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OBA Ethics Counsel

Ethics Opinion No. 7

Adopted September 25, 1936

A member of The State Bar of Oklahoma has requested the Board of Governors of The State Bar of Oklahoma to express its opinion in answer to the following inquiries:

(1) "I understand that there are a number of attorneys in Oklahoma who, being in the general practice of law, accept monthly retainers from Personal or Chattel Loan Companies under an agreement whereby they will sue for and collect the notes of such company, including the stipulated attorney's fee in such notes, and upon collection will return the principal and interest collected upon the judgment and will also return the amount of the attorney's fee collected through judgment to such company. The only compensation to the attorney being the monthly retainer.
(2) Suppose the attorney for such loan company is not in the general practice but is employed on a regular salary by such company. Is it ethical for such attorney to collect the attorney fee stipulated in the notes collected and return such fee to such loan company?"

With reference to the first inquiry:

Assuming that the inquiry implies that the amount of the attorney's fee so delivered to the client is in excess of his retainer, it is the opinion of the Board of Governors that the delivery to such client of fees so collected by such lawyer constitutes a violation of Rule 36 of the Rules of Professional Conduct which provides:

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

The Board of Governors is also of the opinion that the delivery by the lawyer of fees so collected by him constitutes a cause for disbarment, suspension or other disciplinary action. The causes for disbarment, etc., adopted by the Board of Governors and approved by the Supreme Court, provides:

"That the following shall be considered sufficient causes for disbarment, etc., ...

9. That he has divided or agreed to divide fees for legal services with anyone other than another attorney entitled to practice law. ..."

If the amount of fees delivered to the client is less than the retainer, the Board of Governors is still of the opinion that the delivery of such fees to the client is in violation of the spirit of Rule 36 and of cause 9 of the Causes for Disbarment, etc., and is a practice to be severely condemned.

In answer to inquiry No. 2:

It is the opinion of the Board of Governors that it is not only unethical for an attorney to collect the attorney's fee stipulated in the notes and to deliver such fees to his client in lieu of his salary, but also that such act is a sufficient cause for disbarment or suspension or for the imposition of disciplinary measures upon the attorney. The causes for disbarment, etc., provide:

"That the following shall be considered sufficient causes for disbarment, etc., ...

11. That he has divided or agreed to divide fees earned or received with his client or has paid such fees to his employer in lieu of salary or compensation received from his employer."