MRPC 1.8: CURRENT CLIENT COI SPECIFIC RULES Flashcards Preview

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Flashcards in MRPC 1.8: CURRENT CLIENT COI SPECIFIC RULES Deck (35)
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1
Q

Does Rule 1.7 interplay with 1.8?

A

YES!
Remember that Rule 1.7 always applies:
Do a 1.7 analysis, then go to 1.8, if anything applies

2
Q

What does Rule 1.8(a) say? Is it mandatory?

A

Mandatory

(a) a lawyer shall not enter into a business transaction with a client that is adverse to a client, unless: (needs all three conditions
(1) The transaction is fair and reasonable to the client and the terms are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client
(2) Client is advised in writing of the desirability of seeking the advice of independent counsel and an is given a reasonable opportunity to get that advice; and
(3) Client gives informed consent

3
Q

Under Rule 1.8(a) does it matter if a client knows a deal is unfair as long as they’ve provided consent?

A

It does not matter if the client gives informed consent if the deal is not fair:

+ It still violates 1.8(a)
+ Builds onto 1.7(b)(4)

4
Q

Under Rule 1.8(a)(2), what is a reasonable opportunity to get advice?

A

You have to give an opportunity to ACTUALLY GO GET THE ADVICE

Ex: If the advice is given and the deal is signed within 30 minutes there was no opportunity

5
Q

Under Rule 1.8(a)(3), what needs to be included in the informed consent?

A

+ Must be fully transmitted in writing and in plain English
+ Signed by client
+ Only needs essential terms: Lawyer does not need informed consent for nonessential terms

6
Q

What does Rule 1.8(b) say?

A

Cannot use information relating to representation of a client to the disadvantage of the client unless they give informed consent:

[5] To the disadvantage to the client → an independent clause triggered over 1.7 and 1.9

7
Q

What does Rule 1.8(c) say?

A

We are worried about lawyers giving advice that results in gifts to lawyers:
+ If the lawyer does not solicit the gift, that is fine
+ BUT if the client gives the lawyer a HUGE gift then we are concerned about 1.7(a)(2)
+ A substantial gift is okay if the lawyer or other recipient of the gift is related to the client

8
Q

Can a lawyer negotiate an agreement giving them media rights based on a substantial part on info relating to representation?

A

No. Mandatory! Rule 1.8(d)

Ex: Cuomo’s lawyer wants to write a book about representation during sexual harassment cases. Violation of 1.8(a) if you go into business with client. It doesn’t matter if client gives consent at the start of the case. Trying to protect confidentiality. Presumed conflict. Also applies to former clients.

9
Q

Are there any circumstances when a lawyer can provide financial assistance to a client in connection with pending or contemplated litigation?

A

Rule 1.8(e)
A lawyer shall not (mandatory) provide financial assistance to a client in connection with the pending or contemplated litigation, UNLESS:
(1) May advance court costs if the litigation is contingent, OR
(2) May pay court costs for indigent clients

10
Q

What are the exceptions where a lawyer can accept compensation for someone other than a client regarding pending or contemplated litigation?

A

Rule 1.8(f)
A lawyer shall not accept compensation for representing a client from one other than the client, UNLESS:

(1) Client gives Informed consent
(2) No interference with the lawyer’s independence of professional judgment
(3) Information relating to representation of a client is protected as required by 1.6
Ex: parent paying for representation of child. When you represent the minor you rep the minor and NOT the paying parent.

11
Q

Can a lawyer who accepts two or more clients participate in making aggregate settlement of the claims of or against the clients?

A

No. Rule 1.8(g)

A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, (or in crim. an agg. settlement as to guilty or no contest), *unless both give informed consent

12
Q

What does Rule 1.8(h) say?

A

A lawyer shall not: MANDATORY

(1) Make an agreement limiting the lawyer’s liability to a client for malpractice UNLESS the client is independently represented in making the agreements OR
(2) Settle a claim for such liability with an unrepresented client UNLESS that person is advised in writing of the desirability of seeking and is given reasonable opportunity to seek the advice of independent legal counsel

13
Q

Under Rule 1.8(h), does a client’s sophistication or relationship with the lawyer matter in terms of limiting liability for malpractice claims?

A

It does not matter how sophisticated the client is or the length of the relationship or that they have agreed to it in the past.

HOWEVER, a client may consent to a separate agreement limiting liability IF they have independent representation.

14
Q

What are the exceptions to 1.8(i): A lawyer SHALL NOT acquire a proprietary interest in cause of action/subject of litigation?

A

(1) Acquiring a lien to secure fees and expenses

(2) Contract with a client gives a reasonable contingent fee in a civil case

15
Q

Can a lawyer have a sexual relationship with a client?

A

Rule 1.8(j) No, unless the sexual relationship already existed before the lawyer-client relationship.

