Can salaried house counsel claim a reasonable attorney's fee from the debtor when collecting on notes?

Plain-English summary

A lawyer was full-time counsel for a corporate collection agency, paid a regular monthly salary. He asked whether, in handling collections on promissory notes that provide for reasonable attorney's fees, the agency was entitled to a fee and how it should be set.

The committee said whether a client is entitled to a reasonable attorney's fee in matters handled by salaried house counsel is essentially a question of law that a court would decide, provided all facts about the fee are correctly presented to the court. It held, however, that it would be highly unethical to claim in a pleading, and represent to the court, that the client had obligated itself to pay a reasonable attorney's fee for collection when the lawyer was employed on a regular salary without regard to a particular case, because that would assert something that simply is not true. The committee added that it would be improper to allow such a situation where the corporate employer cannot determine the fee paid on a particular case, creating the opportunity to obtain a fee award exceeding the attorney's compensation, citing DR 2-106.

Currency note

This opinion was issued in 1971, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Code of Professional Responsibility (DR 2-106), the subject matter of which is now addressed by Rule 4-1.5 (fees) and, as to representations to a court, Rule 4-3.3 (candor toward the tribunal). Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Can salaried house counsel collect a statutory attorney's fee on notes?

A: Under this opinion, only with full explanation to the court. The committee called it highly unethical to claim such a fee without disclosing that the lawyer is salaried.

Q: Why is disclosure the dividing line?

A: The opinion reasons that claiming a fee obligation that does not reflect the lawyer's salaried compensation asserts something that is not true, and that full presentation of the facts lets the court decide the legal question.

Background and rules framework

The opinion applied DR 2-106 of the former Code of Professional Responsibility, which addressed fees. The subject matter is now in Rule 4-1.5 (fees), and the concern about misrepresenting a fee obligation to a court is now addressed by Rule 4-3.3 (candor toward the tribunal). The Model Rule analogues are Rules 1.5 and 3.3.

Citations and references

Rules of Professional Conduct:

• DR 2-106 [Code of Professional Responsibility; fee subject matter now in Rule 4-1.5]

See also

• FL Bar Ethics Op. 71-26: Charging Interest on Delinquent Legal Fees
• FL Bar Ethics Op. 71-19: Assigning a Cash Bond as Security for a Criminal Fee

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-70-56/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-70-56-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 70-56
January 8, 1971
Advisory ethics opinions are not binding.
Unless full explanation is made to the court, it would be unethical for an attorney to claim reasonable attorney fees for collection of notes when the attorney is retained on salary for that purpose.
CPR: DR 2-106
Chairman Massey stated the opinion of the committee:
A member of The Florida Bar is full-time counsel for a corporate collection agency and is paid a regular monthly remuneration. He inquires whether, when he handles collections on promissory notes providing for reasonable attorney's fees, the corporate agency is entitled to a fee and, if so, on what basis should it be set.
Whether or not a client is entitled to a reasonable attorney's fee in those matters handled by house counsel who is paid a monthly salary is essentially a question of law and a court decision would be controlling, providing all facts relating to the fee are correctly presented to the court. However, it would be highly unethical for an attorney to make claim for (as in a pleading) and represent to the court that his client has obligated itself to pay a reasonable attorney's fee for collection when the inquirer is employed on a regular salary basis without regard to the handling of a particular case or cases or to the total number of cases or amounts involved. This is a necessary conclusion as to hold otherwise would allow the inquirer to assert that which simply is not true. Additionally, it would be improper to allow such a situation to exist when there is no way upon which the corporate employer can determine the fee paid to its counsel on a particular case and the opportunity would be available through the attorney to obtain an award of an attorney's fee which exceeds the compensation paid the attorney in the first instance. See CPR DR 2-106.