Link to original WordPerfect Document

                                         96 N.J.L.J. 1332
                                         November 15, 1973


Appointed by the New Jersey Supreme Court


Representing Members of Nonprofit
Association Unemployment Security Claims

    Inquiry is made whether or not the attorneys to an association of nonprofit institutions, which administers an "Unemployment Compensation Reserve Fund" for its members under P.L. 1971, c. 346, N.J.S.A. 43:21-7.2, may represent each member organization, in processing, investigating and contesting the claims of former employees of such member before the Division of Employment Security and in appellate tribunals, to the end that the liabilities of the member institutions to the Fund may be properly determined. The Fund is responsible to the Division of Employment Security for reimbursement for any benefits paid by the Division on behalf of the members of the Fund.
    The services to be provided include legal services, and a member of the New Jersey Bar must appear at all steps in such proceedings. See N.J.A.C. 12:20-5.3 of the Rule and Regulations of the Division of Employment Security of the New Jersey Department of Labor and Industry. And see N.J.S.A. 43:21-6 for the general procedures. The Fund will pay the attorneys on the same time basis at specified rates as the association now pays for general legal services to the association. The member-employer is free to engage its own counsel. Although an adjudicated claim is against the Fund, the member-employer has a stake in the result in respect to its experience rating and the contributions that will be required of it. And the association, as the group administering the Fund, has an interest in advancing the public benefit served by a proper and efficient management of the Fund under the Employment Security Law.
    In this inquiry the legal services are being rendered to limit the payment of groundless claims and consequent depletion of the funds reserved. Cf. the situation in Urged Mine Workers of America v. Alleles State Bar Association, 389 U. S. 217 (1967), where the objective of the legal services provided to the union members was to assure the receipt of adequate payments to qualified members of the group. The Unemployment Security Law is designed to benefit our economy through maintenance of purchasing power and labor standards; and the public interest is served both in assuring proper payment to qualified claimants and in protecting the economy from the payment of groundless claims. See Campbell Soup Co. v. Division of Employment Security, 13 N.J. 431, 436, 100 A2d 287, 289 (1953), and Krauss v. A & M Karagheusian, 13 N.J. 447, 455-66, 100 A2d 277, 281 (1953). Thus, the rendition of legal services to employer-members of the association in this inquiry is in pursuit of these policy objectives and is in the public interest.
    The inquiry states that the primary purpose of the association is to provide general assistance to its members to achieve operational efficiency. The addition of legal services to members in respect to claims on the Fund is incidental to the primary purpose although certainly of benefit to the members in protecting their rate of contributions. The employer-member will be regarded as the client although free to engage other counsel; and neither Fund nor association will derive any financial benefit from the legal services to be rendered the member before the Division of Employment Security. However, we recognize that an association that extends additional services to its membership generally increases its appeal to nonmembers; and to the extent that such additional services attract new members and dues there is a consequent economic benefit. The association is a nonprofit one and such economic benefit is of no consequence in the considerations of concern here.
    We have already expressed our views on similar inquiries. In our Opinion 172, 93 N.J.L.J. 81 (1970), we held it improper for an attorney for a corporation to participate in a company plan for advising employees on estate plans. In our Opinion 256, 96 N.J.L.J. 745 (1973), we disapproved a plan whereby a union sought to provide the services of its general counsel to its members for drawing wills. There we discussed the standards required by Disciplinary Rule 2-103(D) effective September 13, 1971, by order of the Supreme Court of New Jersey.
    However, under the facts presented in this inquiry, our opinion is that the legal services here proposed to be provided by a nonprofit association to its members to represent the members in Unemployment Security claims meet the standards and criteria of DR 2-103(D) and of our Opinion 256, supra, and accordingly, are approved.

* * *

This archive is a service of Rutgers University School of Law - Camden