Can a lawyer represent a salary or chattel loan company, including suing to collect notes that carry usurious interest?

Plain-English summary

A bar member asked, in light of earlier advisory opinions on representing loan companies, three questions: (a) whether an attorney could represent a salary and chattel loan company on a retainer for advisory services; (b) whether an attorney could collect indebtedness for such a company where the written instruments were undoubtedly usurious but the debtor did not raise that defense; and (c) whether an attorney could sue on indebtedness where all usurious interest had been waived by the company.

On (a), the Board concluded it was not a violation to represent such a company on a retainer for advisory services. On (b), the Board concluded that because the taking or charging of usurious interest was condemned by the state's public policy, it was reprehensible and unprofessional to assist in enforcing the collection of usurious interest; it pointed to Rule 17 (the lawyer's trust must be performed within the bounds of the law), Rule 33 (the lawyer remains responsible for bringing questionable suits and cannot escape that responsibility by pointing to client instructions), and Rule 34 (the lawyer must observe and advise the client to observe the statute law). The Board added that this answer did not make it reprehensible to represent a person or corporation in collecting the principal plus legal interest. On (c), the Board concluded a lawyer does not violate the rules by representing the company in a suit where no attempt is made to collect usurious interest.

The Board qualified its answer to (a) by assuming the lawyer was not knowingly representing a company engaged in charging usurious interest as a course of general business conduct, and it referred back to Advisory Opinion No. 5 on business association with a habitual usury violator.

Currency note

This opinion was issued in 1932, 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 The rule numbers cited here, Rules 17, 33, and 34, belong to that superseded canon-era code and do not correspond to the current Oklahoma Rules of Professional Conduct. The statutory citations to the Compiled Oklahoma Statutes of 1921 reflect the usury law of that era. 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: Can a lawyer represent a loan company at all?

A: The opinion concluded yes; a lawyer could represent a salary or chattel loan company on a retainer for advisory services, assuming the lawyer was not knowingly serving a company that charged usurious interest as a course of business.

Q: Can a lawyer sue to collect a debt the lawyer knows carries usurious interest?

A: The opinion concluded that assisting in enforcing the collection of usurious interest was reprehensible and unprofessional, even where the debtor did not raise the usury defense.

Q: What if the company waives the usurious interest?

A: The opinion concluded a lawyer does not violate the rules by suing on the indebtedness where no attempt is made to collect usurious interest.

Background and rules framework

The opinion applied several rules of the then-current Oklahoma Rules of Professional Conduct: Rule 17 (the lawyer's trust must be performed within the bounds of the law and must not involve fraud or violation of law), Rule 33 (the lawyer bears responsibility for bringing questionable suits and cannot excuse it by client instructions), and Rule 34 (the lawyer must observe and advise the client to observe the statute law), against the backdrop of the Oklahoma usury statutes. The principle that a lawyer may not assist a client in unlawful conduct corresponds in current practice to the rule against counseling or assisting a client in conduct the lawyer knows is criminal or fraudulent, though the opinion predates the Model Rules.

Citations and references

Rules of Professional Conduct:

• Rule 17 (1929 Oklahoma Rules of Professional Conduct): the lawyer's trust is to be performed within, not without, the bounds of the law.
• Rule 33 (1929 Oklahoma Rules of Professional Conduct): the lawyer is responsible for bringing questionable suits and cannot escape that responsibility by pointing to client instructions.
• Rule 34 (1929 Oklahoma Rules of Professional Conduct): the lawyer must observe and advise the client to observe the statute law.

Statutes:

• Section 5098 and kindred sections, Compiled Oklahoma Statutes 1921; 15 Okl. St. Ann. § 267 et seq. (usury)

Other opinions cited:

• Oklahoma Advisory Opinion No. 5 (business association with a habitual usury violator)

See also

• Okla. Bar Ethics Op. 5: Runners, Touters, Loan Sharks
• ABA Formal Op. 491: Avoiding Client Crime or Fraud
• ABA Formal Op. 463: Client Due Diligence

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-14/

Original opinion text

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

Adopted January 22, 1932

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

"The writer has noted with considerable interest Advisory Opinions, appearing in various issues of the State Bar Journal, relative to the representation of loan companies by attorneys, and would greatly appreciate further advice from the Committee on Rules concerning the following:

(a) May an attorney represent a corporation engaged in the salary and chattel loan business, receiving as compensation a retainer fee, said fee to act as compensation for services rendered in an advisory capacity, without violating the rules of the State Bar of Oklahoma?

