This post might not be relevant to many readers. However, I’m writing because my sense is that it is not uncommon for attorneys in Vermont’s smaller firms and towns to barter with clients.
Last week, in a case involving a lawyer who bartered a fee for legal services, a disciplinary panel in Maine reprimanded the lawyer for violating the rule that governs business transactions with clients. The Legal Profession Blog reported the decision, which is here:
So I’m clear, nothing in the Vermont Rules of Professional Conduct prohibits bartering for a legal fee. However, the Maine decision is a good reminder that bartering often equates to a different type of transaction than does negotiating a standard fee agreement. TA type of business transaction that invokes one of the conflicts rules.
In the Maine case, the client was not able to pay the lawyer’s hourly fee. So, the lawyer and client agreed that the client would pay for legal services by transferring title to a car to the lawyer, giving the lawyer a note and mortgage interest in real estate, and doing some excavation work for the lawyer. The lawyer was sanctioned for (admittedly) failing to comply with Maine’s rule that governs business transactions with a client.
In Vermont, Rule 1.8 applies to such situations. Here’s paragraph (a):
“A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and
(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.”
Comment  indicates that the rule is meant to address “the possibility of overreaching when the lawyer participates in a business, property or financial transaction with a client, for example, a loan or sales transactions or a lawyer investment on behalf of the client.” It adds that the rule “does not apply to ordinary fee arrangements between lawyer and client, which are governed by Rule 1.5, although its requirements must be met when the lawyer accepts an interest in the client’s business or other nonmonetary property as payment of all or part of the fee.”
Now, some might be wondering “why isn’t this in the rule on fees?” It is — kind of. Again, Rule 1.5 prohibits unreasonable fees. Comment  allows a lawyer to “accept property in payment for services.” However, the Comment goes on to caution that “a fee paid in property may be subject to the requirements of Rule 1.8(a) because such fees often have the essential qualities of a business transaction with the client.”
In short, when bartering for a legal fee, remember that the rule on business transactions with a client might apply.
As always, let’s be careful out there.
 V.R.Pr.C. 1.5 prohibits unreasonable fees.