Concerns in Attorney Using a Confession of Judgment Gary Muldoon Muldoon & Getz Rochester, NY 585 262-5130 www.muldoongetz.com
One method of securing a debt in New York State is the confession of judgment. The method is provided for in CPLR 3218.
Siegel describes it thus: “A confession of judgment dispenses with an adversary proceeding and gives the creditor the fruits of a successful one by permitting the creditor merely to file the confessed judgment. It serves as a security device by enabling a creditor to obtain a judgment without an action even before a debt is due, although of course it may not be enforced until due.” Siegel, New York Practice, 3d ed., § 299. Generally, see Carmody-Wait 2d, § 68:1 et seq.
To what extent may it be properly used in attorney-client relations?
According to a 1977 State Bar Association ethics opinion, it is not per se improper for a lawyer to obtain a confession of judgment for services previously rendered with the understanding that it will be filed only if the fees are not paid. NYSBA Ethics Opinion 77-474.
A confession of judgment may be filed while the attorney still represents a client, but the COJ should not be for prospective or unearned fees. See Engster v Passonno, 202 AD2d 769, 608 NYS2d 740 (3d Dept 1994); Katlowitz v Halberstam, 284 AD2d 306, 726 NYS2d 438 (2d Dept 2001); Rubenfeld v Gambino, 213 AD2d 709, 624 NYS2d 957 (2d Dept 1995). See also, Harris v Harris, 84 Misc2d 893, 378 NYS2d 298 (Sup Ct 1976).
When obtaining a confession of judgment, the attorney should provide a full explanation of the character, effect and purpose of a confession of judgment, including the effect on one’s credit rating. Matter of Jacobs, 188 AD2d 228, 594 NYS2d 794 (2d Dept 1993); Matter of Kauffman, 99 AD2d 640, 471 NYS2d 719 (3d Dept 1984); see NSYBA Ethics Opinion 77-474. See also Baehre v Rochester Dental Prosthetics, Inc., 112 Misc2d 270, 446 NYS2d 901 (Sup Ct 1982).
Where a criminal defense attorney charged a client a fixed advance fee secured by a confession of judgment, and failed afterwards to provide a proper accounting, this was improper, as it compromised the client’s unqualified right to change attorneys at any time. Matter of Harris, 279 AD2d 694, 719 NYS2d 172 (3d Dept 2001).
Family Law cases
The Milonas Rules limit the use of security interests in family law cases. One of the security interests specified is a confession of judgment. Section 1400.5 of 22 NYCRR states that a confession of judgment, promissory note, real property lien or other security interest may be obtained only where three conditions are met: the retainer agreement provides that a security interest may be sought; notice of an application for a security interest has been given to the other spouse; and the court grants approval of the security interest after submission of an application for counsel fees. Section 1400.5 is enforced by the Code of Professional Responsibility, DR 2-106(C)(2)(iii).
The procedure for obtaining a security interest in matrimonial actions is set forth in 22 NYCRR § 202.16(c)(2).
An affidavit of confession of judgment may be filed within three years of execution. The three-year period is a statute of limitations. Moldavsky v Nevins, 184 Misc2d 968, 712 NYS2d 822 (Sup Ct 2000). A judgment by confession may not be entered after the death of the debtor. CPLR 3218(b). Where the debt the judgment entered for is not all due, execution may be issued only for the sum that has become due. CPLR 3218(c). A joint confession of judgment is permissible. CPLR 3218(d).
The COJ may be entered in a court having monetary jurisdiction. Siegel, supra, § 301.