![]() interests in the contract rights of other business enterprises. A law firm is a business, albeit one infused with some measure of the public trust, and there is no valid reason why a law firm should be treated differently than an accounting firm or a construction firm. The Rules of Professional Conduct ensure that attorneys will zealously represent the interests of their clients, regardless of whether the fees the attorney generates from the contract through representation remain with the firm or must be used to satisfy a security interest. Parenthetically, the court will note that there is no suggestion that it is inappropriate for a lender to have a security interest in an attorney's accounts receivable. It is, in fact, a common practice. Yet there is no real "ethical" difference whether the security interest is in contract rights (fees not yet earned) or accounts receivable (fees earned) in so far as Rule of Professional Conduct 5.4, the rule prohibiting the sharing of legal fees with a non-lawyer, is concerned. It does not seem to this Court that we the guise of ethics, an insulation from creditors to which others are not entitled. the law firm had not supported its "proposition that a credit facility secured by a law firm's accounts receivable constitutes impermissible fee sharing with a non-lawyer." The court also held that, despite the law firm's contention, the credit agreement did not give the lender a prohibited ownership interest in the law firm. "A lender who loans money under a revolving credit facility is a creditor of the borrower. Unless the credit agreement provides for equity... the loan results in debt, not equity." The court also rejected the law firm's argument that the terms of the credit agreement in this case were objectionable because the law firm agreed to pay the lender a percentage of the firm's revenue on all of the firm's cases, rather than a percentage in certain cases. The viability of revolving credit agreements percentage of the law firm's receipts as with a factoring agreement, for mass- tort and other law firms. Lawyers whose firms need funding to take on new cases, injured parties who need well-funded lawyers who can vigorously pursue their claims, and investors looking for investment opportunities, can all benefit from this development. 2015 WL 4279720 (S.D.N.Y. 2015) (rejecting constitutional challenge to New York law and court rules prohibiting non-lawyers from taking an equity interest in a law firm); Bonilla v. Rotter, 36 A.D.3d 534, 829 N.Y.S.2d 52 (1st Dep't 2007) (precluding fee-sharing arrangement with investigator who located personal-injury clients at hospitals); Ungar v. Matarazzo, Blumberg & Assocs., P.C. 260 A.D.2d 485, 688 N.Y.S.2d 588 (2d Dep't 1999) (agreement under which non-lawyer administrative employee of law firm received half of the firm's earnings and profits constituted impermissible fee-sharing with a non- lawyer); Prins v. Itkowitz & Gottlieb, P.C., 279 A.D.2d 274, 719 N.Y.S.2d 228 (1st Dep't 2001) (condemning fee sharing-arrangement with purported insurance expeditor charged with extortion); Gorman v. Grodensky, 130 Misc. 2d 837 (Sup. Ct. N.Y. Co. 1985) (prohibiting attorney's splitting fees with collections manager). 2015). 1997 WL 527978 (Del. Super. Ct. 1997). |