Essay on "Client-Lawyer Relationship and Financial Assistance"

Essay 6 pages (1842 words) Sources: 3

[EXCERPT] . . . .

Kippi works for Legal Aid, a free legal clinic, and has given one of the clients, an unwed pregnant teenager, money to pay for the delivery of her baby and to buy some necessities.

Does Kippi's payment to the client create an ethical problem for Kippi?

Does Kippi's payment create an ethical problem for Legal Aid?

Does the fact that Legal Aid is not a for-profit firm change the answer to either question?

Reasoning

Rule 1.8(e).

Rule 5.4.

Pritchett Burch PLLC v. Boyd.

Street v. Smart Corp.

Rule 5.3.

Gen. Stat. § 48-10-103.

Payments were not made to further legal expenses and seem to be the type prohibited under the ethical rules.

The answer might be different if the client was placing a child for adoption.

Conclusion: Kippi's actions created a legal problem for her and for her employer, and that problem would only be magnified if Kippi worked for a for-profit firm.

Summary: Kippi is a legal assistant who works for Legal Aid in Winston Salem, a free legal clinic. One of the clients Kippi has been working with is an unwed pregnant teenager. The girl has not been in touch with her family and has not yet qualified for any type of state assistance. Kippi pays the hospital bill for the delivery of the girl's baby and buys some clothes and other necessities for her.

Issues: Does Kippi's payment of the hospital bill for the delivery of the client's baby and supplying of baby clothes create an ethical problem for Kippi or her employer, Legal Aid? Would it make any difference if Kippi were a legal assistant for a for-profit law firm, and the client had been paying legal fees to the firm?

Reasoning: When looking at ethical issues, the first resource is to look to the North Carolina Rules. Rule 1.8 governs scenarios in which attorneys may provide financial assistance to a client. Rule 1.8(e) provides that:

A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and (2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client (Rev. R. Prof. Conduct N.C. St. B. 1.8(e), 2003 Ann. R. (N.C.) 625).

Comment 10 to Rule 1.8(e) gives a detailed example of what type of payments are prohibited by the rule. It states that:

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 (Rev. R. Prof. Conduct N.C. St. B. 1.8(e), 2003 Ann. R. (N.C.) 625).

The ability to advance funds without regard to whether or not they will be repaid is actually a new facet of law. Under the old rules, an attorney was prohibited from advancing funds for litigation without stipulating that the loan would be repaid, regardless of the outcome of the dispute (See Pritchett Burch PLLC v. Boyd, 2005 N.C. App. LEXIS 540,16;169 N.C. App. 118; 609 S.E.2d 439). Moreover, under the old rules, even if an attorney did advance funds to a client, that did not give the attorney an interest in the underlying action, because the loan was to be repaid regardless of the outcome at trial. (See Street v. Smart Corp, 157 N.C. App. 303, 306, 578 S.E.2d 695, 698 (2003)).

While Kippi is not a lawyer, her actions will be imputed to her law firm. Under Rule 5.3, a responsible lawyer must make reasonable efforts to ensure that nonlawyer employees are not violating ethical rules. The text of the rule provides that:

With respect to a nonlawyer employed or retained by or associated with a lawyer:

(a) a partner, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm or organization shall make reasonable efforts to ensure that the firm or organization has in effect measures giving reasonable assurance that the nonlawyer's conduct is compatible with the professional obligations of the lawyer;

(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the nonlawyer's conduct is compatible with the professional obligations of the lawyer; and (c) a lawyer shall be responsible for conduct of such a nonlawyer that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:

(1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or (2) the lawyer is a partner or has comparable managerial authority in the law firm or organization in which the person is employed, or has direct supervisory authority over the nonlawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action to avoid the consequences (Rev. R. Prof. Conduct N.C. St. B. 5.3, 2003 Ann. R. (N.C.) 625).

Analysis: The North Carolina Code of Professional Conduct makes it abundantly clear that a lawyer is not permitted to give a client living expenses. Although the text of the rule suggests that a lawyer would only be prohibited from lending clients money in relation to the subject of the lawsuit, comment 10 prohibits all forms of subsidized lawsuits, because of a concern that doing so encourages litigious behavior. The fact that Kippi is not a lawyer does little to change the situation. Her law firm is required to take reasonable efforts to ensure that is employees are not engaging in unethical behavior. Kippi should have, at a minimum, received some type of training instructing her not to provide financial assistance to the clients. If Kippi and the client took some measures to hide their actions from the supervisory attorney, then that attorney might not have violated an ethical rule in not preventing Kippi from giving the client the money, though she certainly would have engaged in behavior that might result in her losing her job. However, if Kippi gave the client a gift and did not hide that behavior, it would seem that an attorney's reasonable efforts should have been sufficient to uncover that behavior.

The fact that Kippi works for Legal Aid is not enough to remove the concern attached to subsidizing client lawsuits. The reality is that Legal Aid clients are frequently indigent and in need of financial assistance. This financial assistance might impact a client's ability to sue, but all of the concerns linked to attorneys giving their clients financial support disappear with Legal Aid, where attorneys do not have a financial incentive to pay their clients. Moreover, providing financial assistance may be one of the only ways that indigent clients can maintain suits. In fact, lawyers may lend clients funds that are directly related to the lawsuit in question and these loans do not have to be repaid if the client is indigent, but other gifts are unethical.

However, one of the striking issues about this factual scenario is that it does not reveal why the unwed pregnant teenage mother has sought the assistance of Legal Aid. However, the fact that she is an unwed, pregnant teenager certainly suggests a scenario in which the client might be looking to place the child for adoption. Under N.C. Gen. Stat. § 48-10-103:

(a) an adoptive parent, or another person acting on behalf of an adoptive parent, may pay the reasonable and actual fees and expenses for:

(1) Services of an agency in connection with an adoption;

(2) Medical, hospital, nursing, pharmaceutical, traveling, or other similar expenses incurred by a mother or her child incident to the pregnancy and birth or any illness of the adoptee;

(3) Counseling services for a parent or the adoptee that are directly related to the adoption and are provided by a licensed psychiatrist, licensed psychologist, licensed marriage and family therapist, licensed professional counselor, licensed or certified social worker, fee-based practicing pastoral counselor or other licensed professional counselor, or an employee of an agency;

(4) Ordinary living expenses of a mother during the pregnancy and for no more than six weeks after the birth;

(5) Expenses incurred in ascertaining the information required under G.S. 48"3"205 about an adoptee and the adoptee's biological family;

(6) Legal services, court costs, and traveling or other administrative expenses… READ MORE

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