Ethics Opinions

Opinion No. 77-8

Summary: A lawyer employed full time by a bank in its trust department as its "Tax Officer" to render to its customers an "Income Tax Preparation Service":
(1) May properly bring suit on behalf of the bank in a collection matter, receiving no additional remuneration therefor.
(2) May properly bill the bank for such legal collection services at the rate customarily billed by an outside attorney. Whether the bank may charge the delinquent debtor for legal collection services of such a full-time employee is a question of law we do not decide, but even if it can, the bank may not properly charge the delinquent debtor with any greater legal fees than the actual cost to the bank of that proportion of the lawyer's time properly allocable to such services.
(3) May properly have his college and law school diplomas on the walls of his office in the bank.
(4) May draft instruments for bank customers who seek his legal advice without recommendation by him or promotion by the bank, provided there is no conflict of interest proscribed by DR 5-105, that such legal services for the bank's customers are not done in the lawyer's office in the bank, and further provided that the bank does not directly or indirectly benefit from the services rendered.
(5) May not have the legal fees charged the bank's customers for such legal services in (4) above used to reduce the compensation paid the lawyer for his full-time services in its trust department.

Facts: A lawyer is employed full time by a bank in its trust department as its "Tax Officer," and the bank's advertisement for its "Income Tax Preparation Service" is signed by the lawyer, with his picture. He is in no way identified as a lawyer in the advertisement or elsewhere in connection with the bank's service in the bank's office. (This was approved by our committee in Opinion No. 76-10.) The lawyer now inquires whether he may properly:
(1) Bring suit on behalf of the bank in a collection matter, receiving no additional remuneration therefor?
(2) Bill the bank for such collection services the amount customarily billed by an outside attorney, with the amount of these fees the major determinant of his salary for his trust department duties? Or would such payments involve the bank in sharing the lawyer's fees in violation of DR 3-102(A)?
(3) Hang his college and law school diplomas on the wall of his office at the bank?
(4) Draft instruments for a bank customer who learns he is an attorney from sources outside the bank? Or for a bank customer who asks him (in connection with his trust department work) whether he is an attorney?
(5) Use the fees received from the work in (4) above for the lawyer as extra compensation? Can they be used to reduce the amount paid to him by the bank for his services to it in the trust department?

Discussion: In our Opinion No. 76-10, we concluded that the lawyer could properly engage in the separate profession of "Income Tax Preparation Service" for the bank under DR 2-102(E) so long as he did not identify himself also as a lawyer on any letterhead, office sign or professional card, or in connection with the separate profession. We also noted our view that such a service was not a "law-related" occupation.

(1) As a paid full-time employee of the bank, the lawyer may properly bring suit on its behalf in collection matters, receiving no additional remuneration. A lawyer may properly act as such for a single client, whether the legal work he does for it occupies his full time or not.

(2) He may properly bill the bank for such legal collection services at any rate the bank agrees to pay, provided the fee is not "illegal or clearly excessive" in violation of DR 2-106(B).

But questions are raised if the bank seeks to recover from the debtor for such legal collection services, pursuant to a valid provision in a written instrument for the collection of reasonable and necessary attorney fees. Judge Caffrey in a recent case in our U.S. District Court (In the matter of Cambridge Nuclear Corporation, F. Supp., June 23, 1974) ruled that the sum of $11,161.35 sought to be recaptured herein [under such a provision] by reason of activities of full-time salaried employees of Bank is not properly chargeable to the debtor's estate [in a Chapter X proceeding under the Bankruptcy Court] but must be borne by Bank under its contract with its various employees, who I find were acting in the normal course of their duties and who, I also find, did not render services necessary to the collection of the note.

If recovery of any such fees paid to the bank's attorney is permissible as a matter of law in the case before us, we would point out that the lawyer will be in trouble if the bank charges the delinquent debtor with any greater legal fees than the actual cost to the bank of that proportion of the time of its full-time employee (including office overhead) which is properly allocable to the collection work. If it (the bank) makes a profit on the collection work done for it by its lawyer-employee, by using any surplus over actual cost to reduce the compensation paid for the trust department services of the lawyer-employee, the lawyer will in effect be sharing the legal fee collected from the delinquent debtor with the bank, a non-lawyer, in violation of DR 3-102(A).

(3) Many graduates of law schools do not practice law. We do not regard hanging college and law school diplomas on the wall of an office in which a separate profession is carried on as constituting a publication therein identifying the person as a lawyer. There would appear to be no violation of DR 2-102(E) here, and indeed DR 2-102(F) specifically allows a lawyer to use in connection with his name "an earned degree or title derived therefrom indicating his training in the law."

(4) Under DR 2-103(A) and (D), the lawyer may not properly recommend the lawyer's employment as a private practitioner, nor may the bank properly promote the use of his legal services. If legal business comes to the lawyer without such recommendation or promotion, he may properly perform them and charge for them, subject to several qualifications. The drafting of instruments and other legal work may create a conflict of interest in violation of DR 5-105, unless the client and the bank both consent after full disclosure. (See our discussion of the similar problem under DR 5-101 in our Opinion 76-10.) Further, we do not believe that the actual drafting of instruments and other legal work for bank customers or others could properly be done in the lawyer's office in the bank, or that the bank can act as a fiduciary under such instruments or in any other way benefit directly or indirectly from such legal work. In reaching this conclusion, we have followed the views expressed by the ABA Committee on Ethics and Professional Responsibility in Informal Opinions C-431 (6/20/61) and 987 (5/23/67).

(5) If the legal fees charged the bank's customers (or other clients) for such legal services are used to reduce the compensation paid the lawyer by the bank for his full-time services in its trust department, the lawyer will in effect be splitting his fee with the bank (a non-lawyer) in violation of DR 3-102(A). If the lawyer were allowed to keep such fees as extra compensation, it would not violate DR 3-102(A), but the lawyer must not use his other profession or business as a subterfuge to promote his law practice (even if carried on in an office not in the bank), or promote his other profession or business by advertising the availability of his legal skills. See our Opinion No. 76-10.


Permission to publish granted by the Board of Delegates, 1977. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.
©2014 Massachusetts Bar Association