May 1957

SOLICITATION -- COLLECTING DELINQUENT ACCOUNTS -- It is not improper to form and operate a corporation for the purpose of collecting delinquent accounts owed to lawyers even though the company's stock would be owned principally by lawyers and its board of directors would consist mainly of lawyers.

Canon 24.  


Would there be a violation of any Canon of Ethics involved in the formation and operation of a corporation formed for the purpose of collecting delinquent accounts owed to lawyers, and the stock of which corporation would be owned principally by lawyers, and a majority of whose directors would be lawyers, but the active management of which corporation would be conducted by non-lawyers?


All members except one thought it would be ethical for an attorney to form such a corporation and to won stock in same.  That dissenting member thought such a corporation must necessarily solicit business in order to exist and that therefore an attorney would be doing by indirection what he could not do directly and would be in violation of Texas Canon 24.  (7-1)

Three of the present eight members thought it would be unethical to be a director or otherwise participate in the management of such a corporation or to represent it in court; two members thought it proper to be a director but not to represent the corporation in court; one member thought it proper to represent the corporation in court but not to participate in its management; one member thought it unethical for a practicing attorney to be connected with such a corporation in any way (citing Opinions 92 and 119 of the Texas Ethics Committee and Opinion 225 of the American Bar Ethics Committee); and one member though such a corporation ethical in all respects, contending any solicitation of business would be by the corporate entity, and that there was no purchase of an interest in the subject matter of litigation the attorney was conducting in violation of American Canon 10 as contended by those members who considered the representation of such corporation in Court to be unethical.