Advisory Opinion:
1557
Year Issued:
1994
RPC(s):
RPC 1.7; 1.8(a)
Subject:
Business transaction with client; lawyer representing inventors for royalty interest or share of profits
The Committee reviewed your inquiry concerning representation of persons marketing inventions to manufacturing companies. It was not clear from your inquiry whether you also represent manufacturing companies with whom your clients might be dealing. The Committee was of the opinion that if you do, you would need to comply with the requirements of RPC 1.7 regarding disclosure and consent.
You ask whether investors could pay legal fees on a contingent basis in the form of either a royalty interest in gross receipts or sale of the products or patent. Others have also suggested sharing in the gross or net profits with you and one client has requested that you seek prospective licensees or distributors for a fixed or percentage fee. The Committee was of the opinion that in entering into any form of business relationship with a client you would need to comply with the requirements of RPC 1.8. The Committee also suggested that I refer you to In Re McGlothen, 99 Wn. 2d 515, 663 P.2d 1330 (1983) and the cases cited therein. The Committee also was of the opinion that, depending on the facts, in some instances as a result of the business/fee arrangement with your client, your own interests might come into conflict with your client's. In that case, you would need to comply with RPC 1.7(b).
Finally, the Committee was of the opinion that if you were also representing the manufacturing company in drafting agreements between the company and your client, the conflict of interest between then might not be waiveable pursuant to RPC 1.7(a).
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