Advisory Opinion No. 7, Vol. 1., Adv. Op. p. 19, in which such course of conduct is interdicted in contravention of rule 36 and of Cause 9 of the Causes for Disbarment which provides:

"That he has divided or agreed to divide fees for legal services with anyone other than another attorney entitled to practice law."

See also Hamilton v. Burgess, 233 Ala. 4, 170 So. 348 in which the Supreme Court of Alabama held that a stipulation in a note or mortgage, by which the debtor contracted to pay a certain amount as the attorney's fees of the creditor, is in reality a contract to pay the attorney only an amount actually and reasonably earned by him, not to exceed the amount stipulated. The court construed the stipulation to be a contract of indemnity merely, saving the creditor from loss by reason of the payment of a reasonable fee only. The court also held that "any agreement between the creditor and his attorney by which either is to collect under guise of attorney's fees more than the attorney is to receive for his services is oppressive, unlawful and void;" and that "any agreement between the creditor and his attorney to split fees is highly objectionable."

In response to (b): In the opinion of the Board of Governors, the rule is of universal application and applies to the Home Owners Loan Corporation or the Commissioners of the Land Office of the State of Oklahoma; but the law in this State has been declared otherwise. See ex rel. Mothershead v. Commissioners of Land Office, 135 Okl. 107, 274 P. 473.