May a lawyer accept employment to render a bond-validity opinion when a state agency requires every bidder, as a condition of bidding, to agree to hire that named lawyer and pay him a set fee?

Plain-English summary

A state agency authorized to sell revenue bonds customarily required an opinion of counsel approving the bonds' legality to assure investors. Although state law forbade the agency from employing private attorneys directly, the agency required all bidders, as a condition of their bid, to agree to pay a named attorney a specified fee for a legality opinion before purchase if they were the successful bidder. The committee was asked whether this procedure was proper, and answered in the negative.

The committee began from the principle that a client has the right to be represented by counsel of its own selection (citing Drinker and ABA Formal Opinion 10), and observed that, because the bond purchaser is usually an underwriter reselling the bonds, the legality of the bonds is of great interest to that purchaser, who should be free to choose its own counsel. The committee then applied DR 2-103(D) (a lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services) and DR 2-103(E) (a lawyer shall not accept employment when he knows or it is obvious that the person seeking his services does so as a result of conduct prohibited under the rule).

The committee concluded that, without suggesting the attorney had requested the requirement (which would itself violate DR 2-103(C)), an attorney who knows the agency makes such a requirement on a continuing basis and nevertheless accepts the employment would be assisting conduct proscribed by the Code, violating DR 2-103(D) and (E). The committee distinguished the accepted underwriting practice in which an underwriter conditions its own bid on the approving opinion of a specific attorney it names, because there the client (the underwriter) has chosen its own attorney.

In practice

Under this opinion, a lawyer who knows a state agency requires bidders, as a continuing condition of bidding, to hire and pay that lawyer for a bond-legality opinion may not accept the employment, because doing so assists conduct proscribed by DR 2-103. Per the opinion, the line turns on who chooses counsel: an underwriter's own decision to condition its bid on a named attorney's opinion is acceptable, while an agency-imposed requirement that bidders employ a particular attorney is not.

Currency note

This opinion was issued in 1975 under the Code of Professional Responsibility, before Oklahoma adopted the Oklahoma Rules of Professional Conduct (1988) and the later Ethics 2000 revisions. The solicitation and recommended-employment rules (DR 2-103) have since been recast (compare Model Rules 7.2 and 7.3). 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: Why was it improper for the lawyer to accept the agency-required bond work?

A: Because a state agency required all bidders to employ and pay that named attorney, and the committee held that an attorney who knows of such a continuing requirement and accepts the employment assists conduct proscribed by DR 2-103(D) and (E).

Q: Is it ever proper for a bid to be conditioned on a particular attorney's opinion?

A: Yes, in the committee's distinction: where the underwriter itself conditions its own bid on the approving opinion of a specific attorney it names, the client has chosen its own counsel, which the committee treated as acceptable.

Q: What if the lawyer asked the agency to impose the requirement?

A: The committee stated that a lawyer's request that the agency require bond purchasers to employ him or his associates would violate DR 2-103(C).

Background and rules framework

The opinion applied DR 2-103(C), (D), and (E) of the Code of Professional Responsibility, concerning requesting recommendations of employment, assisting persons or organizations that recommend or pay for legal services to promote the lawyer's services, and accepting employment resulting from prohibited conduct. It also drew on the principle that a client may choose its own counsel (Drinker, Legal Ethics; ABA Formal Opinion 10). It predates the Model Rules and made no Model Rule citation.

Citations and references

Rules of Professional Conduct:

• DR 2-103(C) (Code of Professional Responsibility): a lawyer shall not request a person or organization to recommend his employment (with a narrow lawyer-referral-service exception).
• DR 2-103(D) (Code of Professional Responsibility): a lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services.
• DR 2-103(E) (Code of Professional Responsibility): a lawyer shall not accept employment when he knows it results from conduct prohibited under the rule.

Other opinions cited:

• ABA Formal Opinion 10 (1926).

