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OBA Ethics Counsel

Ethics Opinion No. 14

Adopted January 22, 1932

The Board of Governors is in receipt of the following communication:

"The writer has noted with considerable interest Advisory Opinions, appearing in various issues of the State Bar Journal, relative to the representation of loan companies by attorneys, and would greatly appreciate further advice from the Committee on Rules concerning the following:

(a) May an attorney represent a corporation engaged in the salary and chattel loan business, receiving as compensation a retainer fee, said fee to act as compensation for services rendered in an advisory capacity, without violating the rules of the State Bar of Oklahoma?

(b) May an attorney represent a corporation engaged in the salary and chattel loan business by collecting indebtedness due said corporation, where the written instruments evidencing such indebtedness are undoubtedly usurious, but where the debtor does not desire to avail himself of such defense, without violating the rules of the State Bar of Oklahoma?

(c) May an attorney represent a corporation engaged in the salary and chattel loan business, in a suit on written evidence of indebtedness where all usurious interest has been waived by the said corporation, without violating the rules of the State Bar of Oklahoma? I have heard a great deal of discussion among local attorneys as to what extent an attorney may represent corporations engaged in the salary and chattel loan business, and it has been suggested by members of the local bar that representation of corporations engaged in the salary and chattel loan business is in itself grounds for disbarment. I should therefore, greatly appreciate advice concerning the situations outlined above."

In response to inquiry (a):

It is the opinion of the Board of Governors that it is not a violation of the rules of professional conduct of the State Bar of Oklahoma for an attorney to represent a corporation engaged in the salary and chattel loan business on a retainer fee for services rendered in an advisory capacity.

In response to inquiry (b):

The taking, receiving, reserving or charging of usurious interest is condemned by the public policy of the State of Oklahoma, as is evidenced by Section 5098 and kindred sections of the Compiled Oklahoma Statutes, 1921, 15 Okl.St.Ann. § 267 et seq. It is therefore reprehensible, and constitutes a practice unprofessional and unworthy of a member of the State Bar of Oklahoma, to assist in the enforcement of the collection of usurious interest.

Rule 17 of the rules of professional conduct of the State Bar of Oklahoma, among other things, provides:

"But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the law. The office of attorney does not permit, much less does it demand of him for any client, violation of law or any manner or fraud or chicane. He must obey his own conscience and not that of his client."

Rule 31 of such rules provides that a member of the Bar "should strive at all times to uphold the honor and to maintain the dignity of the profession and to improve not only the law but the administration of justice."

Rule 33 of such rules provides:

"No lawyer is obliged to act either as advisor or advocate for every person who may wish to become his client. He has the right to decline employment. Every lawyer upon his own responsibility must decide what business he will accept as counsel, what causes he will bring into court for plaintiffs, what cases he will contest in court for defendants. The responsibility for advising as to questionable transactions, for bringing questionable suits, for urging questionable defenses, is the lawyer's responsibility. He cannot escape it by urging as an excuse that he is only following his client's instructions."

Rule 34 of such rules, among other things, provides that a member of the bar "must also observe and advise his client to observe the statute law."

This opinion, in answer to inquiry (b), should not be construed as holding that it would be reprehensible for a member of the State Bar to represent a person or corporation in the enforcement of the collection of the principal amount, plus legal interest, due upon an instrument such as described in the inquiry.

In response to inquiry (c):

It is the opinion of the Board of Governors that a member of the bar does not violate the rules of professional conduct of the State Bar of Oklahoma by the representation of a corporation in a suit on written evidence of indebtedness where no attempt is made to collect usurious interest.

The answer to inquiry (a) is given upon the assumption that the member of the bar is not knowingly representing a corporation engaged in taking, receiving, reserving or charging usurious interest, as a course of general business conduct.

In this connection attention is called to Advisory Opinion No. 5 of the Board of Governors appearing in the September, 1931, issue of the Oklahoma State Bar Journal, wherein it is said:

"A business association by a member of the State Bar of Oklahoma with a loan shark, that is, one whose course of business conduct is contrary to the usury statutes of this state, is unbecoming a member of the State Bar and tends to bring the profession into disrepute."