Can a lawyer buy a note from his client just before default and then sue on it to collect the principal plus attorney's fees?

Plain-English summary

A member of the bar was sent a note for collection that contained the usual provision for attorney's fees, with a failure to pay an interest installment imminent. Rather than collecting it for the client, the attorney purchased the note from the client and, upon default of the interest payment, immediately sued on the note and obtained judgment for the amount of the note plus attorney's fees. The inquiry stated that this lawyer frequently engaged in this practice.

The Board of Governors concluded the practice is improper. It adopted the reasoning of ABA Opinion 51, which addressed a similar situation and held that such conduct violates both the letter and spirit of Canon 28, forbidding lawyers to stir up strife and litigation. The Board noted that although this might be said to bar attorneys from a speculative field open to laymen, the dignity of the profession and the ethics of the situation supported the conclusion. The Board added that Canon 28 is identical with Rule 30 of the Rules of Professional Conduct adopted by the Board of Governors.

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The rule cited here, Rule 30 (which the Board identified with ABA Canon 28 on stirring up litigation), belongs to that superseded canon-era code and does not correspond to the current Oklahoma Rules of Professional Conduct. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: Could a lawyer buy a client's note and then sue on it for fees in 1932?

A: The Board concluded the practice is improper, adopting ABA Opinion 51's view that buying a note to sue on it stirs up strife and litigation in violation of Canon 28, identical with Rule 30.

Q: Did it matter that buying claims was a speculative field open to non-lawyers?

A: The Board acknowledged that argument but concluded the dignity of the profession and the ethics of the situation supported treating the practice as improper for a lawyer.

Background and rules framework

The opinion applied Rule 30 of the then-current Oklahoma Rules of Professional Conduct, which the Board identified as identical to ABA Canon 28 forbidding lawyers to stir up strife and litigation. The Board treated a lawyer's purchase of a note in order to sue on it for principal and attorney's fees as the kind of fomenting of litigation the canon prohibits, relying on ABA Opinion 51. These rules were patterned on the ABA Canons of Professional Ethics in force at the time.

Citations and references

Rules of Professional Conduct:

• Rule 30 (1929 Oklahoma Rules of Professional Conduct), identical to ABA Canon 28: a lawyer should not stir up strife and litigation.

Other opinions cited:

• ABA Committee on Professional Ethics, Opinion 51 (May issue, ABA Journal): buying a note in order to sue on it is improper as stirring up litigation under Canon 28.

See also

• ABA Formal Op. 474: Referral Fees and Conflict of Interest
• Okla. Bar Ethics Op. 5: Runners, Touters, and Association With a Loan Shark
• Okla. Bar Ethics Op. 10: Sharing a Collection Fee With a Lay Forwarder

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-29/

Original opinion text

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

Adopted May 27, 1932

A request for an opinion is requested on the following state of facts:

A member of the bar was sent a note for collection containing the usual provision for attorney's fees, a failure in the payment of an interest installment being imminent. The attorney purchased the note from his client, and, upon default of the interest payment, immediately filed suit upon the note, and secured judgment for the amount of the note plus attorney's fees. The statement is made that this particular member of the bar frequently indulges in this practice.

Attention is called to Opinion No. 51 of the American Bar Association Committee on Professional Ethics appearing in the May issue of the American Bar Association Journal in which, referring to a similar situation, it is said:

"We are of the opinion that this practice is improper. It seems clear to us that such a course of conduct is violative of both the letter and spirit of Canon 28, which forbids lawyers to stir up strife and litigation. This opinion, it may be claimed, bars attorneys from entering a speculative field, which might be profitable and which is open to laymen; nevertheless, we feel that the dignity of the profession, as well as the ethics of the situation, are entirely consonant with the view herein expressed."

Canon 28 is identical with Rule 30 of the Rules of Professional Conduct adopted by the Board of Governors as being in accordance with its views.