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OBA Ethics Counsel

Ethics Opinion No. 10

Oklahoma Bar Association Legal Ethics Committee Advisory Opinions Opinion No. 10. Division of A Collection of Fees with Forwarder Is Unprofessional Conduct.

Approved November 20, 1931

The opinion of the Board of Governors is asked upon the following state of facts:

"A, a corporation of St. Louis, doing a general collection business forwards a claim to B, an attorney in Oklahoma, for collection, over an attorneys' list, the claim being forwarded on a contingent fee basis of 15%, 10% of which the local attorney is to retain as his fee, and 5% of which he is to remit to the forwarder. The A corporation, not being a law firm but doing business under a corporate name and the claim not being forwarded by an attorney representing the corporation, the claim being forwarded by the collection agency itself."

The direct inquiry being:

"Will the attorney in Oklahoma violate any of the rules of professional conduct in remitting the agreed percent of the fee to the forwarder?"

Attention is called to Rule 36 of the rules of professional conduct, which provides as follows:

"No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility. But the established custom of sharing commissions at a commonly accepted rate, upon collections of commercial claims between forwarder and receiver, though one be a lawyer and the other not (being a compensation for valuable services rendered by each), is not condemned hereby, where it is not prohibited by statute."

This is the only rule touching the subject of the inquiry. The answer to the inquiry is that the Oklahoma attorney would not be violating any of the rules of professional conduct in the premises stated.

This rule constitutes one of the rules of the canons of professional ethics of the American Bar Association. It is interesting to note that there is a very decided movement in the American Bar Association to strike out the exception in Rule 36 as to collection agencies, it being the contention that under no circumstances should a member of the bar be allowed to split his fees with a layman or a lay organization. In the judgment of the Board of Governors this would be a consummation devoutly to be wished for.