1997-01

QUESTION:

“This letter will serve as my request for a formal opinion
from the Disciplinary Commission concerning the question
regarding our firm’s licensing of software to participate
in an electronic collection network. Specifically, this
relates to the National Attorney Network Inc. located in
Atlanta, Georgia. NAN licenses computer software that
electronically connects creditors and law firms for the
efficient collection of the creditors’ accounts
receivable. The attorney fee is negotiated and agreed upon
directly between the attorney and the credit
grantor/client. NAN receives a fee of three percent of the
net proceeds recovered for software licensing and
electronic data transfer.

The present practice is for us to remit directly to the
client the net proceeds of accounts collected on a monthly
basis. We would withhold the agreed upon attorney’s fees
due our law firm. We would also withhold the three
percent NAN Network Licensing fee and remit that to NAN.
The creditor/client is fully informed of the amount of the
NAN licensing fee and the practice of the law firm
withholding and remitting it. In fact they prefer not to
have the accounting responsibility for the NAN fee. Some
credit grantors may even erroneously misstate the terms of
our engagement by referring to our authorization to
retain ‘an attorney’s fee of 28%’. Their intent, however,
is for us to retain an attorney fee of 25% and also cover
the cost of the 3% NAN license fee as well. Their
engagement letter would require our firm to pay all charges
(the three percent due the National Attorney Network) for
the collection of accounts using that system. Our firm
also would negotiate its contingency fee with a credit
grantor with full knowledge that payment of the NAN
licensing fee would be part of our expense or overhead.

A copy of the National Attorney Network Agreement is
enclosed for your review. The pertinent parts have been
highlighted in yellow.

Also enclosed for your review is a copy of the letter from
the general counsel for the National Attorney Network.
This letter contains their opinion regarding the ethical
compliance. Please advise if we can continue participating
in the National Attorney Network.

We have also retained in our possession certain monies
representing the three percent fee while this ethical
question can be considered. Your direct instructions
regarding permission to remit those funds being held to the
National Attorney Network is necessary as well.”

ANSWER:

Our review of the agreement you have with National Attorney
Network, Inc., leads us to conclude that there is nothing
ethically impermissible about it. You are not splitting
legal fees with a non-lawyer entity, nor are you
participating in a prohibited for-profit referral service
by paying for referrals in any way.

In light of this, you may continue to participate in the
network and you may ethically remit to National Attorney
Network, Inc., monies owed for software licensing fees to
date.

MLM/vf

1/3/97

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