A voluntary non-profit agency organized to provide health, educational, recreational and social services to young persons, furnishes special tuition to mentally handicapped children. At present the cost is borne by the agency, which is partially reimbursed by the State and the parents of the handicapped child. The agency desires to obtain the benefit of provisions of the Family Court Act which provide that upon application in an appropriate case the Court may make an order the effect of which would relieve the parents and the agency from any part of the cost, casting the entire burden thereof upon the County and the State. The inquiring attorney has been requested by the agency to make his services available for the preparation and processing of such applications. Besides the benefit of the grant of additional public funds, this arrangement would result in less legal expenses than would be involved if the parents in each individual case retained separate independent counsel.
The attorney asks if it would be proper for him to inform, or to permit the agency to inform, the parents of the handicapped children that his services are available at a fee to be charged to the parents? ‘He also asks if, in the alternative, it would be proper for him, in view of the ultimate benefit which would ensure to the agency, to accept a retainer and compensation from the agency itself, to represent the parents in each such case?
This Committee does not pass on issues of law, but for the purposes of this opinion, will assume that under the present practice in New York City an application to the Family Court may result in relieving both the parents and the agency of the costs of tuition at the agency, although this may not continue to be true if the present practice is upset by later court decisions.
The controlling principles are set out in DR 2-103(D) and EC 2-33, as amended by the American Bar Association on February 24, 1975, and as recently adopted by the New York State Bar Association, effective April 19, 1975.
In its new form, DR 2-103(D), while prohibiting a lawyer from knowingly assisting a person or organization that furnishes or pays for legal services to others to promote the use of his services, also provides that this general proscription does not prohibit a lawyer from being recommended, employed, paid by, or cooperating with, certain defined offices or organizations that promote the use of his services if there is no interference with the exercise of independent professional judgment in behalf of his client.
The relevant definition brings within the exceptions any bonafide organization that recommends, furnishes, or pays for Legal services to its members or beneficiaries, provided that the following conditions are satisfied:
that the organization derives no profit from the recommendation of legal services by lawyers; (except in certain circumstances not relevant here.)
that the lawyer has not initiated or promoted the organization for the primary purpose of benefiting himself;
that the organization is not operated for the purpose of procuring legal work or financial benefit for any lawyer as a private practitioner outside of the legal services program of the organization;
that the member or beneficiary to whom the legal services are furnished, and not the organization, is recognized as the client of the lawyer in the matter;
that provision is made protecting the member’s or beneficiary’s right to select other counsel; and granting appropriate relief if he exercises such right.
that the lawyer does not know, or have cause to know, that the organization is in violation of applicable laws, rules of court or other legal requirements governing its legal service operations, and finally,
that the organization has filed with the appropriate disciplinary authority, at least annually, a report with respect to its legal service plan or, if it has failed to do so, that the lawyer does not know, or have cause to know, of the failure.
If these conditions are met in the situation that is the subject of the question, there would appear no reason why the lawyer could not permit the agency to inform the parents of the handicapped children that his services are available at a fee to be charged to the parents or why the agency could not furnish and pay for his services to the parents. While the children, rather than the parents, might, on a strict reading, be considered the members or beneficiaries of the agency, this would be too nice a reading of the Rule and the parents may be considered beneficiaries of the agency for the purposes of the Rule.
The lawyer should, of course, meticulously observe the admonitions set out in EC 2-33 and in DR 2-101(B) as recently amended. He must, in all respects, treat the parent, and not the agency, as his client and act with undivided loyalty towards his client, especially with respect to any possible conflict of interest between the agency and the parent. Confidential information disclosed by the parents to the lawyer during the course of the representation should not be divulged to the agency, especially if the financial situation of the parent is a factor in determining whether the agency will receive the child or in determing the allocation between the parent and the agency of any costs not paid by the State.
It would be improper for the attorney himself to inform the parent Of the availability of his services under either alternative posed in the question.
February 16, 1976