Can a lawyer serve as regional counsel for a union's injury-claims bureau that investigates members' claims and shares a contingent fee with the organization?

Plain-English summary

A union labor organization of railway employees maintained a national bureau to investigate the cause and nature of injuries to member employees and to preserve witness statements and data for the injured member in case of litigation, much as a railway's claim department compiled data for the company. The country was divided into regions, each with a designated regional counsel. Regional counsel agreed to advise injured employees and try to settle claims without litigation and without charge; but if litigation followed, counsel would charge the injured employee a contingent fee of fifteen percent of the net recovery, and the national bureau would charge five percent for obtaining legal and competent evidence. The inquirer asked whether attorneys acting as regional counsel violated the rules by being party to this agreement.

The Board concluded the attorneys would be proceeding in violation of Rule 37, which provides that a lawyer's professional services should not be controlled or exploited by any lay agency intervening between client and lawyer, and that while a lawyer may accept appointment from an organization to render legal service in a matter in which the organization as an entity is interested, that employment should not include rendering legal services to the members in their individual affairs. The Board said the gratuitous settlement work did not change the situation. It gave a further reason: a lawyer should not put himself where his personal interests might conflict with the client's, and here, because counsel earned nothing on a settlement but could expect compensation from litigation, he might subconsciously be controlled by his personal interest, which would tend to bring reproach on the profession.

Currency note

This opinion was issued in 1933, 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. Lay intermediaries, group and union-sponsored legal services, and personal-interest conflicts are governed today by separate provisions of the current Oklahoma Rules of Professional Conduct, and intervening constitutional decisions altered the law on union-sponsored legal services. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific principle mentioned here.

Common questions

Q: Could a lawyer act as regional counsel for the union bureau under this plan?

A: No. The Board concluded the arrangement violated Rule 37 because a lay agency would intervene between lawyer and client to handle members' individual claims.

Q: Did the free settlement work cure the problem?

A: No. The Board said the fact that settlement services were rendered gratuitously did not alter the situation.

Q: What was the personal-interest concern?

A: Because counsel earned no fee if a claim settled but could expect a fee if it went to litigation, the Board reasoned he might subconsciously be controlled by his personal interest, which a lawyer should avoid.

Background and rules framework

The opinion applied Rule 37 of the then-current Oklahoma Rules of Professional Conduct, patterned on the ABA Canons of Professional Ethics, which barred a lay agency from controlling or exploiting a lawyer's services and limited organizational employment to the organization's own matters rather than its members' individual affairs. The Board added a personal-interest-conflict rationale grounded in the lawyer's duty not to place his own interests against the client's.

Citations and references

Rules of Professional Conduct:

• Rule 37 (1929 Oklahoma Rules of Professional Conduct): a lawyer's services shall not be controlled or exploited by a lay agency intervening between client and lawyer; organizational employment does not extend to members' individual affairs.

See also

• Okla. Bar Ethics Op. 49: Lawyer Representing Members of a Lay Cooperative Association
• Okla. Bar Ethics Op. 53: Lawyer Representing a Debt-Adjustment Company
• Okla. Bar Ethics Op. 31: Law Firm Managing a Lay Adjustment Bureau

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-55/

Original opinion text

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

Adopted June 23, 1933

The Board is in receipt of the following request for an advisory opinion:

"We request an advisory opinion from the Board of Governors on the following state of facts. The Union Labor Organization of railway employees through its national office maintains a bureau for the purpose of investigating the cause and nature of all injuries to railway employees who happen to be members of the organization. These investigations are made honestly and impartially and statements are taken from witnesses and this data is preserved for the injured man in the event litigation should be had, very much in the same manner as the claim department for the railway compiles data for the use of the railway company in the event of litigation following an accident. The United States is divided into regions and in each region counsel is designated as regional counsel of this organization. These regional counsel agree that they will advise with the injured employees and in all cases try to effect an equitable settlement without litigation and without charge to the injured employee, but in the event of litigation they are to charge the injured employee a contingent fee of fifteen per cent of the net amount recovered and the national bureau charges five per cent of the net amount recovered for obtaining legal and competent evidence for use in the trial. This charge is made only in the event of litigation. We request the opinion of the board as to whether or not attorneys acting as regional counsel are violating the rules of the bar by being a party to this kind of an agreement."

In response:

The Board is of the opinion that the attorneys acting as regional counsel would be proceeding in violation of Rule of Professional Conduct No. 37, which provides:

"The professional services of a lawyer should not be controlled or-exploited by any lay agency, personal or corporate, which intervenes between client and lawyer. A lawyer's responsibilities and qualifications are individual. … A lawyer may accept appointment from any organization, such as an association, club or trade organization, to render legal service in any manner in which the organization, as an entity, is interested, but this employment should not include the rendering of legal services to the members of such an organization in respect to their individual affairs."

The fact that services rendered in effecting settlements are given gratuitously does not alter the situation.

The proposed plan cannot be approved for a further reason. A member of the bar should not place himself in a position where his personal interests might conflict with that of his client. In the situation presented where the member of the bar is not entitled to compensation in the event a settlement is effectuated and where some compensation, arising from future litigation, may be expected, the member of the bar subconsciously may be controlled by his personal interests. A member of the bar should not place himself in such position because it would tend to bring reproach upon the profession.