May a trade association's salaried attorney-manager represent individual member companies in arbitration and NLRB matters, with the association charging and keeping a fee for that service?

Plain-English summary

The inquirer was a member of the bar employed full-time as the manager of a trade association (a New Jersey non-profit corporation whose members were manufacturing establishments), funded entirely by membership dues and operating in industrial and personnel relations. Most of his time went to supervising staff, planning activities, writing bulletins, and conferring with members on personnel and labor-relations problems. Several times a year he represented individual member companies in labor arbitration hearings and in representation proceedings before the National Labor Relations Board, for which the member paid no extra amount to the association or to him, and he received no extra payment. The association was now contemplating charging a fee for the arbitration services, which it would keep as general revenue with no part paid to the inquirer, and asked whether that arrangement would violate Canon 35 or Canon 47.

The Committee set aside the unauthorized-practice authorities the inquirer raised. It noted that Auerbacher v. Wood, 139 N.J. Eq. 599 (Ch. 1947), aff'd 142 N.J. Eq. 484 (E. & A. 1948), involved a layman and presented no ethics problem, and that under the Supreme Court's rule the Advisory Committee was not authorized to deal with the unauthorized practice of law. It distinguished A.B.A. Opinion 305 (1962), about a person qualified as both lawyer and accountant, as having no relation to the present inquiry.

The Committee held that Canon 35 was dispositive. It quoted the canon's second paragraph: a lawyer may accept employment from an organization, such as an association, club, or trade organization, to render legal services in any matter in which the organization, as an entity, is interested, but that employment "should not include the rendering of legal services to the members of such an organization in respect to their individual affairs." The arbitration and NLRB representation of individual member companies fell on the prohibited side of that line.

Currency note

This opinion was issued in July 1967, before New Jersey's September 13, 1971 adoption of the Disciplinary Rules (Code of Professional Responsibility), and well before the 1984 Rules of Professional Conduct and all later revisions. It applied Canon 35 of the Canons of Professional Ethics, which addressed a lawyer's accepting employment from an intermediary organization. The subject is now treated under RPC 5.4 (professional independence; a third party's involvement in the lawyer's services) and RPC 1.8(f) (compensation from someone other than the client). Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific requirement mentioned here.

Common questions

Q: Can a trade association's salaried lawyer represent individual member companies?

A: Under this opinion, not in their individual affairs. The Committee held Canon 35 dispositive: the association lawyer's employment may cover matters in which the association as an entity is interested, but should not include rendering legal services to members in respect to their individual affairs, which is what the arbitration and NLRB work was.

Q: Did it matter that the association, not the member, would charge and keep the fee?

A: The fee arrangement was what prompted the inquiry, but the Committee resolved it on Canon 35's limit on whom the association-employed lawyer may serve, holding the representation of members in their individual affairs outside the permitted scope of that employment.

Q: Did the Committee decide whether this was the unauthorized practice of law?

A: No. It said that under the Supreme Court's rule the Advisory Committee was not authorized to deal with the unauthorized practice of law, and it set the Auerbacher line of authority aside as not presenting an ethics question.

Background and rules framework

The opinion turns on Canon 35, which governed a lawyer's accepting employment through an intermediary organization and drew the line between serving the organization as an entity and serving its members in their individual affairs. In current New Jersey terms, the concern maps to RPC 5.4 (a lawyer's professional independence and a third party's involvement in the lawyer's services) and RPC 1.8(f) (accepting compensation for representing a client from one other than the client).

Citations and references

Cases:

• Auerbacher v. Wood, 139 N.J. Eq. 599 (Ch. 1947), aff'd 142 N.J. Eq. 484 (E. & A. 1948): activities of a layman incidental to his main calling; cited by the inquirer

Other authorities:

• Canons of Professional Ethics, Canon 35 (employment through an intermediary organization), Canon 47
• A.B.A. Comm. on Professional Ethics, Opinion 305 (1962): a lawyer cannot shed ethical restraints by declaring himself a layman for a particular purpose; distinguished

See also

• NJ ACPE Op. 119: Borrower's Payment of the Lender's Legal Fees
• NJ ACPE Op. 115: A Bank-Financed Plan for Paying Legal Fees

Source

• Landing page: https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp114-1.html

Original opinion text

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

90 N.J.L.J. 480
July 20, 1967

OPINION 114

Manufacturers' Association Attorney
Representing Members

The inquirer is a member of the bar who is employed full-time by a trade association organized as a New Jersey non-profit corporation. The members of the corporation consist of manufacturing establishments. The corporation is governed by an elected board of directors. It operates entirely in the area of industrial and personnel relations, supplying its members with statistical data, advice and assistance. Its revenues are derived entirely from membership dues, the amount of each member's dues being determined according to a formula based upon size.

The attorney states that as the manager of this association, he engages in no outside activity, legal or otherwise. He states that the majority of his time is spent in supervising the association staff, planning activities, writing bulletins for distribution to members and conferring with members concerning personnel and labor relations problems.

The inquirer states that occasionally (8 or 10 times per year) he represents members in labor arbitration hearings, i.e., he prepares and argues cases before an arbitrator and, with about the same frequency, he represents member companies in representation proceedings before the National Labor Relations Board.

In both the arbitration and National Labor Relations Board work, the attorney works directly with a member company. The member pays no fee or other extra amount to the association or to the attorney for such service. The attorney receives no extra payment from the association or anyone else by reason of his representing a member company.

The question presented to us is:

Since the association is contemplating charging a fee for the arbitration services hereafter to be performed by the inquirer, which fee the association would retain as part of its general revenue and no part of which would be paid directly or indirectly to the inquirer for services rendered by him in these arbitration proceedings, is there any violation of Canon 35 or 47?

The inquirer cites Auerbacher v. Wood, 139 N.J. Eq. 599 (Ch. 1947), affirmed 142 N.J. Eq. 484 (E. & A. 1948). He states that in that case the activities described were held not to constitute the practice of law on the part of a non-lawyer because they were an incident to his main calling and the court pointed out that the National Labor Relations Board allowed non-lawyers to appear before it. The inquirer argues that the mere fact that one is licensed to practice law should not by itself bar him from engaging in all of the activities in which a member of some other avocation or calling might engage.

The Auerbacher case involved a layman. That was an action to enjoin what complainants charged would be the unlawful practice of law. The complainants were the Essex County Bar Association, a committee of the State Bar Association and one Louis Auerbacher, Jr., an attorney. No problem of ethics was presented. R. 1:26A of the Supreme Court does not authorize the Advisory Committee on Professional Ethics to deal with the unauthorized practice of law.

Our attention has also been called to A.B.A. Comm. on Professional Ethics, Opinion 305 (1962). That opinion involved a person who was qualified as both a lawyer and an accountant. It held that a lawyer cannot free himself of the ethical restraints of the profession in carrying out an activity which constitutes the practice of law, merely by announcing that he is to be regarded as a layman for that particular purpose. The opinion held that the mere fact that he was licensed to practice law did not of itself bar him from engaging in all the activities in which an accountant may lawfully engage. The Committee reiterated other opinions in which they held that a lawyer may "withdraw" from the active practice of law and refrain from holding himself out as a lawyer. The facts have no relation to the question presented in the present inquiry.

Canons of Professional Ethics, Canon 35 is dispositive of the inquiry made here. The second paragraph of the canon states:

A lawyer may accept employment from any organization, such as an association, club or trade organization, to render legal services in any matter in which the organization, as an entity, is interested, but this employment should not include the rendering of legal services to the members of such an organization in respect to their individual affairs.