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