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OBA Ethics Counsel

Ethics Opinion No. 126

Adopted October 23, 1936

Numerous inquiries have been received by the Board as to the propriety of:

ONE, of the receiving and handling by members of the State Bar of collections from collection agencies or publishers of law lists, i. e., lay organizations engaged in the solicitation of commercial items and the forwarding of them to members of the bar, (a), upon stated fees to be collected by members of the bar and then divided between them and the laymen forwarders, or (b), upon stated fees to be collected by members of the bar and wholly retained by them; and

TWO, of the receiving and handling of items of business by members of the bar direct from proposed clients, which, to the knowledge of the members, are forwarded as a result of the carrying of their name in unapproved law lists or directories.

In response:

It constitutes a violation of the rules of professional conduct for a member of the bar to accept employment in either of the situations presented.

The acceptance of employment in the situation presented in ONE (a) is interdicted by three rules of professional conduct, to-wit: Rules 36, 37 and 29.

Rule 36 is:

"No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility.

The sharing of commissions between a forwarder of collections who is not a member of the bar and a receiver thereof who is a member of the bar, is condemned as being interdicted by this rule."

(See Advisory Opinion 107, April 1936, Bar Journal.)

Rule 37, insofar as involved, is:

"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 responsibility and qualifications are individual. He should avoid all relations which direct the performance of his duties by or in the interest of such intermediary. A lawyer's relation to his client should be personal and the responsibility should be direct to the client."

Rule 29 interdicts the securing of business by "touters" of any kind. That the solicitation of collection business by lay organizations and the subsequent farming out of such business to members of the bar selected by them constitutes "touting," is clear. That the "touting" is done without the permission, knowledge or consent of the member of the bar does not alter the situation. As the Board had occasion to say in Advisory Opinion No. 5, (Vol. 1, Adv. Op. p. 17) rendered on August 29, 1931:

"The knowing acceptance of the service of runners or touters in securing business for a member of The State Bar of Oklahoma, with or without an agreement, express or implied, to compensate such runners or touters, is a violation of the Rules of Professional Conduct."

The conclusions reached are in consonance with the declared policy of this state as evidenced by referring to the history of Rules 36 and 37. Rule 36, as originally adopted, read as follows:

"No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility, but sharing commissions between forwarder and receiver, at a commonly accepted rate upon collections, without suit, of liquidated commercial claims, though one be a lawyer and the other not, is not condemned hereby, where it is not prohibited by statute."

On March 4, 1936 the Supreme Court of this State, upon the recommendation of the Board of Governors, approved an amendment to the rule so that it now reads as first above set forth, to-wit:

"No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility.

The sharing of commissions between a forwarder of collections who is not a member of the bar and a receiver thereof who is a member of the bar, is condemned as being interdicted by this rule."

Rule 37, as originally adopted, contained the sentence:

"The established custom of receiving commercial collections through a lay agency is not condemned hereby."

On January 8, 1934, upon recommendations of the Board of Governors, the Supreme Court approved an amendment to the rule by striking therefrom the sentence quoted.

As the Board said in Advisory Opinion No. 72 (Vol. 1. Adv. Op. p. 135):

"The provisions of Rules 36 and 37 are clear and unambiguous and, now appearing as recently amended, taken in connection with the provisions of Rule 29 interdicting the use of touters to secure business, are designed to prevent the commercialization of the profession and its consequent demoralization."

The acceptance of employment in the situation presented in ONE (b) is improper. Rule 37 prohibits the exploitation of services of members of the bar by lay agencies which intervent between client and lawyer and dictate the terms of the relationship between them; members of the bar may not sanction such conduct by participating therein by profiting therefrom (State Bar Advisory Opinion No. 4, Vol. 1. Adv. Op. p. 17).

It is also prohibited by the spirit, if not the express language, of Rule 36, because the division of fees between the lay agencies and members of the bar is necessarily inherent in the situation. Members of the bar may not close their eyes to conditions which from their experience they know to exist. There is no substantial difference in the plan recently adopted by lay agencies as exemplified by the situation presented in ONE (b) from the plan heretofore used by them as exemplified by the situation in ONE (a). Under the situation presented in ONE (b) the client is ultimately charged a certain gross amount for the combined services rendered him by the lay agency and a member of the bar, a portion of which goes to the lay agency and a portion of which goes to the member of the bar, just as was the situation under the plan exemplified in ONE (a). The specious plan ONE, (b) recently adopted by lay agencies in an attempt to circumvent the rules of professional conduct hereinbefore referred to cannot avail because, as the Board had occasion to say in Advisory Opinion Number 36, the conduct of members of the bar must conform to ideals which are measured by higher standards than merely that their conduct does not come within the supposed narrow letter of the rules of professional conduct. The acceptance of employment in the situation presented by ONE (b) is also prohibited by Rule 29 as a violation of the prohibition against "touting." As we have seen, the fact that the "touter" receives no compensation from a member of the bar for his efforts does not alter the situation.

In connection with the situations presented in both ONE (a) and ONE (b), the Board quotes with approval the following from the report of the Advisory Committee to the General Chairman of Bar Committees of the State of Missouri to the Supreme Court of that State, which report, on July 2, 1936, was approved by that court:

"One of the essential relations upon which the Bar is founded is the relation of attorney and client. The destruction of this relationship by subjecting the Bar to influences other than the courts and its clients, to whom the Bar owes its allegiance, will destroy the Bar.

