Can a lawyer participate in a non-law business that buys and assumes physicians' workers'-compensation accounts receivable?

Plain-English summary

An individual proposed a business that would contact physicians owed money by workers' compensation carriers, pay them discounted amounts, and assume their accounts receivable for work-related-injury services. Attorney A was asked to assist in the business. The committee was asked whether the business was permissible and whether Attorney A could participate.

The committee declined to decide whether the business itself is proper, explaining that the propriety of a business other than the practice of law is a matter of substantive law outside its purview; it advises attorneys only about the Rules of Professional Conduct. As to Attorney A's participation, the committee concluded that, from the brief description, the involvement does not appear to involve the practice of law, so the Rules of Professional Conduct do not appear to apply. It added the caveat that a lawyer should always remain mindful of Rule 8.4 and the general spirit of the rules in all activities, whether or not directly involving the practice of law.

Currency note

This opinion was issued in 1993, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. Subsequent rule amendments or 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 Treat this page as historical context, not current guidance.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: Did the committee say whether the receivables business is proper?

A: No. It treated the propriety of a non-law business as a substantive-law question outside its purview and did not address it.

Q: Can the lawyer participate in the business?

A: The committee concluded that, as described, the participation does not appear to involve the practice of law, so the Rules of Professional Conduct do not appear to apply.

Q: Do any ethics rules still matter?

A: Yes. The committee cautioned that the lawyer should remain mindful of Rule 8.4 and the general spirit of the rules in all activities, even those outside the practice of law.

Background and rules framework

The opinion turned on the scope of the Rules of Professional Conduct: activities that are not the practice of law fall outside the rules, except that a lawyer remains subject to Rule 8.4 (misconduct) and the rules' general spirit. The South Carolina rule corresponds to like-numbered Model Rule 8.4.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 8.4 / Model Rule 8.4: misconduct (the lawyer's continuing obligation in non-law activities).

See also

• SC Bar Ethics Op. 93-37: Lawyer-CPA Dual Practice
• SC Bar Ethics Op. 94-04: Litigation Financing Advice

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-93-28/

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 93-28

Attorney A has been contacted by an individual who wishes to establish a business whereby the business would contact physicians who were owed monies by workers' compensation carriers for services rendered to injured workers. The business would pay to physicians discounted amounts owed and assume physicians' accounts receivable for service pertaining to work related injuries. Attorney A has been asked to assist in such business.

Question:
Is it permissible for a business to assume accounts receivable from physicians who are treating work related injuries? Is it permissible for Attorney A to participate in the business as described above?

Summary:
The question as to whether this is a proper business is not a proper question for this committee. Similarly, any participation by Attorney A does not appear to involve the practice of law and so would not be controlled by the Rules of Professional Conduct.

Opinion:
This committee advises attorneys concerning their conduct with regard to the Rules of Professional Conduct and other applicable ethical standards. Of course, businesses other than the practice of law are not controlled by these Rules and hence are not within the purview of this committee. The propriety of a business other than the practice of law would constitute a matter of substantive law, which this committee does not address.

Any participation of Attorney A in this business, from the brief description provided does not appear to involve the practice of law. Consequently, the Rules of Professional Conduct do not appear to apply to any involvement in this business. Of course, the lawyer should always be mindful of Rule 8.4 and the general spirit of the Rules in all activities whether directly involved with the practice of law or not.