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:

  1. 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?
  2.  Does the fact that the lawyer’s client in this case is another lawyer take this arrangement out of the prohibited transaction category?

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