Tip of the Month

Tip for April 2016

Avoid Business Transactions with Clients

Lawyers and law firms should enter into business transactions with clients only with extreme caution and only after complying with the requirements of the applicable Rules of Professional Conduct. The Rules of most states include a version of ABA Model Rule 1.8(a). Other sections of Rule 1.8 address specific kinds of transactions with clients, such as agreements to prospectively limit liability to clients or settling claims of clients. Business transactions with clients generally include investing in client companies, client investment in attorney-owned companies, borrowing money from clients, lending money to clients, or entering into virtually any other kind of agreement or contract with clients. Transactions such as these may implicate issues of conflicts of interest and a presumption of undue influence, and may place at risk the lawyer's interest in the transaction, the lawyer's fees from that client and future representation of that client. This web site contains materials that discuss the issues pertaining to transactions with clients in more detail.