Opinion 211
Question Presented
Is it a violation of the Canons of Ethics for a firm of attorneys to:
- Invest in the stock of a loan company which lends considerable money to persons who have pending damage suit claims, and from which company the clients of said law firm have borrowed money in the past.
- Continue to send their clients, who might have a need to borrow money, to a loan company in which they own stock.
18 Baylor L. Rev. 297 (1966)
SOLICITATION, INDIRECT- INVESTING IN STOCK OF COMPANY, LENDING MONEY TO PERSONS WITH DAMAGE SUIT CLAIMS
It is not a violation of the Canons of Ethics for a firm of attorneys to invest in the stock of a loan company which lends considerable money to persons who have pending damage suit claims and from which company the clients of said law firm have borrowed money in the past if such connection between the company and the attorneys is not used for the solicitation of business; nor is it a violation for said law firm to continue to send its clients, who might have a need to borrow money, to a loan company in which it owns stock, provided such practice is not engaged in with sufficient notoriety or regularity to constitute an indirect solicitation of business or advertisement on behalf of the firm of attorneys, or if it is not done for the purpose of, or as an aid to, securing employment in view of the barratry statute.
Canons 24, 25.
Such investment and referral, as set out in sections a and b hereof, would not of itself be in violation of the Canons of Ethics.
If the connection between the loan company and the firm of attorneys, because of the stock ownership, is not used for the purpose of or as an incident to the solicitation of business (which would, of course, constitute a violation of Canon No. 24) or for the purpose of stirring up litigation (which would be a violation of Canon No. 25) the purchase, by a firm of attorneys, of stock in a loan company which lends money to persons having pending damage suit claims would not be a violation of the Canons of Ethics, nor would the referral or continued referral, by a law firm of its clients to a loan company in which said law firm owns stock be a violation of the Canons of Ethics, provided such practice is not engaged in with sufficient notoriety or regularity to constitute an indirect solicitation of business or advertisement on behalf of the film of attorneys, or if it is not done for the purpose of, or as an aid to, securing employment in view of the barratry statute. (9-0.)
Bluebook Citation
Tex. Comm. On Professional Ethics, Op. 211 (1960)