The Committee has been asked to address the propriety under the Pennsylvania Rules of Professional Conduct ("the Rules"), of attorneys accepting collection cases against Philadelphia area defendants from a national company which forwards judgments from other jurisdiction reduced from support arrearages, to proceed in civil, not family court, and handle these matters on a contingency fee basis.
The inquiry also poses the collateral questions of the propriety of handling such collection actions directly for Pennsylvania clients, without any intermediary, first by reducing the arrearages to a judgment and then collecting on them, all on a contingent fee basis, and also the propriety of reducing such arrearages to a judgement, and taking a contingent fee from that in order to pay for ongoing legal services for further support, custody and/or divorce.
Rule 1.5d1 provides that:
(d) A lawyer shall not enter into an arrangement for, charge, or collect:
any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support.
Prior to discussing the specifics of the inquiry, the Committee notes the reason behind the prohibition in Rule 1.5d1. The comments to the Annotated Model Rules of Professional Conduct, 3rd Edition, Center for Professional Responsibility American Bar Association (1996) is enlightening:
"[The] Rule--reflect[s] a public policy concern that a lawyer-client fee agreement should not discourage reconciliation between parties."
Considering the language of the actual Rule as well as the policy behind it the Committee finds that there is no ethical prohibition against handling the collection matter on a contingent fee basis for a client referred from out of state on support arrearages which have already been reduced to a judgment. The action of moving the matter from the family court setting to civil court has already taken place, and there is no issue of reconciliation between the parties and the attorney interfering with that because of the fee structure. This conclusion is consistent with that of Pennsylvania Bar Association Legal Ethics and Professional Responsibility Committee Opinion 96-67. As that opinion points out, in this situation the amount of support that is due and owing has already been determined.
The first collateral question poses the same issues and the Committee also concludes that a contingent fee based on a judgement from arrearages would also be permissible, provided that the attorney explain to the client the advantages of proceeding in the family court system rather than a civil system. Specifically, in the family court setting, the court has the inherent power of contempt which includes the ability to jail a delinquent support obligor, a power and remedy that is not available in any civil setting. This is a necessary disclosure in order to prevent a situation where the fee for the attorney is driving what the attorney is recommending to the client to do, similar to a recommendation of an action for damages as opposed to an equitable remedy. The Committee recommends that this disclosure be made to the client in writing so that there is absolute clarity about it, although it is noted that since this is a conflict under Rule 1.7b1 it is not required that such disclosure be made in writing.
As regards the second collateral question, the Committee believes that again, provided there are disclosures made as noted above, that such representation would be permissible and assuming that the judgment obtained from the arrearages on a support order is valid and does not have a procedural defect subjecting it to attack. Allowing such a fee arrangement does not impeded the public policy considerations behind the rule in any way. To the contrary, in situations involving arrearages in child support, which in its essence is a financial issue and not one that impacts on the parties' reconciliation, enabling individuals to have representation in a domestic situation could very well in fact foster a better chance of reconciliation and settlement between the parties, then in a situation where there is an inequity of representation between the economically able and non-economically able client.
The Committee feels it important to note that this opinion should not be read to in any way abridge the prohibition of Rule 1.5d. It is still unethical to charge a fee in a support, divorce and/or alimony matter contingent upon the awarding of and/or amount of support , or on the obtaining of a divorce. Rather, the questions posed herein regarding contingent representation require as a condition precedent that the amount of support has already been determined and is in arrears to a sufficient degree that proceeding to reduce that arrearage to a judgement is in fact in the client's best interests.