Formal Advisory Opinion No. 95-1
Ethics & Discipline / Advisory Opinions / Formal Advisory Opinions / Formal Advisory Opinion No. 95-1
State Bar of Georgia
Issued by the Supreme Court of Georgia
On October 4, 1995
Formal Advisory Opinion No. 95-1
For references to Standard of Conduct 23, please see Rule 1.16(d).
For references to Standard of Conduct 26, please see Rule 5.4(a).
For references to Standard of Conduct 28, please see Rules 1.6 and 1.8(b).
For references to Standard of Conduct 30, please see Rule 1.7.
For references to Standard of Conduct 31(a), please see Rule 1.5(a).
For references to Standard of Conduct 40, please see Rule 1.8(f).
For an explanation regarding the addition of headnotes to the opinion, click here.
May a lawyer practicing law in Georgia ethically participate in a fee collection program which purchases client fee bills from lawyers and collects the fees from the client? To participate in the program, the lawyer must enroll and pay a fee; and agree to assign the client's fees bills and share information about the client and the client's case with the program.
Because the lawyer's participation will result in a violation of one or more disciplinary Standards, members of the State Bar of Georgia cannot ethically participate in the program.
I. Introduction and Background
A fee collection program purchases client fee bills from lawyers and collects the fees from the client. To participate in the program, the lawyer must enroll and pay a fee; and agree to assign the client's fees bills and share information about the client and the client's case with the program.
If the client is credit worthy, the program will pay the client's bill and then proceed to collect the fees from the client on an installment basis, charging interest according to the credit worthiness of the client; if the client is not credit worthy, the program will proceed to collect the fees for the lawyer, but without any advance payment, remitting only 80% of the amount of the fees collected.
The lawyer is required by the program's Participation Agreement to grade clients according to their legal needs and ability to pay. The Participation Agreement contains the following provisions:
The lawyer must "disclose events or circumstances materially affecting...credit worthiness" of the client. The lawyer is required to warrant and covenant, among other terms, the following: that the application, credit agreement and voucher "have been signed by either the Client, a person authorized to sign on the Client's behalf, or the person who will be responsible for repaying the credit extended under the Program, and such Client or person has been identified by a valid driver's license or state identification card;" "the Voucher accurately describes and evidences the type of service which has been provided to the Client;" "the Client is not in default with respect to any agreement between Client and Participant (lawyer), other than regarding accounts receivable;" and "Participant has no knowledge of any facts which may result in the uncollectability and/or unenforceability of the Credit Agreement."
Thus to participate in the program, the lawyer must provide information about the client that may well violate the client's right of confidentiality. Moreover, the client must sign the lawyer's voucher warranting the satisfactory nature of the lawyer's services, acknowledging that the fees are reasonable, and agreeing to pay finance charges in addition to the reasonable fee.
II. The Ethical and Legal Considerations in the Program
Preliminarily, it should be noted that a client's use of a program voucher is not analogous to a client's use of all-purpose credit cards to pay for services of a lawyer. Rather, the program is essentially a finance company designed to provide a service exclusively for lawyers and clients.
In Georgia, lawyers are officers of the Court, Platen v. Byck, 50 Ga. 245, 248 (1873); Bibb County v. Hancock, 211 Ga. 429, 438 (1955); Sams v. Olah, 225 Ga. 497, 504 (1969), and, as members of the State Bar, are members of the administrative arm of the Georgia Supreme Court engaged in the administration of justice.
The office of attorney is indispensable to the administration of justice and is intimate and peculiar in its relation to, and vital to the well-being of, the court.
Sams v. Olah, supra, at 504. Thus, the lawyer is "an officer of the state, with an obligation to the courts and to the public no less significant than his obligation to his client," id., and the legal profession "[d]emands adherence to the public interest as the foremost obligation of the practitioner." First Bank & Trust Co. v. Zagoria, 250 Ga. 844, 845 (1983).
The basic vice of the program is that it violates both the spirit and the letter of these precepts by requiring the lawyer to dilute his or her role as fiduciary. For example, the lawyer requires the client to sign a warranty as to the services rendered, which purports to contract away the client's legal right to complain or to dismiss the lawyer. A fundamental rule applicable to the lawyer as fiduciary is that "a client has the absolute right to discharge the attorney and terminate the relation at any time, even without cause." White v. Aiken, 197 Ga. 29 (1943). (See also Standard 26).
The dilution of the lawyer's fiduciary role is further indicated by the fact that a lawyer's participation in the program entails the possible violation of at least six standards of the State Bar of Georgia: Standards 23, 26, 28, 30, 31(a), and 40.
Standard 23 requires a lawyer who withdraws from employment to refund any unearned fees. Standard 26 prohibits a lawyer from sharing legal fees with a non-lawyer. Standard 28 prohibits a lawyer from revealing the confidences or secrets of a client. Standard 30 prohibits representation where the lawyer's exercise of professional judgment on behalf of a client may be affected by his own financial, business, property or personal interest. Standard 31(a) prohibits the lawyer from charging a clearly excessive fee. And Standard 40 prohibits a lawyer from accepting compensation from one other than the client for representation of the client without the consent of the client.
Because the lawyer's participation will result in a violation of one or more of these Standards, members of the State Bar of Georgia cannot ethically participate in the program.
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