Can a West Virginia law firm turn its overdue client accounts over to a collection agency to collect unpaid fees?

Plain-English summary

A West Virginia lawyer asked whether the firm could refer overdue client accounts to a collection agency under three conditions: the agency would have no authority to bring legal action on the accounts; the only information given to the agency would be the client's name, address, and amount owed; and the firm had good reason to believe the agency would deal courteously with the debtor/client and comply with the laws regulating collection agencies. The Committee identified EC 2-23, DR 4-101(B)(1), DR 4-101(C)(4), EC 5-2, and DR 5-101(A) of the West Virginia Code of Professional Responsibility as the authorities involved.

The Committee acknowledged that DR 4-101(C)(4) permits revealing confidences and secrets otherwise protected by DR 4-101(B)(1) in order to collect a fee, but read that permission narrowly: it allows revelation of only the minimum information necessary to locate and collect from debtors, and it assumes that a method of collection has already been found appropriate under the ethics rules. The threshold question of whether referral to a collection agency is itself an appropriate method, the Committee said, has to be answered elsewhere in the Code.

Turning to that threshold question, the Committee pointed to EC 2-23 (a lawyer should be zealous in avoiding fee controversies and should not sue a client for a fee unless necessary to prevent fraud or gross imposition) and to EC 5-2 and DR 5-105(A), which warn that a lawyer must not allow personal financial interests to dilute zeal and loyalty to the client. Citing West Virginia Legal Ethics Case No. 213 (May 1964), it reiterated that the practice of law is not a mere money-getting trade.

The Committee concluded that the closeness of the attorney-client relationship is best maintained when fees are set and collected on a personal lawyer-to-client basis, and that injecting a collection agency into that relationship, even with the lawyer retaining some general control, would present an unacceptably high possibility of injury to the relationship. It noted that the New York State Bar had reached the same conclusion in its Opinion 400 (1975). The question was therefore answered in the negative.

Currency note

The official PDF of this opinion carries a handwritten notation that LEI 80-1 was "Overruled by L.E.I. 94-01" (the West Virginia State Bar issued LEI 94-01 in 1994). This opinion was issued in 1981, before West Virginia replaced its Code of Professional Responsibility (the DR and EC provisions cited here) with the Rules of Professional Conduct, effective January 1, 1989, and before later rule revisions, including the comprehensive 2015 amendments. LEI 94-01 now permits a lawyer to refer a delinquent fee account to a collection agency under eight prescribed guidelines, so the conclusion here no longer reflects current guidance. 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 LEI 80-1 let a firm send overdue fee accounts to a collection agency?

A: No. The opinion concluded that the question should be answered in the negative, even with safeguards limiting the information shared and requiring the agency to act courteously and lawfully.

Q: Doesn't DR 4-101(C)(4) allow revealing client information to collect a fee?

A: The opinion read that provision narrowly. It allows revealing only the minimum information necessary to locate and collect from debtors, and it presupposes that the chosen collection method is already appropriate under the ethics rules; the Committee found that using a collection agency was not.

Q: Why did the Committee object to using a collection agency?

A: The opinion reasoned that the attorney-client relationship is best maintained when fees are set and collected personally between lawyer and client, and that bringing in a collection agency, even one the lawyer partly controls, would create an unacceptably high possibility of injury to that relationship.

Q: Is LEI 80-1 still good guidance?

A: No. LEI 94-01 (1994) overruled it to the extent the two are inconsistent, holding that a lawyer may refer a delinquent fee account to a collection agency under eight prescribed guidelines. LEI 80-1 is indexed here as historical research, not current guidance.

Background and rules framework

The opinion applied the West Virginia Code of Professional Responsibility. DR 4-101(B)(1) protects client confidences and secrets, and DR 4-101(C)(4) creates a limited exception permitting their revelation to collect a fee. EC 2-23 addresses a lawyer's handling of fee disputes, and EC 5-2 and DR 5-101(A) address a lawyer's duty not to let personal financial interests impair loyalty to the client. The Committee treated the confidentiality exception as conditional on the underlying collection method being proper, and resolved that threshold question against the use of a collection agency.

