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Opinion #465 - 04/21/1977 (15-77)

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)

QUESTION

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?

OPINION

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 thereon.

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 follows:

"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 negative.