Ethics Committee Formal Opinion #1995/96‑16
Formation of a limited liability company by several New Hampshire law firms for the purpose of purchasing discounted debt with the member law firms then seeking to collect the discounted debt on a contingent fee basis.
September 10, 1996
ANNOTATION:
A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may contract with a client for a reasonable contingent fee in a civil case. In this case, however, more than simply a contingent fee is involved. Because the lawyer also owns the subject matter of the litigation, the note, the transaction is prohibited.
QUESTIONS:
- Does the fact that the lawyer is working on a contingent fee basis in collecting the notes take this arrangement out of the prohibited transaction category?
- Does the fact that the lawyer’s client in this case is another lawyer take this arrangement out of the prohibited transaction category?