The practices of the many law lists and law directories constitute them intermediaries between attorney and client and traffickers in legal business. By control of a volume of business, they are able to dictate the terms of the relationship between attorney and client. Thus, they destroy the fundamental relationship upon which the bar is founded."

The Board is of the opinion that to permit laymen to solicit business and then to act as intermediaries between clients and members of the bar is in violation of public policy of this state as declared by the rules of professional conduct of the State Bar of Oklahoma.

The acceptance of the employment in the situation presented in TWO is improper for the following reasons:

(a) Rule 45 provides that a member of the bar may insert his name in a reputable law list or law directory. It prohibits the insertion of the name of a member of the bar in a publication which is not approved as reputable. By order of the Supreme Court, the Board of Governors is authorized to determine what law lists and directories are reputable.

Rule 45 provides that a member of the bar, who causes his name or card to be published in an unapproved law list or directory, or who permits his name or card to be continued to be published after notice of the publication in such law list or directory thereof, is guilty of unprofessional conduct.

Parenthetically, however, attention is called to the fact that in Advisory Opinion No. 120 (October, 1936, State Bar Journal), it was recognized, in this connection, that too onerous a burden should not be imposed upon the individual member of the bar. In that opinion it was said:

"The publishers who have heretofore carried the name or card of the inquirer without his consent should be notified in positive terms to discontinue the listing of the inquirer in future publications, whether the forms are made up or not.

Should publishers of unapproved lists or directories continue to carry the names or cards of members of the Bar of Oklahoma after having been notified to discontinue, or should other publishers of unapproved lists carry the names or cards of members of the bar, the members whose names are carried in those publications should notify the Secretary of the State Bar of the facts.

It is conceivable that those publishers may be enjoined by The State Bar, on the theory that the listing constitutes advertising of those members of the bar and the solicitation of business for them, contrary to law and to the ethics of the profession as declared by The State Bar of Oklahoma."

A publisher of an unapproved law list or directory who inserts therein the names of members of the Bar of the State of Oklahoma with knowledge of the provisions of Rule 45, particularly after having been requested by them to discontinue such insertion is so doing in contemptuous defiance of the rules of the Supreme Court of Oklahoma and of the declared policy of this state.

By Rules 29 and 37 the practice of advertising for and soliciting business, whether it be through lay runners on the street, law lists with highly specialized solicitors or other agencies is prohibited and is contrary to the declared public laws of this state.

Members of the bar may not take advantage of that which they themselves may not do, even though it be done without the consent, and against the protest, of the member of the bar involved. As was said in Advisory Opinion No. 4. (Vol. 1. Adv. Op. p. 16), members of the bar may not sanction such conduct by participation therein by profiting therefrom;

(b) Rule 29 interdicts the solicitation of business by advertisement and the securing of business by "touters." As we have seen, the knowing acceptance of employment brought about by "touters" is condemned;

(c) Rule 31 of the rules of professional conduct enjoins upon a member of the bar the duty "at all times to uphold the honor and to maintain the dignity of the profession." It would constitute a violation of this rule were he to sanction the contemptuous conduct of the publishers of unapproved law lists in carrying his name by accepting employment tendered as a result thereof and by profiting therefrom. As said in Advisory Opinion Number 1, (Vol. 1, Adv. Op. p. 7), members of the bar who cooperate with laymen and thus make it possible for them to commercialize the profession and to bring it into disrepute, clearly violate the provision of Rule 31 of the rules of professional conduct.

The foregoing conclusions in our judgment, are based upon sound considerations of public policy as exemplified by the rules of professional conduct. The touting for, and the furnishing, selling or exploiting of the legal services of, members of the bar is derogatory to the dignity and self respect of the profession, tends to lower the standards of professional character and conduct, and, thus, lessens the usefulness of the profession to the public.

Supplement to Opinion No. 126

Adopted November 10, 1936

The Board re-affirms the opinion that the receiving and handling of collections from collection agencies, i. e., lay organizations engaged in the solicitation of commercial items and the forwarding of them to member of the bar, whether such collections are handled upon stated fees to be divided by members of the bar with the laymen forwarders or upon stated fees to be wholly retained by the member of the bar, is reprehensible in that it permits the professional services of the member of the bar to be controlled by intermediaries coming between them and their clients, constitutes a division of fees by a member of the bar with a lay agency, and in that such lay agencies constitute "touters" for members of the bar.

Nevertheless the board realizes that, for many years, collection agencies have been permitted to operate in every state of the Union; that the business of these collection agencies is nationwide in its scope; and that it can do little to remedy existing conditions without the co-operation of the bars of the other states.

The board is of the opinion that an attempt on its part to remedy existing conditions as to collection agencies, until the movement looking towards their suppression becomes more nationwide in its scope, would unjustly discriminate against members of the State Bar of Oklahoma in that they would not be permitted to receive and handle certain items of business originating in foreign states while the members of the bars of said originating states and states other than Oklahoma are permitted so to do.

Therefore, until further notice, the receiving and handling by members of the State Bar of Oklahoma of collections from collection agencies operating without this state, upon stated fees to be collected by members of the bar and wholly retained by them (denominated in Advisory Opinion Number 126 as "ONE (B)"), while disapproved of, will not be considered as a violation of Rules 29, 36 and 37; provided that advisory opinion number 126 shall be construed to apply to and to condemn the receiving and handling of items of business, upon any basis whatsoever, from collection agencies which maintain offices or solicit and handle collections, or otherwise operate within the State of Oklahoma.