The Florida Bar

Ethics Opinion

Opinion 67-46

May 6, 1968
Advisory ethics opinions are not binding.
The Committee gives its general approval to a proposed legal service financing plan.

12, 14, 27, 34, 35, 37
66-56, ABA 320

Chairman MacDonald stated the opinion of the committee:
By request of the Board of Governors of The Florida Bar we are asked to
review the ethical aspects of a proposed legal services financing plan suggested
by the Sub-Committee on Financing Legal Services of the Committee on
Economics of Law Practice. We are told that the basic format of the proposed
plan would be as follows:
(a) The local bar association would enter into a separate contract with each
participating local financing institution. Such contract would cover the basic plan.
Presumably, the bar association would enter into the same business arrangement
with each local participating financial institution, although we recognize that
some variation due to local conditions might be possible and desirable.
(b) Individual contracts would then be entered into between each
participating financing institution and each participating attorney setting forth the
respective rights and obligations of each, the interest rate, discount rate, etc. The
terms of this contract would be governed by the bar association’s contract with
the bank and would be identical for all participating attorneys.
(c) The loan would be made by the bank to the client on the client’s own
credit, either with or without an endorser, or security.
(d) The lawyer, his secretary, etc. would be precluded from acting, directly or
indirectly, as an endorser or guarantor of the client’s obligation to the bank.
(e) The bank would have no recourse against the lawyer in the event of
(f) The participating lawyer would be precluded from being hired by the bank
to collect any delinquent obligations, even though the lawyer is the regular
attorney for the bank.
(g) The participating bank would have the primary responsibility for
advertising and promoting the financial plan, but, all advertising would have to be
cleared by the bar association.

(h) Each bank would make its individual arrangements for its own bad debt
reserve. In other words, there would be no pooling of discount for bad debt
contingencies by the participating banks.
(i) In the event of default by clients, the bank would contact the lawyer,
advise him of the default, and give the lawyer the opportunity to buy back the
obligation from the bank. The lawyer would be under no obligation to do so;
however, if he did, he would then proceed to attempt to collect the debt as he
presently does. If he does not buy it back, the bank would then proceed to collect
the obligation as it normally would.
(j) Should the client raise a question of overcharge; or that the attorney had
not done all he had originally contracted to do for the particular fee; or that the
attorney had withdrawn before all the work had been done and therefore that the
client was entitled to a refund of a portion of the fee, or the like, the client would
be required by the loan contract to submit the question to arbitration for
determination. In the event the client is given relief by the arbitration panel, the
attorney would be required to make good that award.
For these purposes, the arbitration panel would be appointed by the local bar
association and would consist of three lawyers and two laymen who would serve
without pay. The terms of the panel members would be for at least one year,
perhaps with staggered terms. There would be no charge either to the lawyer or to
the client for this service.
(k) No contingent fee cases could be financed; however, the costs of
contingent fee cases could be financed.
(l) The attorney-client privilege will be safeguarded. However, if an outline
of the legal services requested would result in a disclosure of a confidential
communication, such an outline would not have to be set forth in the loan
agreement. In its place there would be a statement only that such services would
not impair the client’s ability to repay the loan. If there was any danger of the
matter impairing the client’s ability to repay the loan, the client would have to
agree to waive the confidential communication in order to obtain the loan; but
even in that event, the bank would agree in its contract with the bar association to
safeguard such information.
(m) In most of the existing plans, a participating attorney has a kit provided
him by a participating bank, and it is the attorney who actually assists the client in
filling out the installment obligation. He then assigns the obligation to the bank
without recourse. This is probably the most practical and efficient way of
handling the plan. We do not believe that Chapter 520 of the Florida Statutes will
apply to this plan. See Op. Atty. Gen. 067-1.

(n) All participating attorneys would be prohibited from exhibiting signs or
plaques, etc. disclosing that he is a participant of the legal services financing plan,
and all hand-outs and brochures would be prohibited.
It has been suggested by the Sub-Committee that a prototype contract between the local
bar association and a bank, a contract between the participating lawyer and participating bank
and a retail installment contract be subsequently prepared and submitted to this Committee for
approval after the general features of the plan have been considered and approved by the Board
of Governors.
Two members of this Committee assisted in the work of the Sub-Committee and initially
were of the view that they should refrain from participation in the preparation of this opinion.
However, the Chairman believes that the significance of this issue to The Florida Bar is such that
all members of the Committee should participate and accordingly has counted the responses of
all participating members of the Committee in the formulation of this opinion.
As noted, the proposal is at the present time in general form and necessarily our
comments are confined thereto. At such time as the plan, complete with all of its salient forms, is
prepared it may be that a more definitive opinion can be rendered. Moreover, as was emphasized
in our Opinion 66-56 [since withdrawn], wherein we considered a proposed OEO funded legal
services program, the practical operation of any program is necessarily a question apart from its
proposed format.
With these limiting observations we have concluded that the plan as generally proposed
contains no ethical impediments which should preclude the Board of Governors from giving the
plan the general approval now requested by the Sub-Committee. The Committee on Professional
Ethics of the American Bar Association, in its formal Opinion 320 rendered on February 19,
1968, has recently considered in exhaustive detail the various ethical objections commonly
advanced in connection with these plans. There is no reason to reiterate the exhaustive detail into
which this opinion goes. It also is not necessary for us to acquiesce in all of what is said in that
opinion in order to reach our conclusion.
The objections to these type plans are several. It is sometimes assumed that their
operation causes a lay intermediary to intervene between the client and lawyer, in contravention
of Canon 35. In our judgment the plan does not so operate. The lending institution plays no part
in the rendition of the legal services, nor does it in any way control or regulate the activities of
the lawyer.
Moreover, operation of the plan need not involve a violation of Canon 12 because both
attorney and client are left free to agree upon a fee which may properly include consideration of
all of the elements set forth in that canon. We do perceive that the existence of a discount factor
may afford a temptation for the increase of the fee. If such is the case then necessarily full
disclosure of the amount of this discount must be made to the client by the attorney before the
client enters into the plan.
We see no problem in connection with Canon 14. The lawyer may avoid suit against the
client by procuring the return of the note from the bank, in which case he would be in precisely

the same position he would have been had he elected not to make an effort to collect the fee from
the client in the first instance.
There is some concern among a minority of the Committee that the arbitration provisions
of the proposal are in contravention of the law of Florida. This, of course, is a question of law
beyond the purview of this Committee.
We see no features in the program which would violate Canon 34, precluding the division
of fees with laymen, and the program contains salutary safeguards against the disclosure of the
confidences of the client as required by Canon 37.
A vigorous minority of the Committee believes that the portions of the program dealing
with advertising are violative of Canon 27. So long as this advertising is in good taste and is
entirely subject to approval of the Bar, a majority is unable to distinguish between the advertising
permissible in this respect for paying clients and the one which is sanctioned by Opinion 66-56
for indigents. Indeed it appears to the majority that to contend otherwise would be to permit
notice to the indigent procuring services from a publicly financed plan not otherwise permitted to
be given to fee paying clients.
Under the circumstances and subject to the remarks contained herein we believe that the
Board of Governors may properly sanction the general outline of the program presented and may
properly direct the Sub-Committee to proceed with further efforts to refine and formalize the
proposed program.