See also

• Okla. Bar Ethics Op. 269: Representing collection agencies for creditors
• Okla. Bar Ethics Op. 230: Bar association lawyer referral service and advertising
• Okla. Bar Ethics Op. 221: Trade association directing members to a retained attorney

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-284/

Original opinion text

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

Adopted February 17, 1975

INQUIRY

Is it ethically proper for an attorney to accept employment from a prospective purchaser of state revenue bonds to render an opinion approving the validity of such bonds, when the state agency selling the bonds requires all bidders, as a condition of their bid, to agree to obtain such an opinion from the aforementioned attorney and to pay him a specified fee prior to their purchase, should they be the successful bidder?

OPINION

The answer to the inquiry is in the negative, for the reasons set out below.

An agency of the State of Oklahoma is authorized to sell revenue bonds for purposes of financing the construction of public projects. In order to assure investors as to the validity of such bonds, this agency has customarily required an opinion of counsel approving their legality. Although state law forbids the employment of private attorneys by this agency, the agency requires all bidders on such bonds, as a condition of their bid, to agree to pay a named attorney a specified fee for his opinion approving the legality of such bonds prior to their purchase should they be the successful bidder.

This committee has been requested to render an opinion concerning the propriety of this procedure. In view of the legal prohibition against the attorney in question representing the state agency directly, the resolution of this inquiry is then dependent upon the ethical propriety of the manner in which an attorney-client relationship is created between the attorney and the bond purchaser.

In other areas of legal problems, professional ethics have recognized that a client has the right to be represented at all times by counsel of his own selection. Drinker, Legal Ethics 198 (1953); A.B.A. Formal Opinion 10 (1926).

In view of the fact that the bond purchaser is usually an underwriter purchasing with a view towards reselling some or all of the bonds, the legality of such bonds is obviously a matter of great interest and concern to such purchaser. It would therefore appear to be uniquely the prerogative of the bond purchaser to choose its own legal counsel in whose opinion it has confidence and in whom it believes its customers will have confidence. So long as the agency receives the purchase price of the bonds, it should have no concern with respect to whom the purchaser chooses to retain as counsel to render an opinion on their legality.

Disciplinary Rule 2-103(D) provides as follows:

“A lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services or those of his partners or associates.”

Discplinary Rule 2-103(E) prevents an attorney from accepting employment resulting from conduct prohibited under this disciplinary rule. This rule provides:

“A lawyer shall not accept employment when he knows or it is obvious that the person who seeks his services does so as a result of conduct prohibited under this Disciplinary Rule.”

Without suggesting in any way that an attorney has requested that the state agency require the prospective bond purchaser to employ him as its attorney (which would, of course, violate Disciplinary Rule 2_103(C)1), if an attorney were to know that such a requirement has been made, as would seem probable if the inclusion of the requirement is a continuing practice of the state agency, his acceptance of the employment under such circumstances would constitute assisting conduct proscribed by the Code of Professional Responsibility.2

Therefore, to summarize the foregoing, a request by an attorney to a state agency that it require purchasers of bonds issued by such agency to employ him, or any one associated with him, to pass upon the legality of such bonds, would be a violation of Disciplinary Rule 2-103(C). Furthermore, an attorney with knowledge that an agency is making such a requirement on a continuing basis who nevertheless accepts such employment would violate Disciplinary Rules 2_103(D) and (E).

1 “A lawyer shall not request a person or organization to recommend employment, as a private practitioner, of himself, his partner, or associate, except that he may request referrals from a lawyer referral service operated, sponsored, or approved by a bar association representative of the general bar of the geographical area in which the association exists and may pay its fees incident thereto.”

2 The situation here presented is entirely different than in instances, generally accepted in the underwriting profession, whereby an underwriter, in submitting a bid for a proposed issue, conditions his bid contingent upon the approving opinion of a specific attorney named in the underwriter’s bid. In such instances the client (the underwriter) has chosen his own attorney.