Citations and references

Rules of Professional Conduct (Code of Professional Responsibility, as cited):

• DR 4-101(B)(1) (preserving client confidences and secrets)
• DR 4-101(C)(4) (revealing confidences/secrets to collect a fee)
• DR 5-101(A) (lawyer's personal interests and professional judgment); the body also references DR 5-105(A)
• EC 2-23 (avoiding fee controversies; suing a client for a fee)
• EC 5-2 (personal interests must not dilute loyalty)

Other opinions cited:

• West Virginia Legal Ethics Case No. 213 (May 1964) (law is not a mere money-getting trade; old Canon 12)
• New York State Bar Opinion 400 (June 27, 1975), 47 N.Y.S.B.J. 434 (1975) (collection arrangement not in keeping with the dignity of the profession)

See also

• WVSB Ethics Op. 94-01: Collection of overdue accounts (overrules 80-1)
• WVSB Ethics Op. 93-02: Finance charges on delinquent fee accounts
• WVSB Ethics Op. 84-4: Refusing to file a final divorce decree until fees are paid

Source

• Landing page: https://wvodc.org/Legal-Ethics-Opinion
• Original PDF: https://storage.googleapis.com/msgsndr/Rgd68xOkcVdteTsBkf6O/media/66a7ea7e4c67bc204534b08d.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

LEGAL ETHICS INQUIRY 80-1

(January 16, 1981)

PROPRIETY OF LAW FIRM REFERRAL OF ITS OVERDUE CLIENT ACCOUNTS TO COLLECTION AGENCY

The Committee has received the following inquiry from a West Virginia lawyer: "May my law firm refer overdue client accounts to a collection agency under the following conditions: (a) the agency would have no authority to bring legal action on the accounts; (b) the only information revealed to the agency is the client's name, address and the amount owed; (c) the law firm has good reason to believe that the particular agency will deal courteously with the debtor/client and is in full compliance with national and state law regulating collection agencies and practices"?

AUTHORITIES INVOLVED: EC 2-23, DR 4-101(B)(1), DR 4-101(C)(4), EC 5-2 and DR 5-101(A) of the West Virginia Code of Professional Responsibility.

The Committee has examined the above authorities as well as the general philosophy which has guided this Committee, in the past, in the determination of similar inquiries. While DR 4-101(C)(4) allows revelation of confidences and secrets otherwise protected under DR 4-101(B)(1) in order to collect a fee, it is the view of the Committee that such provision allows revelation of only the minimum information necessary to locate, and collect from, debtors. Additionally, DR 4-101(C)(4) assumes that a method of collection has been found appropriate under our ethics rules. In fact, guidance concerning the answer to that threshold question must be found elsewhere in the Code of Professional Responsibility.

EC 2-23 provides:

A lawyer should be zealous in his efforts to avoid controversies over fees with clients and should attempt to resolve amicably any differences on the subject. He should not sue a client for a fee unless necessary to prevent fraud or gross imposition by the client.

EC 5-2 and DR 5-105(A) also warn that a lawyer must not allow his personal financial interests to dilute his zeal and loyalty to his client.

In West Virginia Legal Ethics Case No. 213 (May, 1964) this Committee cited old Canon 12 and emphasized that the law is not a mere money-getting trade and that a lawyer, as a professional, should willingly surrender attitudes and policies or tradesmen in favor of better client relations and a more wholesome professional image.

The closeness of the attorney/client relation can be best maintained only when the setting and collection of fees is done on a personal lawyer-to-client basis. The injection of a collection agency or agent into this unique and personal relationship, even when the lawyer retains some general control over the agency, would present an unacceptably high possibility of injury to the attorney/client relation, which should be avoided. The New York State Bar states that such collection arrangement is not in keeping with the dignity of the profession in its recent Opinion 400 of June 27, 1975, 47 N.Y.S.B.J. 434 (1975).

Therefore, it is the conclusion of the Committee that the question presented should be answered in the negative.