ETHICS OPINION 492-1960 SOLICITATION

NUMBER 492

QUESTION.

 

A, an attorney, is associated with XYZ, a law firm.

 

A is one of nine directors and a member of the five man Executive Committee of C, a corporation. A and his family (which consists of his mother, sisters and two cousins, all of whom he represents in the management of their financial affairs) own beneficially, outright and in various family trusts, approximately 22% of the outstanding common stock of C, which percentage has an approximate market value of $7,500,000. In addition to the said 22%, A and certain members of his said family have beneficial remainder interests in approximately an additional 4% or about $1,400,000.

 

For over 25 years A has had a close personal relationship with D, the president of C who is also a director. This relationship arises from the fact that D was for many years employed by A’s family as a financial adviser and manager of their financial affairs, in the course of which he had innumerable personal contacts with A. D is also a trustee of several of A’s family trusts. One of the other directors of C is A’s cousin whom A has known all of his life. Since A’s family made their investment in C several years ago, A has had frequent regular contact with the other six directors concerning the affairs of C.

 

PQR, a law firm, have been attorneys for C for several years, S and T were the partners of PQR who were principally concerned with C’s non-tax matters. U, another partner of PQR, has been concerned with C’s tax matters. S was a director of C. Within the past year, S resigned as a partner of PQR and as a director of C, and T resigned as a partner of PQR, and both withdrew from the practise of law.

 

A now wishes to suggest to D and to the other directors of C that XYZ be retained as attorneys for C. A is of the opinion that the services of PQR have been competent, efficient and satisfactory.

 

Question: Do the facts above set forth constitute “personal relations” as stated in Canon 27? Upon said facts, is it unethical under Canon 27 or 7 or any other Canon for A to discuss with D and the other directors of C the retention of XYZ as its attorneys?

 

ANSWER.

 

It is the Committee’s opinion that under the facts stated in the foregoing question, the personal relations of the inquiring attorney are sufficiently intimate to warrant solicitation by him of the business of the suggested client.

 

Dated: May 31, 1960.