Legal Service Financing Plan

93 N.J.L.J. 481
July 9, 1970

OPINION 180

Legal Service Financing Plan

In 1967 a county bar association of this State submitted to this Committee a plan for the financing of legal fees.
This Committee rendered its Opinion 115, 90 N.J.L.J. 681 (1967), concluding that the plan should not be approved, not so much because it violated any particular canon of ethics, but because it connoted a commercialization of the practice of law. It was the opinion of this Committee that the plan might result in a lowering of the standards of the legal profession, tending to bring the profession into disrepute and, accordingly, the plan was disapproved.
We now have before us an inquiry by the New Jersey State Bar Association as follows:
May a State, County or Local Bar Association organize and may attorneys participate in a plan for financing of legal fees through local banking institutions?
 
We quote from the inquiry:

The legal service financing plan functions in the manner described in Opinion 115 of the Advisory Committee on Professional Ethics, 90 N.J.L.J. 681 (October 19, 1967), with one major exception. The specific plan discussed in that opinion provided that in the event of a default in payment, the participating bank might retain the assigning attorney to institute suit against the client, and in such event the attorney would be paid 20% of any recovery as a fee for his services to the bank. It is believed that such a provision is reprehensible, and that the plan containing such proposal was properly rejected by the Advisory Committee.
 
The deletion in the plan now before us of the provision allowing the participating bank to retain the assigning attorney to institute suit against the client, does not in our opinion warrant a change in the views expressed in Opinion 115. We conclude that the plan still connotes a commercialization of the practice of law.