Ethics Hotline & Opinions

Ethics Docket No. 1995-15

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 1995-15

Attorneys; Ancillary business of child support collection agency, contingent fees

 

You first attached a solicitation of a collection service business specializing in collecting child support and ask whether that activity is legal. This Committee declines to give legal advice because to do so is outside the Committee's scope of providing ethics advisory opinions. The attached solicitation does not clearly show the involvement of a lawyer, which is a predicate for application of the Maryland Rules of Professional Conduct. If a lawyer is an owner or principal of the business, this Committee believes the services to be rendered are sufficiently law-related so that a lawyer in the operation of such a business would be subject to the Rules of Professional Conduct.

You particularly inquire whether a lawyer may form a business entity for the purpose of collecting child support and then retain himself or herself to provide professional services for the business entity.

This Committee is not aware of any per se violation by what you propose. However, the formation of a business entity, ancillary to the lawyer's practice, may raise several ethical issues such as:

  1. compromise of lawyer's independent judgment,

  2. conflicts of interest,

  3. client confusion as to provider of services,

  4. potential loss of confidentiality,

  5. sharing of fees with non-lawyers,

  6. ""feeding"" of the law practice through the customers of the ancillary business.

This Committee recommends your attention to the extensive treatment of these issues in Ethics Docket 92-13 and 95-14.

Should your inquiry regarding a lawyer forming a child support collection agency also include a contingent fee basis as explained n the sample solicitation, this Committee warns that, pursuant to Rule 1.5 {d} (1), ""a lawyer shall not enter into an arrangement for, charge, or collection: any fee in a domestic relations matter, the payment of which is contingent upon. . . the amount of. . . support. . ."" This Committee interprets support to be child support, as well as, spousal support.

In summary, this Committee advises against a lawyer forming and controlling a business entity to circumvent the application of the Rules of Professional Conduct.

References: Ethics Dockets  1992-13 and  1995-14

 

DISCLAIMER: Opinions of the Maryland State Bar Association (MSBA) Ethics Committee are an uncompensated service of the MSBA. This Committee’s opinions are not binding on the Maryland Court of Appeals, Maryland Attorney Grievance Commission, MSBA or this Committee. The reader is advised that subsequent judicial opinions, revisions to the rules of professional conduct, and future opinions of this Committee may render the Opinions stated herein outdated. As such, the Committee’s opinions are advisory only and neither the Committee nor the MSBA assumes any liability whatsoever with respect thereto. Accordingly, reliance upon the opinions of this Committee is solely at the risk of the user.