(b) May an attorney represent a corporation engaged in the salary and chattel loan business by collecting indebtedness due said corporation, where the written instruments evidencing such indebtedness are undoubtedly usurious, but where the debtor does not desire to avail himself of such defense, without violating the rules of the State Bar of Oklahoma?

(c) May an attorney represent a corporation engaged in the salary and chattel loan business, in a suit on written evidence of indebtedness where all usurious interest has been waived by the said corporation, without violating the rules of the State Bar of Oklahoma? I have heard a great deal of discussion among local attorneys as to what extent an attorney may represent corporations engaged in the salary and chattel loan business, and it has been suggested by members of the local bar that representation of corporations engaged in the salary and chattel loan business is in itself grounds for disbarment. I should therefore, greatly appreciate advice concerning the situations outlined above."

In response to inquiry (a):

It is the opinion of the Board of Governors that it is not a violation of the rules of professional conduct of the State Bar of Oklahoma for an attorney to represent a corporation engaged in the salary and chattel loan business on a retainer fee for services rendered in an advisory capacity.

In response to inquiry (b):

The taking, receiving, reserving or charging of usurious interest is condemned by the public policy of the State of Oklahoma, as is evidenced by Section 5098 and kindred sections of the Compiled Oklahoma Statutes, 1921, 15 Okl.St.Ann. § 267 et seq. It is therefore reprehensible, and constitutes a practice unprofessional and unworthy of a member of the State Bar of Oklahoma, to assist in the enforcement of the collection of usurious interest.

Rule 17 of the rules of professional conduct of the State Bar of Oklahoma, among other things, provides:

"But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the law. The office of attorney does not permit, much less does it demand of him for any client, violation of law or any manner or fraud or chicane. He must obey his own conscience and not that of his client."

Rule 31 of such rules provides that a member of the Bar "should strive at all times to uphold the honor and to maintain the dignity of the profession and to improve not only the law but the administration of justice."

Rule 33 of such rules provides:

"No lawyer is obliged to act either as advisor or advocate for every person who may wish to become his client. He has the right to decline employment. Every lawyer upon his own responsibility must decide what business he will accept as counsel, what causes he will bring into court for plaintiffs, what cases he will contest in court for defendants. The responsibility for advising as to questionable transactions, for bringing questionable suits, for urging questionable defenses, is the lawyer's responsibility. He cannot escape it by urging as an excuse that he is only following his client's instructions."

Rule 34 of such rules, among other things, provides that a member of the bar "must also observe and advise his client to observe the statute law."

This opinion, in answer to inquiry (b), should not be construed as holding that it would be reprehensible for a member of the State Bar to represent a person or corporation in the enforcement of the collection of the principal amount, plus legal interest, due upon an instrument such as described in the inquiry.

In response to inquiry (c):

It is the opinion of the Board of Governors that a member of the bar does not violate the rules of professional conduct of the State Bar of Oklahoma by the representation of a corporation in a suit on written evidence of indebtedness where no attempt is made to collect usurious interest.

The answer to inquiry (a) is given upon the assumption that the member of the bar is not knowingly representing a corporation engaged in taking, receiving, reserving or charging usurious interest, as a course of general business conduct.

In this connection attention is called to Advisory Opinion No. 5 of the Board of Governors appearing in the September, 1931, issue of the Oklahoma State Bar Journal, wherein it is said:

"A business association by a member of the State Bar of Oklahoma with a loan shark, that is, one whose course of business conduct is contrary to the usury statutes of this state, is unbecoming a member of the State Bar and tends to bring the profession into disrepute."