Advisory Opinion:
2157
Year Issued:
2008
RPC(s):
RPC 5.4(c), 1.7(a)(2), 5.4(a), 1.6
Subject:
Lawyer borrowing money using the value of contingent cases as collateral
BACKGROUND
This inquiry concerns a company that advertises that it “provide[s] litigators with flexible revolving credit lines up to $15 million using the value of your contingent cases as collateral.” The inquiry was sent by a lawyer who asked the Committee to determine whether the company`s financing arrangements with lawyers comport with the Rules of Professional Conduct. The inquiry was extensively researched by two former Committee members and was discussed over several Committee meetings during its last term. Those materials are included in the background packet and we will not repeat that discussion here; rather, we simply incorporate them by reference.
ANALYSIS
Because the Committee as a matter of policy does not “approve” or “certify” specific commercial ventures, we recommend following that course here and providing the lawyer with a brief generic answer that points the lawyer to what the Committee has already identified as the key ethical precepts in this situation. Our brief suggested response follows.
RESPONSE
The Committee as matter of policy does not approve specific commercial ventures that market their services to lawyers. With any law firm financing arrangement with a third party, however, three general principles should guide the lawyer’s conduct. First, the lawyer cannot, under RPC 5.4(c) and RPC 1.7(a)(2), allow the company providing financing to the law firm “to direct or regulate the lawyer’s professional judgment in rendering such legal services” (RPC 5.4(c)) or “materially limit” (RPC 1.7(a)(2)) the lawyer’s duties to the lawyer’s clients. Second, the lawyer cannot, under RPC 5.4(a), share the lawyer’s legal fees with the financing company. Third, the lawyer cannot, under RPC 1.6, share confidential information relating to the representation of clients with the financing company.
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