Increasing Access: Financial Assistance to Clients

This is Part 4 in my series on using the Rules of Professional Conduct to increase access to legal services.  I expect it might be controversial.  Nevertheless, in my opinion, the problem has reached the point that nothing should be off the table. And, to be clear, this is not a recommendation for a rule change. It’s a recommendation that we never stop thinking about what we’re doing and whether we can do it better.

First, a quick refresher:

Now, here’s an idea that might belong on the table.

As most of you know, Rule 1.8(e) prohibits lawyers from providing financial assistance to clients.  Here’s the rule:

  • “A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:
    • (1) A lawyer may advance or guarantee court costs and expense of litigation, including expenses of investigation, expenses of medical examinations, and costs of obtaining and presenting evidence, the repayment of which my be contingent upon the outcome of the matter; and
    • (2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of a client.

Comment 10 reads as follows:

  • “Lawyers may not subsidize lawsuits or administrative proceedings brought on behalf of their clients, including making or guaranteeing loans to their clients for living expenses, because to do so would encourage clients to pursue lawsuits that might not otherwise be brought and because such assistance gives lawyers too great a financial stake in the litigation.  These dangers do not warrant a prohibition on a lawyer lending a client court  costs and litigation expenses, including the expenses of investigation and medical examination and the costs of obtaining evidence, because these advances are virtually indistinguishable from contingent fees and help ensure access to the courts.  Similarly, exceptions allowing lawyers representing indigent clients to pay court costs and litigation expenses regardless of whether these funds will be repaid are warranted.”

A handful of states have adopted limited exceptions to the general prohibition on providing financial assistance to clients.  The exceptions might not necessarily increase access, but they help to maintain access.

In Louisiana, Rule 1.8(e)(4) states:

  • “(4) In addition to costs of court and expenses of litigation, a lawyer may provide financial assistance to a client who is in necessitous circumstances, subject however to the following restrictions.
    • (i) Upon reasonable inquiry, the lawyer must determine that the client’s necessitous circumstances, without minimal financial assistance, would adversely affect the client’s ability to initiate and/or maintain the cause for which the lawyer’s services were engaged.
    • (ii) The advance or loan guarantee, or the offer thereof, shall not be used as an inducement by the lawyer, or anyone acting on the lawyer’s behalf, to secure employment.
    • (iii) Neither the lawyer nor anyone acting on the lawyer’s behalf may offer to make advances or loan guarantees prior to being hired by a client, and the lawyer shall not publicize nor advertise a willingness to make advances or loan guarantees to clients.
    • (iv) Financial assistance under this rule may provide but shall not exceed that minimum sum necessary to meet the client’s, the client’s spouse’s, and/or dependents’ documented obligations for food, shelter, utilities, insurance, non-litigation related medical care and treatment, transportation expenses, education, or other documented expenses necessary for subsistence.”

In a previous post, I quoted from an opinion of the Louisiana Supreme Court that’s illustrative here.  In Louisiana State Bar Ass’n v. Edwins, a commissioner concluded that a lawyer had “been guilty of professional acts and omissions which do not conform to the standards of character and conduct laid down by the profession.”

Whoa! Acts & omissions that don’t conform to the standards we’ve laid down!  What might they be?

Well, among other things, advancing funds to a client to help the client avoid foreclosure and seek necessary medical treatment.

The Louisiana Supreme Court disagreed with the commissioner, stating:

  • “no bar disciplinary rule can or should contemplate depriving poor people from access to the court so as effectively to assert their claim.”

Similarly, in Minnesota:

  • “a lawyer may guarantee a loan reasonably needed to enable the client to withstand delay in litigation that would otherwise put substantial pressure on the client to settle a case because of financial hardship rather than on the merits, provided the client remains ultimately liable for repayment of the loan without regard to the outcome of the litigation and, further provided, that no promise of such financial assistance was made to the client by the lawyer, or by another in the lawyer’s behalf, prior to the employment of that lawyer by that client.”

It’s Rule 1.8, and Minnesota’s rules are here.

With respect to the rule, the Minnesota Office of Lawyers Professional Responsibility has stated:

  • “While perhaps not a perfect solution, Minnesota’s approach to financial assistance to clients allows lawyers to act in a humanitarian fashion if the situation requires, and yet avoid troubling conflicts with the representation.” (Borrowing and Lending with Clients, Marcia Johnson, Minnesota Office of Lawyers Professional Responsibility, (August 1995)).

Alabama’s Rule 1.8(e)(3) authorizes lawyers to “advance or guarantee emergency financial assistance to the client, the repayment of which may not be contingent on the outcome of the matter, provide that no promise or assurance of financial assistance was made to the client by the lawyer, or on the lawyer’s behalf, prior to the employment of the lawyer.”  The policy reasons underpinning the rule are in the comment.

In Mississippi, and “under dire and necessitous circumstances,” Rule 1.8(e) authorizes a lawyer to advance up to $1500 to a client for reasonable and necessary medical or living expenses.  (At the link, scroll to pages 33 and 34)  The rule indicates that permissible assistance includes “minimal living expenses of minor sums such as those necessary to prevent foreclosure or repossession or for necessary medical treatment.”

Finally, in New Jersey, Rule 1.8(e)(3) authorizes certain non-profits to provide financial assistance to indigent clients that the non-profit is representing without a fee.

Again, I don’t know if this is an access issue.  At the very least, however, when there is no legitimate concern of a conflict of interest or frivolous litigation, the Rules of Professional Conduct should not prohibit common sense compassion.












One thought on “Increasing Access: Financial Assistance to Clients

  1. Hi Mike…how about this….as part of bar membership, attorneys should be part of a statewide “pro bono civil public representative” program with a minimum, annual obligation. Cases would be assigned by way of an office to which residents would apply and be screened. Time consuming cases would be given more credit with respect to this pro bono obligation than easier ones. Attorneys could also restrict performance of this obligation within their area of specialty.

    In addition, perhaps attorneys could take a half day a year to be “on site civil counsel” for the small claims docket.


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