April 13, 1993
A lawyer may not sue a client to recover unpaid legal fees while still representing the client.
A lawyer obtaining an assignment of a receivable for unpaid legal fees may not pursue a collection action against the debtor when the assignor lawyer still represents the debtor.
References: MRPC 1.6(c)(5), 1.7(a) and (b), 8.4(a); Op 7; CI-250, CI-497.
A lawyer represents the wife in a divorce action which is currently on appeal to the Court of Appeals. The client has not yet paid the lawyer for services rendered in the matter, and the lawyer assigns the receivable to another lawyer for collection. The assignee lawyer asks whether litigation may be instituted to collect the debt against the debtor client wife while the assignor lawyer's representation of the client is ongoing.
Authority under the former Michigan Code of Professional Responsibility held that a lawyer may not initiate a separate action against a client to recover fees while representing the client in a pending matter, from which the lawyer has not withdrawn. Cf., CI-497, CI-250, Op 7. These opinions were based upon the principle that a lawyer may not sue a former client until all business ties with the client have been terminated.
In CI-497 the Committee addressed the situation of a lawyer wishing to withdraw from a matter because the client owed the lawyer in excess of $20,000, but the client asked the lawyer to delay filing the motion to withdraw until another pending motion has been decided. The lawyer asked whether filing a suit for fees in another court was permitted while the lawyer was still counsel of record for the client. The Committee noted MCPR DR 7-101(A)(3), which stated:
"(A) A lawyer shall not intentionally:
". . .
"(3) Prejudice or damage his client during the course of the professional relationship, except as required under DR 7-102(B) [unlawful conduct of client]."
The Committee reasoned that the timing of the suit for fees could not be allowed to bring into question the lawyer's ability to represent the client zealously in the pending matter. It was therefore improper to initiate a lawsuit against the client while still counsel of record for the client.
The Michigan Rules of Professional Conduct make this prohibition clearer. MRPC 1.7(a) forbids a lawyer from representing a client directly adverse to a current client. A disinterested lawyer could not reasonably believe that the lawyer's suit for fees against a client would not adversely affect the lawyer's relationship with the client in the representation. It is similarly unlikely that a client would consent to such directly adverse representation. Thus the conditions of MRPC 1.7(a)(1) and (2) are not met, and a lawyer may not sue a client while still representing the client.
Under an assignment, the assignor may convey only what rights the assignor possesses, and the assignee takes only those rights lawfully conveyed. Since the assignor lawyer could not ethically sue the client while representing that same client, the assignment cannot convey that right to another. MRPC 8.4(a) states:
"It is professional misconduct for a lawyer to:
"(a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; . . . ."
Thus a lawyer may not, through an assignee, do something the lawyer could not ethically do directly.
If the assignee were to file suit, the suit could only be proven through the testimony and records of the assignor lawyer. Although MRPC 1.6(c)(5) allows a lawyer to reveal confidences and secrets to the limited extent necessary to collect a fee, the assignor lawyer's act of testifying in the fee matter against a current client creates an impermissible conflict under MRPC 1.7(b), which states:
"A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation . . . ."
Clearly the assignor lawyer's continued representation of the client in the same matter giving rise to the fee dispute will be materially limited by the lawyer's testimony in the fee litigation. MRPC 8.4(a) prohibits the assignee lawyer from "assisting" or "inducing" the assignor lawyer to violate representation duties owed to the client by testifying in the fee litigation.
Therefore, a lawyer may not sue a client to recover unpaid legal fees while still representing the client, and a lawyer obtaining an assignment of a receivable for unpaid legal fees may not pursue a collection action against the debtor when the assignor lawyer still represents the debtor.