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Will you please give me your advice on the following facts?
“A” is a lawyer who was admitted to the Bar of the State of New York in 1928. He also has a license as a real estate and insurance broker. “B” is a lawyer and C.P.A. who was recently admitted without any practice.
“A” and “B” formed a partnership for a period of three years and “B” immediately took over the operation of the insurance. During their partnership, “B” was introduced to many of “A’s” clients and “B” not only handled their insurance but also did accounting and tax work for them and also some legal work.
At the end of the three-year period, the parties dissolved their partnership but decided to continue to share the same offices. Since “B” was handling insurance and accounting work for many of “A’s” clients, “B” agreed in writing not to solicit from or do any legal work for “A’s” clients. The contract dissolving the partnership contains the following provision:
“As long as the parties hereto are associated together, they agree not to solicit or to accept any legal work or retainers from any insurance or real estate customers or accounting clients which each may refer to the other or had heretofore referred to each other or to each other’s company.”
About two years after the dissolution of the partnership, “A” accidentally discovered that “B” had prepared two chattel mortgages which involved approximately $50,000.00 each for “X” who is a valuable client of “A”. These chattel mortgages were prepared without knowledge, authorization or consent of “A” and when he questioned “B” about this, “B” stated that he prepared these chattel mortgages gratis and did not charge any fee.
It is “A’s” personal opinion that the reason for doing this work gratis for “X” was for the purpose of enticing “X” away from “A”. It is also to be noted that this work was not entirely gratis since “B” is handling “X’s” insurance business and also doing his accounting and tax work.
My question is whether it was professionally improper for “B” to do said legal work for “X” gratis, without charge. If the answer to the first question is in the negative, would it be professionally proper for “B” to do legal work for “X” for a consideration?
Under Article XXIV of the By-Laws of the New York County Lawyers’ Association, this Committee is empowered “when consulted, to advise inquirers respecting questions of proper professional conduct.” Ordinarily this Committee will only give advice concerning the inquirer’s own professional conduct.
Where the question concerns the professional conduct of a member of the Bar other than the inquirer, such question does not properly come under the jurisdiction of this Committee.
November 28, 1962