Does a lawyer violate South Carolina Rule 4.5 by sending a bad-check collection notice that warns of possible criminal prosecution when state law requires that warning?

Plain-English summary

A lawyer's client, a small-business owner, asked the lawyer to help collect several dishonored checks returned for insufficient funds or drawn on an inactive account. The lawyer contemplated sending a letter under S.C. Code 34-11-70 that would warn the check writer that, unless the amount is paid in full within the specified time, the holder may turn the dishonored check and related information over to the solicitor or other appropriate officer for criminal prosecution. The lawyer was mindful that Rule 4.5 prohibits a lawyer from threatening to present criminal or professional disciplinary charges solely to obtain an advantage in a civil matter, and asked whether sending the statutory notice would violate Rule 4.5.

The committee concluded there is no Rule 4.5 violation. It explained that Rule 4.5 has no equivalent in the Model Rules, is based on DR 7-105 of the former Code of Professional Responsibility, and that the committee had previously applied the rule in Opinion 99-05 (finding a violation where a lawyer for an employer threatened to have federal or state taxing authorities present at a workers' compensation hearing where the employee would testify about lost earnings). It distinguished the present situation because S.C. Code 34-11-70(a)(1) requires that notice be given by mailing it, postage prepaid, to the person at the address printed or written on the instrument. Although the notice constitutes "threatening to present criminal charges," the statute requires the notice, so the threat is not made "solely to obtain an advantage in a civil matter" as Rule 4.5 prohibits. The committee therefore concluded the lawyer may prepare and send the statutory collection notice on the client's behalf without violating Rule 4.5.

In practice

Under this opinion, a lawyer may prepare and send the bad-check collection notice that S.C. Code 34-11-70 requires, even though the notice references possible criminal prosecution. The committee held this does not violate Rule 4.5 because the statute mandates the notice, so the reference to criminal charges is not made solely to gain an advantage in a civil matter. The committee contrasted Opinion 99-05, where a threat not compelled by statute did violate Rule 4.5, locating the distinction in the statutory requirement.

Common questions

Q: Can a lawyer send a bad-check demand that mentions criminal prosecution?

A: The committee concluded yes, where the notice is the one required by S.C. Code 34-11-70. Because the statute requires the notice, mentioning possible criminal prosecution is not done solely to gain an advantage in a civil matter, so Rule 4.5 is not violated.

Q: Why does the statute make the difference?

A: Rule 4.5 only bars threatening criminal charges "solely to obtain an advantage in a civil matter." The committee reasoned that because S.C. Code 34-11-70 compels the notice, the lawyer's purpose is not solely to gain a civil advantage, so the rule is not triggered.

Q: Is this different from the committee's earlier Rule 4.5 opinion?

A: Yes. The committee distinguished Opinion 99-05, where it found a Rule 4.5 violation when a lawyer threatened to bring taxing authorities to a workers' compensation hearing, because that threat was not required by statute.

Background and rules framework

The opinion applies South Carolina Rule 4.5, which prohibits a lawyer from threatening to present criminal or professional disciplinary charges solely to obtain an advantage in a civil matter. The committee noted Rule 4.5 has no Model Rule equivalent and derives from DR 7-105 of the former Code of Professional Responsibility; in the current Model Rules the nearest provision addressing improper purpose is Rule 4.4 (respect for the rights of third persons). The opinion reads Rule 4.5 against the statutory bad-check notice requirement in S.C. Code 34-11-70.

Citations and references

Rules of Professional Conduct:

• SC Rule 4.5 (no threatening criminal or disciplinary charges solely to gain advantage in a civil matter; no Model Rule equivalent; based on DR 7-105)
• MR 4.4 (respect for rights of third persons; nearest Model Rule analog)

Statutes:

• S.C. Code 34-11-70 (1976, as amended) (required notice procedure for collecting dishonored checks)

Other opinions cited:

• SC Ethics Advisory Opinion 99-05 (Rule 4.5 violated where a lawyer threatened to bring taxing authorities to a workers' compensation hearing)

See also

• SC Bar Ethics Op. 05-17: Release-Dismissal Agreements
• SC Bar Ethics Op. 07-04: Lawyers Buying Charged-Off Debt

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-07-06/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 07-06

SC Rules of Professional Conduct: Rule 4.5

Facts
Lawyer's client owns and operates a small business. Client requests that Lawyer assist with the collection of several dishonored checks that have been returned as insufficient funds or were drawn on an inactive account. Lawyer is contemplating sending a letter on client's behalf, in compliance with S.C. Code §34-11-70, 1976, as amended, which would state, in part, "[u]nless this amount is paid in full within the specified time above, the holder of the check or instrument may turn over the dishonored check or instrument and all other available information relating to this incident to the solicitor or other appropriate officer for criminal prosecution." Lawyer is mindful of the language contained in Rule of Professional Conduct 4.5 which prohibits a lawyer from threatening to present criminal or professional disciplinary charges solely to obtain an advantage in a civil matter.

Question
If Lawyer sends collection notices on behalf of Client pursuant to S.C. Code §34-11-70, is Attorney in violation of Rule 4.5 of Professional Conduct, which prohibits threats of criminal charges solely to gain advantage in a civil matter?

Summary
There is no violation of Rule 4.5 of Professional Conduct, SCACR, Rule 407, for Lawyer to prepare and send out a collection notice letter on Client's behalf pursuant to S.C. Code §34-11-70.

Opinion
Rule 4.5 of Professional Conduct for Lawyers, SCACR, Rule 407, prohibits a lawyer from threatening to present criminal or professional disciplinary charges solely to obtain an advantage in a civil matter. This Rule is not included in the Model Rules of Professional Conduct. The language of this Rule is based upon DR 7-105 of the Code of Professional Responsibility. South Carolina Rule 4.5 and its comments have no equivalent in the Model Rules. This committee issued a prior opinion regarding Rule 4.5. S.C. Bar. Ethics Adv. Op. 99-05 (stating it was a violation of Rule 4.5 for lawyer for employer to notify federal or state taxing authorities to be present at workers’ compensation hearing where employee will testify about lost earnings).

However, the current issue is based on a statutory requirement pursuant to S.C. Code §34-11-70(a)(1), 1976, as amended, that “notice must be given by mailing the notice with postage prepaid addressed to the person at the address as printed or written on the instrument.” Such conduct constitutes “threatening to present criminal... charges,” but because the statute requires the notice, the threat is not made “solely to obtain an advantage in a civil matter” as prohibited by Rule 4.5. Therefore, there is no violation of Rule 4.5 of Professional Conduct for Lawyer to prepare and send out a collection notice letter on Client's behalf pursuant to S.C. Code §34-11-70.