NUMBER 323 1933

Question. The XYZ collection agency enters into a standard contract with its customer, which has for one of its provisions, the following:

You are hereby authorized to institute suit in my name and in my behalf, in the event that this claim cannot be collected through your regular service.

You are further appointed my agent and are authorized to deal for me and in my behalf and in my name with any attorney for the purpose of instituting suit in regard to the collection of this claim, the attorney remitting to you the amount collected, less his fee, which shall not exceed 35 percent of the amount collected.

1. Is there any ethical impropriety committed by an attorney who accepts a claim from this XYZ agency under these provisions?

2. Is the XYZ agency furnishing legal counsel or legal aid in violation of Section 280 of the Penal Law or Section 7 of the Stock Corporation Law?

3. Does it make any difference in the opinion you render, if the XYZ agency under the contract mentioned, gives all the claims received from customers in the metropolitan area to one attorney only?

Answer. In the opinion of the Committee, the practice of law by persons not admitted to the Bar is to be discouraged, whether within the prohibition of Section 280 of the New York Penal Law or not, and the lawyer should not assist in such practice. (See Matter of Pace, 107 A.D. 818.) This Committee has conferred with the Committee on Unlawful Practice of the Law of this Association, which has expressed its opinion that the practice of the XYZ collection agency is unlawful.

This Committee accordingly answers the several questions as follows:

1. Yes.

2. The Committee neither construes nor applies Penal Statutes.


3. It may aggravate the impropriety. (See Opinions 147, 220, and 260.)