16
Q

Do constituents of an entity “count” towards Rule 1.8(j) and not having sex with clients?

A

Rule 1.8 [19] Applies to constituents of an entity that you represent when they are a high enough ranking constituent of the entity, including in a relationship between outside counsel and in-house legal department → Depends on the facts

17
Q

True or false: If a conflict of interest applies per 1.7 to one person in the firm it is imputed to everyone in the firm

A

True. Rule 1.8(k)
Imputes all the subsections of 1.8 to other lawyers in the firm

Related to 1.10(a) → if a conflict of interest applies per 1.7 to one person in the firm it is imputed to everyone in the firm

Does not include 1.8 - BUT 1.8 is imputed through 1.8(k) – except 1.8(j)

18
Q

What is the policy behind Rule 1.8(a)? Give an example.

A

Rule 1.8(a) [1]

A lawyer’s legal skill and training, together with the relationship of trust and confidence between lawyer and client, create the possibility of overreaching when the lawyer participates in a business, property or financial transaction with a client.

Ex: A loan or sales transaction or a lawyer investment on behalf of a client. The requirements of paragraph (a) must be met even when the transaction is not closely related to the subject matter of the representation, as when a lawyer drafting a will for a client learns that the client needs money for unrelated expenses and offers to make a loan to the client.

The Rule applies to lawyers engaged in the sale of goods or services related to the practice of law, for example, the sale of title insurance or investment services to existing clients of the lawyer’s legal practice

19
Q

Does Rule 1.8(a) apply even to lawyers purchasing property from estates they represent?

A

Yes. Rule 1.8(a) [1]

20
Q

Does Rule 1.8(a) apply to Rule 1.5 regarding fee arrangements?

A

No. Rule 1.8(a) [1]

It does not apply to ordinary fee arrangements between client and lawyer, 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 a fee.

21
Q

Does Rule 1.8(a) apply to standard commercial transactions between the lawyer and the client for products or services that the client generally markets to others? Give an example.

A

Rule 1.8(a) [1]

It does not apply to standard commercial transactions between the lawyer and the client for products or services that the client generally markets to others.

For example, banking or brokerage services, medical services, products manufactured or distributed by the client, and utilities’ services. In such transactions, the lawyer has no advantage in dealing with the client, and the restrictions in paragraph (a) are unnecessary and impracticable.

22
Q

When obtaining consent from clients under 1.8(a), does the consent have to meet all of the Rule 1.0 requirements?

A

Yes. [2]

Paragraph 1.8 (a)(2) requires that the client also be advised, in writing, of the desirability of seeking the advice of independent legal counsel. It also requires that the client be given a reasonable opportunity to obtain such advice.

Paragraph (a)(3) requires that the lawyer obtain the client’s informed consent, in a writing signed by the client, both to the essential terms of the transaction and to the lawyer’s role.

When necessary, the lawyer should discuss both the material risks of the proposed transaction, including any risk presented by the lawyer’s involvement, and the existence of reasonably available alternatives and should explain why the advice of independent legal counsel is desirable.

23
Q

How does Rule 1.8(a) interplay with 1.7 in terms of client’s expectations and lawyer’s limitations?

A

[3]
The risk to a client is greatest when the client expects the lawyer to represent the client in the transaction itself or when the lawyer’s financial interest otherwise poses a significant risk that the lawyer’s representation of the client will be materially limited by the lawyer’s financial interest in the transaction.

Here the lawyer’s role requires that the lawyer must comply, not only with the requirements of paragraph (a), but also with the requirements of Rule 1.7. Under that Rule, the lawyer must disclose the risks associated with the lawyer’s dual role as both legal adviser and participant in the transaction, such as the risk that the lawyer will structure the transaction or give legal advice in a way that favors the lawyer’s interests at the expense of the client.

Moreover, the lawyer must obtain the client’s informed consent. In some cases, the lawyer’s interest may be such that Rule 1.7 will preclude the lawyer from seeking the client’s consent to the transaction.

24
Q

Is the fact that a client is independently represented to consent in Rule 1.8(a)(2) relevant?

A

[4]
If the client is independently represented in the transaction, paragraph (a)(2) of this Rule is inapplicable, and the paragraph (a)(1) requirement for full disclosure is satisfied either by a written disclosure by the lawyer involved in the transaction or by the client’s independent counsel.

The fact that the client was independently represented in the transaction is relevant in determining whether the agreement was fair and reasonable to the client as paragraph (a)(1) further requires.

25
Q

Give an example of when Rule 1.8(b) comes into play

A

[5]
Use of information relating to the representation to the disadvantage of the client violates the lawyer’s duty of loyalty. Paragraph (b) applies when the information is used to benefit either the lawyer or a third person, such as another client or business associate of the lawyer.

