NEW YORK STATE BAR ASSOCIATIONCommittee
on Professional Ethics
Opinion #465 - 04/21/1977
Topic: Feeder occupation; dual practice; collection of judgments
purchased at discount
Digest: Improper for lawyer to be director of corporation established
to purchase assignments of judgments at discount when his law firm will
be retained to collect such judgments
Code: EC 2-8; DR 2-103(C)
May a lawyer be a director of a corporation established to solicit
and purchase assignments of judgments at a discount when his law firm
will be retained to collect the judgments?
While it is not the function of this Committee to pass upon questions
of law, we note that Sections 488 and 489 of the Judiciary Law are
addressed to various aspects of the question posed and generally serve
to prohibit attorneys, whether directly or indirectly through the
interposition of a corporate entity, from purchasing choses in action
with the intention and for the purpose of causing suit to be instituted
Nevertheless and even if we were to assume for purposes of discussion
the legality of the proposed arrangement, we are of the opinion that it
would be improper for a lawyer to be a director of a corporation which
is engaged in the business of soliciting and purchasing judgments when
it is intended that his law firm be retained to institute proceedings to
collect such judgments.
The ethics of our profession require that a lawyer who is engaged in
another occupation not use that occupation as a cloak for improper
solicitation or as a means of obtaining employment for his legal
services. N. Y. State 206 (1970). Ethically, it makes no difference
whether such solicitation is by the lawyer personally or through a
corporation of which he is a director. N.Y. County 324 (1934)
Consistent with the foregoing authorities, in N.Y State 423 (1975),
we held that it would be improper for a professional legal corporation
to merge with a corporate collection agency, quoting ABA 225 (1941) as
"We are of the opinion that a practicing lawyer cannot participate in
the collection activities or the management of an agency which solicits
the collection of claims. If a lawyer is to participate in such
activities he must withdraw from the practice of law, and refrain from
holding himself out as a lawyer."
See, DR 2-103(C) and EC 2-8; also see, N.Y. State 426 (1975) and N.Y.
City 475 (1939).
For the reasons stated, the question posed is answered in the