Ethics Opinon 1983-4
May a lawyer be a partner in a "consumer affairs service agency" (hereafter "agency") operated by lay employees, which agency assists clients in filing and serving small claims actions and in collecting small claims judgments?
The proposed entity would publish newspaper advertisements aimed at persons with small claims and/or judgments rendered by small claims courts. Persons responding would be mailed a brochure describing the small claims court, along with a complaint form. For a fee, the agency would file the completed form with the court, notify the plaintiff of the hearing date, and serve the defendant. The agency would not, according to the proposal, provide legal advice; rather, any client who requested legal advice would be referred to a "small claims adviser" or to an independent attorney.
A lawyer's involvement in the agency described above would violate California State Bar Rules of Professional Conduct, which prohibit a lawyer from forming a partnership with lay persons if any of the activities of the partnership consist of the practice of law.
Rule 3-103 of the California State Bar Rules of Professional Conduct states:
"A member of the State Bar shall not form a partnership with a person not licensed to practice law if any of the activities of the partnership consist of the practice of law."
Further, Rule 3-101(a) provides that:
"A member of the State Bar shall not aid any person, association, or corporation in the unauthorized practice of law."
A question might be raised as to whether the agency would necessarily be engaged in the practice of law. However, as stated in Ethical Consideration 3-5 of the American Bar Association's Model Code of Professional Responsibility:
"It is neither necessary nor desirable to attempt the formulation of a single, specific definition of what constitutes the practice of law. Functionally, the practice of law relates to the rendition of services for others that call for the professional judgment of a lawyer. The essence of the professional judgment of the lawyer is his educated ability to relate the general body and philosophy of law to a specific legal problem of a client; and thus, the public interest will be better served if only lawyers are permitted to act in matters involving professional judgment. Where this professional judgment is not involved, non-lawyers, such as court clerks, police officers, abstracters, and many governmental employees, may engage in occupations that require a special knowledge of law in certain areas. But the services of a lawyer are essential in the public interest whenever the exercise of professional legal judgment is required."
Here, the proposed "agency" would not, according to its charter, give legal advice as to the wisdom or propriety of filing a particular claim, or of serving a particular defendant. Nevertheless, the lawyer who becomes a partner in the agency would obviously be exercising his professional judgment as to the wisdom of such filing or service in all cases in which he had any involvement. The decision to file a complaint or to serve a particular defendant inherently constitutes the "practice of law." The skill and judgment required to determine whether a small claims action should be filed is the very essence of the practice of law.
Nor can the lawyer-partner avoid "practicing law" by avoiding involvement in the day-to-day activities of the agency. The lawyer's financial interest in the filing, service and collection of such suits compels the conclusion that he would still be practicing law.
In addition, it should be noted that California Code of Civil Procedure Section 117.4 prohibits lawyers from taking "any part in the filing or the prosecution or defense of such litigation in small claims court." Although it may not be improper for a lawyer to advise a client regarding small claims matters, the involvement by a lawyer in the actual filing of small claims actions violates both the letter and spirit of Section 117.4.
Moreover, the lawyer's involvement in the proposed agency creates an undue potential for impermissible "solicitation." Even if the lawyer-partner does not accept legal "referrals" from the agency, his financial interest in the agency's operations may still constitute solicitation of individual clients into a "funnel" operation (for lawyers to whom the agency does make referrals).
This opinion is advisory only, and is not binding upon the State Bar, the Board of Governors of the State Bar, its agents or employees.
Disclaimer: This opinion was issued by the Legal Ethics Committee of the San Diego County Bar Association. It is advisory only and is not binding upon any member of the SDCBA, any other member of the State Bar of California, the State Bar of California or its Board of Governors, or any persons or tribunals charged with regulatory responsibilities. The SDCBA, its officers, directors, agents, and the Legal Ethics Committee members assume no responsibility or liability in rendering this opinion.