For example, if a lawyer learns that a client intends to purchase and develop several parcels of land, the lawyer may not use that information to purchase one of the parcels in competition with the client or to recommend that another client make such a purchase.

26
Q

Does Rule 1.8(b) matter if the information is not used to disadvantage the client? Give an example.

A

No. [5]
The Rule does not prohibit uses that do not disadvantage the client.

For example, a lawyer who learns a government agency’s interpretation of trade legislation during the representation of one client may properly use that information to benefit other clients.

27
Q

What is the policy behind Rule 1.8(d)?

A

[9]
Measures suitable in the representation of the client may detract from the publication value of an account of the representation.

28
Q

Can a lawyer create a fee arrangement in accordance with Rule 1.5 that allows the lawyer a share to the client’s publication rights?

A

[9]
Paragraph (d) does not prohibit a lawyer representing a client in a transaction concerning literary property from agreeing that the lawyer’s fee shall consist of a share in ownership in the property, if the arrangement conforms to Rule 1.5 and paragraphs (a) and (i).

29
Q

What is the policy behind Rule 1.8(f)? Any minor exception examples?

A

[10] 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 medical examination and the costs of obtaining and presenting evidence, because these advances are virtually indistinguishable from contingent fees and help ensure access to the courts. Similarly, an exception allowing lawyers representing indigent clients to pay court costs and litigation expenses regardless of whether these funds will be repaid is warranted.

30
Q

What are some exceptions to Rule 1.8(e)(3)?

A

A lawyer representing an indigent client without fee, a lawyer representing an indigent client pro bono through a nonprofit legal services or public interest organization and a lawyer representing an indigent client pro bono through a law school clinical or pro bono program may give the client modest gifts.

Gifts permitted under paragraph (e)(3) include modest contributions for food, rent, transportation, medicine and similar basic necessities of life. If the gift may have consequences for the client, including, e.g., for receipt of government benefits, social services, or tax liability, the lawyer should consult with the client about these. See Rule 1.4.

31
Q

Do the exceptions in 1.8(e)(3) apply when a lawyer may eventually recover a fee?

A

[13]
(e)(3) does not permit lawyers to provide assistance in other contemplated or pending litigation in which the lawyer may eventually recover a fee, such as contingent-fee personal injury cases or cases in which fees may be available under a contractual fee-shifting provision, even if the lawyer does not eventually receive a fee.

32
Q

What is the policy behind 1.8(f)?

A

[14] Because third-party payers frequently have interests that differ from those of the client, including interests in minimizing the amount spent on the representation and in learning how the representation is progressing, lawyers are prohibited from accepting or continuing such representations unless the lawyer determines that there will be no interference with the lawyer’s independent professional judgment and there is informed consent from the client.

33
Q

How does 1.8(f) interplay with 1.7 and 1.6?

A

[15] Sometimes, it will be sufficient for the lawyer to obtain the client’s informed consent regarding the fact of the payment and the identity of the third-party payer.

If, however, the fee arrangement creates a conflict of interest for the lawyer, then the lawyer must comply with Rule 1.7. The lawyer must also conform to the requirements of Rule 1.6 concerning confidentiality.

Under Rule 1.7(a), a conflict of interest exists if there is significant risk that the lawyer’s representation of the client will be materially limited by the lawyer’s own interest in the fee arrangement or by the lawyer’s responsibilities to the third-party payer (for example, when the third-party payer is a co-client).

Under Rule 1.7(b), the lawyer may accept or continue the representation with the informed consent of each affected client, unless the conflict is nonconsentable under that paragraph. Under Rule 1.7(b), the informed consent must be confirmed in writing.

34
Q

Can a lawyer obtain a lien against a client in any situation, according to Rule 1.8(i)?

A

Rule 1.8 paragraph (i) sets forth exceptions for liens authorized by law to secure the lawyer’s fees or expenses and contracts for reasonable contingent fees.

The law of each jurisdiction determines which liens are authorized by law. These may include liens granted by statute, liens originating in common law and liens acquired by contract with the client.

When a lawyer acquires by contract a security interest in property other than that recovered through the lawyer’s efforts in the litigation, such an acquisition is a business or financial transaction with a client and is governed by the requirements of paragraph (a).

35
Q

Does Rule 1.8(k) apply to all lawyers in the firm with the personally prohibited lawyer? What about 1.8(j)?

A

[23] Under paragraph (k), a prohibition on conduct by an individual lawyer in paragraphs (a) through (i) also applies to all lawyers associated in a firm with the personally prohibited lawyer.

For example, one lawyer in a firm may not enter into a business transaction with a client of another member of the firm without complying with paragraph (a), even if the first lawyer is not personally involved in the representation of the client.

The prohibition set forth in paragraph (j) is personal and is not applied to associated lawyers.