NUMBER 260 1928

Question. 1. May an attorney hold stock in a corporation organized to do commercial collection business for which company said attorney performs legal services?

2. Is it proper for an attorney to maintain his law office in the same suite in which a collection agency is located for which agency said attorney renders legal services?

3. Is it proper for an attorney to contract with a collection agency to furnish legal services over a period of time on certain stipulated terms, where said attorney has no proprietary interest in the collection agency?

Answer. There are many elements of professional impropriety possible in the association of a lawyer with a collection agency which are to be avoided. This Committee has repeatedly indicated some, if not all, of the objectionable features of such association. (See its answers in Opinions 47, 74, 98, 121, 125, 136, 147. 220. and 238, especially Opinions 47 and 220.)

In its announcement of opinion to the Board of Directors of the New York County Lawyers’ Association, which was published by authority of the Board May 2, 1921, the Committee said:

The Committee is led to distinguish lawful trade organizations from collection agencies, in that trade organizations are a cooperative effort to unite the activities of those having a common object, in which all are alike interested, and in which they are uniting through the Association in employing legal services for the common end in the opinion of the Committee the employment of a lawyer to promote this common interest as above indicated contains no element of inherent professional impropriety.

But, as usually conducted, a collection agency exists for its own profit, is an independent contractor, does not exist, for cooperative purposes, and solicits business for its own ends, though it doubtless promotes the interests of its customers or it could not exist. When in behalf of a customer it acts as his agent and transmits a claim or employs a lawyer, such employment, in the interest or on behalf of its customer, is not, in the opinion of the Committee, inherently improper, provided it is free from divided allegiance or inconsistent obligation, and provided it is not permitted to deprive the lawyer of the untrammeled relation, of fidelity to the customer, which is of the essence of professional duty. Since the interests of the collection agency, unlike those of the trade organization, are not identical with the interests of those whom it undertakes to represent, its solicitation of business is for its own ends; while it may properly employ a lawyer as its own adviser, and to represent it, in the opinion of the Committee, the employment by it in its own behalf, of a lawyer to represent its customers, is the exploitation of his services for its profit, as an intermediary between client and attorney; and this the Committee has always regarded as not professionally proper (whether or not prohibited by statute); for the reason that the exploitation of the office of the lawyer for the profit of another is an abuse of its functions, the solicitation of business for the common advantage of the agency and the lawyer is solicitation for the lawyer, and the obligation to the agency should not be permitted to supersede or interfere with the primary obligation to its customer,

The same principles which apply to the conduct of the lawyer for the trade organization of course apply to the conduct of the lawyer for the collection agency.

The Committee expresses the following opinion in answer to the present inquiries:


It is difficult to see how the combination indicated in inquiries 1, 2, and 3 of the question can be earned out without a violation of the precautionary restrictions above mentioned. The observance of such precautions is not necessarily defeated by any one of the arrangements respectively indicated in the several inquiries, hut such restrictions are always to he observed, no matter what the arrangement may otherwise be.