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A Loan to Bemoan

Q. Disabled after her accident, my client can't pay her mortgage, her medical bills, or even her utility bill. Desperate to survive, she wants to settle her case for a fraction of its value. May I advance her living expenses until after we resolve the case?​

A. In most states, the answer is "no."

As adopted in most jurisdictions, Rule 1.8 of the Rules of Professional Conduct forbids lawyers from lending financial assistance to their clients. While they may advance court costs and litigation expenses, the provision is designed to eliminate the inherent conflict arising when clients become indebted to their lawyers. Beyond the conflict of interest, clients who "owe" their lawyers may not feel free to terminate representation or to seek legal assistance elsewhere.

Recognizing the hardship on impoverished clients who cannot wait for their day in court, several states have relaxed this rule and are letting lawyers provide some financial aid to indigent clients. Unlike the absolute prohibitions in Maryland and a majority of states, the District of Columbia and a growing minority of jurisdictions permit lawyers to pay for their clients' medical or living expenses if "reasonably necessary to permit the client to institute or maintain the litigation." This relieves the economic pressure on clients whose financial circumstances would otherwise force them to settle cheaply.

To prevent lawyers from dangling cash in front of needy clients as a means of luring their business, even states that permit some humanitarian aid forbid their lawyers from offering such loans prior to retention.

In most jurisdictions, clients must either settle for pennies on the dollar or incur substantial fees charged by litigation lenders. While the latter often require clients to assign a portion of their recovery to such lenders, they can still be a lifesaver to those who may lose even more in a "fire sale" settlement.

But, regardless of the circumstances, lending any "principal" to a client will attract the "interest" of Bar Counsel and the potential for substantial penalties thereafter.

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Attorney Grievance defense attorney specializes in defending lawyers in disciplinary proceedings before the Maryland Attorney Grievance Commission and the D.C. Bar's Board on Professional Responsibility involving professional misconduct, legal ethics, disbarment, suspensions of law licenses, petitions for disciplinary action, reprimands and sanctions for unethical conduct. If you receive a letter from Bar Counsel Lydia Lawless, Disciplinary Counsel Hamilton Fox, or from any attorney disciplinary board in Maryland or the District of Columbia, retain experienced attorneys with expertise in lawyer discipline and breach of ethics cases to avoid sanctions for professional misconduct. We help lawyers avoid disbarment, suspension, reprimands, censure and informal admonitions by drafting responses to client grievances and ethical complaints; representing lawyers in peer reviews, evidentiary hearings, and oral arguments before the BPR and the Court of Appeals; filing petitions to reinstate an attorney's license to practice law; conducting law firm ethical compliance audits; and drafting legal ethics opinions to protect lawyers from ethics charges. In many cases, disciplinary proceedings may be dismissed, dismissed with a warning, or result in a conditional diversion agreement with Bar Counsel to rectify misconduct. Lawyers may need help in managing their law firm attorney escrow IOLTA trust account and complying with attorney trust accounting rules to avoid charges of ethical misconduct. Do not represent yourself in responding to an attorney grievance, law firm client complaint, or other allegation of ethical impropriety. Attorney grievance defense counsel may help you comply with legal ethics rules, avoid sanctions like suspension or disbarment, and avoid future attorney grievances.

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By The Lawyer's Lawyers | Kramer & Connolly and Irwin R. Kramer who are responsible for the content of this informational website.   This website is designed for lawyers faced with attorney grievances. As cases do differ, past performance does not guarantee future results.
 

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OR THE BOARD ON PROFESSIONAL RESPONSIBILITY OF THE D.C. BAR