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                                             90 N.J.L.J. 480
                                            July 20, 1967



Appointed by the New Jersey Supreme Court


Manufacturers' Association Attorney
Representing Members

    The inquirer is a member of the bar who is employed full-time by a trade association organized as a New Jersey non-profit corporation. The members of the corporation consist of manufacturing establishments. The corporation is governed by an elected board of directors. It operates entirely in the area of industrial and personnel relations, supplying its members with statistical data, advice and assistance. Its revenues are derived entirely from membership dues, the amount of each member's dues being determined according to a formula based upon size.
    The attorney states that as the manager of this association, he engages in no outside activity, legal or otherwise. He states that the majority of his time is spent in supervising the association staff, planning activities, writing bulletins for distribution to members and conferring with members concerning personnel and labor relations problems.
    The inquirer states that occasionally (8 or 10 times per year) he represents members in labor arbitration hearings, i.e., he prepares and argues cases before an arbitrator and, with about the same frequency, he represents member companies in representation proceedings before the National Labor Relations Board.
    In both the arbitration and National Labor Relations Board work, the attorney works directly with a member company. The member pays no fee or other extra amount to the association or to the attorney for such service. The attorney receives no extra payment from the association or anyone else by reason of his representing a member company.
    The question presented to us is:
            Since the association is contemplating charging a fee for the arbitration services hereafter to be performed by the inquirer, which fee the association would retain as part of its general revenue and no part of which would be paid directly or indirectly to the inquirer for services rendered by him in these arbitration proceedings, is there any violation of Canon 35 or 47?

    The inquirer cites Auerbacher v. Wood, 139 N.J. Eq. 599 (Ch. 1947), affirmed 142 N.J. Eq. 484 (E. & A. 1948). He states that in that case the activities described were held not to constitute the practice of law on the part of a non-lawyer because they were an incident to his main calling and the court pointed out that the National Labor Relations Board allowed non-lawyers to appear before it. The inquirer argues that the mere fact that one is licensed to practice law should not by itself bar him from engaging in all of the activities in which a member of some other avocation or calling might engage.
    The Auerbacher case involved a layman. That was an action to enjoin what complainants charged would be the unlawful practice of law. The complainants were the Essex County Bar Association, a committee of the State Bar Association and one Louis Auerbacher, Jr., an attorney. No problem of ethics was presented. R. 1:26A of the Supreme Court does not unauthorized the Advisory Committee on Professional Ethics to deal with the unauthorized practice of law.
    Our attention has also been called to A.B.A. Comm. on Professional Ethics, Opinion 305 (1962). That opinion involved a person who was qualified as both a lawyer and an accountant. It held that a lawyer cannot free himself of the ethical restraints of the profession in carrying out an activity which constitutes the practice of law, merely by announcing that he is to be regarded as a layman for that particular purpose. The opinion held that the mere fact that he was licensed to practice law did not of itself bar him from engaging in all the activities in which an accountant may lawfully engage. The Committee reiterated other opinions in which they held that a lawyer may "withdraw" from the active practice of law and refrain from holding himself out as a lawyer. The facts have no relation to the question presented in the present inquiry.
    Canons of Professional Ethics, Canon 35 is dispositive of the inquiry made here. The second paragraph of the canon states:
            A lawyer may accept employment from any organization, such as an association, club or trade organization, to render legal services in any matter in which the organization, as an entity, is interested, but this employment should not include the rendering of legal services to the members of such an organization in respect to their individual affairs.

    A lawyer may accept employment from any organization to render legal services in any matter in which the organization, as an entity, is itself directly interested. In Drinker, Legal Ethics 162, (1953), we find:
            ...but this employment should not include the rendering of legal services to the members of such an organization in respect to their individual affairs.

            ...the lawyer's relation to his client should be personal, his responsibility to him direct and not subject to the control or exploitation of any lay intermediary intervening between them. ... in addition to interference with the lawyer's intimate personal relation to his client, are the tendency to commercialize the profession, and promotion of the unauthorized practice of the law on the part of the organization by providing legal services and advice for its employees and members.

    The A.B.A. Committee in its Opinion 8 (1925) dealt with the situation in which an automobile club charged its members yearly dues for the privileges furnished them. In soliciting membership from the public, it offered to furnish its members with certain services of its "legal department" in connection with their ownership and operation of automobiles. The legal department consisted of certain attorneys who were engaged in general practice and who devoted to this service only such of their time as was necessary. The attorneys were paid a stipulated monthly amount. If the matters on which the attorneys were consulted resulted in suit or other legal proceedings, the attorneys were entitled to charge their usual and customary fees. The Committee in that opinion stated:
        In furnishing these legal services to its members and in charging them a membership fee which includes payment for these services, the club, in effect, is selling and exploiting the lawyer's professional services to its own benefit or profit. That the benefit may be indirect or the profit indefinite will not vary this conclusion. The sale of an item is no less a sale because the price paid for it or the consideration given is lumped with other items so that it cannot be segregated. Even if the club is not organized for profit the conclusion is the same. In that case its owners (the membership) may not receive any direct money benefit but the club as an entity may profit from this particular activity to the benefit of its other activities and the membership thereby receive an indirect benefit or profit. Neither are these conclusions varied by the conditions under which the club employs these lawyers. Irrespective of whether they give all or only a portion of their time to the service furnished by the club, and of whether they receive a salary, are paid a percentage, or are paid for each separate item of work, the result is the same so long as a lay agency pays a lawyer one amount for his services and for those services charges a different amount to the person to whom they are rendered.

    Opinion 8, supra, was decided in 1925. In 1928, Canon 35 was adopted and much of the language contained in Opinion 8was used.     The Committee on Professional Ethics of the Association of the Bar of the City of New York in Opinion 714 (1948) has held that a lawyer cannot accept employment by an "Association of Tenants, Inc.," a membership corporation, to represent the individual members in proceedings instituted by a landlord against them without violating paragraph 2 of Canon 35. Similar rulings by the City of New York Committee involved a hairdressers' membership association to defend nuisance suits by clients (Opinion 730 (1949)); a nurses' association (Opinion 753 (1950)); and an association of postal employees "all of one race" (Opinion 763 (1951)).
    There is no prohibition against a lawyer accepting employment from any organization to render legal services provided that the legal services are rendered in matters in which the organization, as an entity, is itself directly interested. The City of New York Committee held in Opinions 731 and 920 that a lawyer may properly represent and be compensated by an employer in getting his employees exempt from the draft. Here, the organization as an entity, was directly interested.
    Drinker, supra, at 162, says:
        The Canon does not preclude counsel for a corporation or association from representing its individual employees, patrons, stockholders or members or groups of them provided such employment has not been the result of improper solicitation, and provided such relation is personal and direct and the service paid for by the individual client or pro-rated among the group, and not paid by the corporation or association.

     Where, however, the corporation or association employs and pays the lawyer to advise and represent its employees, patrons, or members in respect to their individual affairs, the prohibition of the Canon would seem applicable, even though the lawyer's relation is direct, although there is no conflict of interest between the client and the organization, ... .

    The facts presented to us indicate that the association, by which the attorney is employed, is rendering legal services to the members of its organization in respect to personal matters before the National Labor Relations Board or in labor arbitration hearings. This is in violation of Canon 35, irrespective of the charging of a fee by the association.

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