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RICHMOND COUNTY BAR ASSOCIATION
COMMITTEE ON PROFESSIONAL ETHICS
OPINION # 20
The Committee is in receipt of an inquiry from a practicing attorney made on behalf of all those similarly situated in the field of matrimonial law in Richmond County.
The inquirer points to the recent changes to the Rules regarding procedures for attorneys in Domestic Relations matters, and in particular, 22 NYCRR §1400.5(a), which provides:
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“An attorney may obtain a confession of judgment or promissory note, take a lien on real property, or otherwise obtain a security interest to secure his or her fee only where:
(1) the retainer agreement provides that a security interest may be sought;
(2) notice of an application for a security interest has been given to the other spouse; and,
(3) the court grants approval for the security interest after submission of an application for counsel fees.”
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The inquirer asks whether an ethical problem arises when a client wishes to give an attorney a post-dated check for an initial retainer or in payment of legal fees. In particular, the inquirer asks whether such a post-dated check constitutes a “security interest” within the meaning of the aforementioned rule.
While the Committee cannot answer questions of law, the ultimate determination of which lies with the courts, it must be remembered that violations of law would perforce constitute unethical conduct (NYSBA Ethics Opinion No. 565).
Initially, the Committee notes that the writer of the letter raises a question as to whether a post-dated check and a promissory note are synonymous for purposes of the Rule. Clearly, a promissory note cannot be taken as security for, or in payment of, legal fees without satisfying the three stated conditions, but the rules make no mention of checks in their proscriptions. Though similar in nature, there is a legal difference between them, founded in statute. A check is an order to pay a sum certain drawn on a bank; a note is a promise to pay (UCC §3-l04(2)(b), (d)).
A universal principle of interpretation of statutes (or in this
case, a Rule) is expressio unius est exclusio alterius.
The specific mention of one thing implies the exclusion of other
things, and an irrefutable inference must be drawn that what
was not included was intended to be omitted (McKinney s, Statutes,
§240). Under these principles, it can be reasonably inferred
that the use of a check was intended to be excluded from the
Rules proscriptions.
The problem posed can be addressed from at least two perspectives. First, is a post-dated check a “security interest” as that term is defined or commonly perceived? The Rules do not define what a security interest is for their purposes, i.e., the regulation of attorney conduct. Therefore, other sources may shed some light, such as the Uniform Commercial Code, which defines it as an interest in personal property or fixtures which secures payment or performance of an obligation (UCC §1-201(37)).
A check, in and of itself, does not give or provide a secured
status for the holder thereof. It is merely, inter alia, an
unconditional promise to pay a sum certain in money and no other
promise, payable on demand or at a definite time (UCC §3-104(1)).
Under the UCC, a security interest is created by a security
agreement which creates or provides for it (UCC §9—l05(1)(l)),
and negotiable instruments are not, in and of themselves, security
agreements (95 N.Y. Jur. 2d, Secured Transactions §77; UCC §9—
l05(l)(i); cf. Berkowitz v. Charo Iinternational, Inc.,
74 NY2d 144, 150). [1]
Thus, an ordinary check, without language therein creating a security interest in the maker s property, does not appear to constitute a “security interest” within the meaning of the Rule. It is merely an obligation or undertaking to pay, not otherwise prohibited by the language of the Rule.
Secondly, it must be remembered that the major abuse sought to be rectified by the Rules, as reported by the Committee to Examine Lawyer Conduct in Matrimonial Actions, E. Leo Milonas, Chairman, was the taking of a mortgage by the lawyer upon his or her client s property, most often the client s home. The Committee called it “indefensible that an attorney may seize a client's home to satisfy an unpaid fee in a matrimonial case”.
The receipt of a check by the attorney, post-dated or not, does not further the evil sought to be remedied, because the attorney acquires no security interest in the client s property thereby. Therefore, it cannot be the basis for a seizure of the client s home in satisfaction of his or her legal fees.
For these reasons, the Committee must conclude that the taking of a post—dated check, in and of itself, in payment of legal fees does not pose an ethical concern for an attorney, so long as no security agreement is included as part of the transaction, and so long as the attorney does not advance monies to the client in exchange for the check. Such transaction does not appear to run afoul of the Rules concerning attorney conduct in matrimonial matters.
Pursuant to Article VI, Section 19 of the Richmond County Bar Association By-Laws, please be advised that the statements contained herein express the opinion of the Committee alone, and have not been passed upon by the Association.
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Wayne M. Ozzi
Chairman, Professional
Ethics Committee |
[1]One
way in which an attorney can acquire a security interest in
the check is to give value for it, i.e., advance monies to a
client in exchange for the check, a circumstance not presented
here (see, Key Bank of Southeastern New York, N.A. v. Strober
Bros. Inc., 136 AD2d 604, 608 (2d Dept.); UCC §4—208(l)(a)).
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