OBA Ethics Counsel
Ethics Opinion No. 31
Adopted May 27, 1932
The Board of Governors is in receipt of the following request for an opinion:
"A certain firm of lawyers in .........., Oklahoma, having formed or were instrumental in forming an association called ".......... Board of Adjusters" having for its purpose the engaging in the business of liquidating the affairs of failing or failed mercantile institutions and of adjusting claims against them. Apparently the office of this association is maintained in the office of the firm of lawyers mentioned. The "Board of Adjusters" solicits employment from the mercantile institutions. The business of the bureau is superintended by a member of the firm and liquidation checks, if any, are sent out on the checks of the firm of lawyers. Part of the time correspondence connected with the business is carried on stationery of the Bureau on which does not appear the names of any of the supposed officers of the Bureau nor of the firm of lawyers as its attorneys, and part of the time for the firm of lawyers on their own stationery. The "Board" as such does not purport to engage in the rendering of a service other than that which may properly be rendered by a lay organization. Is the situation professionally ethical as far as the firm of attorneys is concerned?"
In response, attention is called to Opinion No. 57 of the American Bar Association's Committee on Professional Ethics appearing in the May issue of the American Bar Association Journal where in connection with a similar inquiry the following inquiries were answered:
1. Is it proper for a lawyer, who is engaged in general practice, at the same time to manage an investigating and adjustment bureau, which solicits business from insurance companies?
2. Assuming that the previous question is answered in the affirmative, is it proper for the lawyer to practice law and conduct the adjustment bureau in one and the same office?
3. Is it proper for a lawyer, who is actively engaged in general practice, to allow his name to appear on the stationery of such an adjustment bureau, as its manager, with the intent that this stationery shall be used by the bureau in its solicitation of business?
In answer to the inquiries, it was said:
"It is not necessarily improper for an attorney to engage in a business; but impropriety arises when the business is of such a nature or is conducted in such a manner as to be inconsistent with the lawyer's duties as a member of the bar. Such an inconsistency arises when the business is one that will readily lend itself as a means for procuring professional employment for him, is such that it can be used as a cloak for indirect solicitation on his behalf, or is of a nature that, if handled by a lawyer, would be regarded as the practice of law. To avoid such inconsistencies it is always desirable and usually necessary that the lawyer keep any business in which he is engaged entirely separate and apart from his practice of the law and he must, in any event, conduct it with due observance of the standards of conduct required of him as a lawyer.
Some businesses in which laymen engage are so closely associated with the practice of law that their solicitation of business may readily become a means of indirect solicitation of business for any lawyer that is associated with them. Opinions 31 and 35. The adjustment of claims, the incorporating of companies and the handling of matters before governmental commissions and boards and in government offices fall within such classifications. It is difficult to conceive how a lawyer could conduct a claim adjustment bureau, a company for the organization of corporations, or a bureau for securing income tax refunds, without practicing law. In performing the services which he would ordinarily render in connection with any of these activities, his professional skill and responsibility as a lawyer would be engaged. The fact that a layman can lawfully render certain service does not necessarily mean that it would not be professional service when rendered by a lawyer. On the contrary lawyers are frequently called upon to render much service for the very reason that it can be better rendered by a lawyer.
The adjustment of insurance claims by a lawyer is professional employment. In performing such a service his professional skill and responsibility are engaged. He cannot properly render legal services to a lay intermediary for the benefit of its patrons. Opinions 8, 31, 35, 41 and 56. Furthermore the investigation and adjustment of insurance claims must frequently lead to some litigation, so that the solicitation of business by a bureau handling them must readily lend itself as a means of procuring professional employment for any lawyer in general practice who may be interested in or connected with it.
For the reasons stated a lawyer cannot properly devote a portion of his time to managing a bureau for the adjustment of insurance claims nor permit his name to be used on its stationery. Having thus answered the first and third questions in the negative, it is unnecessary to answer the second question. Nevertheless, reference to it is desirable because it so aptly illustrates the necessity of keeping any business in which a lawyer may be engaged entirely separate and apart from his practice of law. If such a business and his law practice should be conducted from the same office, the public could not be expected to distinguish between his dual capacities and know when he is acting in the capacity of a lawyer and when in that of a layman."
Rule 29 of the Rules of Professional Conduct of the State Bar provides:
"... It is equally unprofessional to secure business by indirection through touters of any kind, whether allied real estate firms or trust companies. ...,"
Rule 37 provides:
"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 responsibilities and qualifications are individual."
Rule 29 is identical with Canon 27 of the Canons of Legal Ethics of the American Bar Association, and Rule 37 with Canon 35.
The opinion of the Committee of the American Bar Association herein quoted from is adopted by the Board of Governors as being in accordance with its views.
Accordingly, the response to the inquiry is that the connection of the firm of lawyers with the "Board of Adjustment" in question is condemned as in violation of the spirit, if not the express language of Rules 29 and 37 of the Rules of Professional Conduct of the State Bar.