Tip of the Month

Tip for December 2012

Investing in Clients is Risky Business

Lawyers and law firms should invest in or with a client only with extreme caution and only after making the necessary disclosures and obtaining the required consents. This includes accepting an interest in a client company in lieu of fees. Investments such as these implicate issues of conflicts of interest in connection with the investment, and perhaps later when the lawyer is rendering legal advice to the client. An issue may also arise about the reasonableness of the fee if the lawyer has accepted an interest in the company in lieu of fees. Consult the applicable rules of professional conduct and other laws pertaining to the investment you are contemplating making in or with your client before agreeing to make the investment. This web site contains articles discussing these issues more fully, as does the treatise, Legal Malpractice, by Ron Mallen, published by West Publishing Company.