Working Through Related Rules

Working Through Related Rules

One transaction between a lawyer and a client can fall under several paragraphs of Rule 1.8, and the paragraphs disagree about whether the client's consent can ever rescue it. Rule 1.8(a) allows a business transaction with a client once its conditions are met. Rule 1.8(e) forbids financial assistance to a client in connection with pending or contemplated litigation, except as the rule itself provides.¹ Both grow from the same worry, a lawyer's personal interest pulling against the client's. Rule 1.8 names the recurring forms so that lawyers spot them, sometimes attaching disclosure and consent requirements that differ from the general conflicts rule and sometimes prohibiting the conduct outright.² A fact pattern that touches more than one paragraph needs a method: which rule to check first, whether consent matters at all, and which general rule still applies on top. The two subsections below build that method on a loan to a client and then on the contrast between consent-plus provisions and barred ones.

Sequencing a Loan to a Client

The bar goes first because it is the only step where consent is beside the point. A lawyer who began with Rule 1.8(a) could assemble a plain-language letter, a waiting period, and a signed consent, then conclude the loan was safe, when none of that paper would matter. Starting with the bar spares the lawyer from papering a deal that cannot be saved. The split between steps one and two follows a difference in risk. A loan unconnected to any dispute is a business dealing, and disclosure, independent advice, and a signature can protect the client there. A loan to a client whose case is pending or headed to court gives the lawyer a stake in how the case ends: a lawyer who has advanced money wants a recovery big enough to repay it, and that wish can color advice on a settlement offer.

Step three comes last because the Rule 1.8(a) conditions test the bargain and the client's agreement to it. They do not ask whether the lawyer can still give undivided advice. That question belongs to the personal-interest conflicts rule, which treats a representation as conflicted when a personal interest of the lawyer would materially limit it.⁶ A lawyer who is both creditor and adviser must clear both rules. An exam stem about a loan usually varies one fact, whether a claim is headed to court, and that fact decides whether step one ends the analysis or hands it to step two.

Rule 1.8(e) reaches contemplated litigation as well as filed litigation, so a lawyer cannot escape it by lending before the complaint to a client who is already preparing to sue.⁷

Without a claim headed to court, the lawyer's problem changes from a prohibition that no paperwork can solve into a business transaction that disclosure, fair terms, and conflict clearance can solve. Exam answers go wrong in two directions. Some run the Rule 1.8(a) conditions on a loan made during litigation and pronounce the lawyer safe. Others stop after Rule 1.8(a) on a loan with no litigation and never ask whether the lawyer's interest as creditor limits the advice the client receives.

Consent-Plus Versus Barred Conduct

The loan sequence divides on whether consent can help, and that division is a design choice in Rule 1.8 itself. Rule 1.8(a) is a consent-plus rule: it requires the client's informed consent in a signed writing and adds a requirement that the terms be fair and reasonable to the client.¹⁰ The rule allows consent because many business dealings between lawyer and client are legitimate. A client may want the lawyer's loan or investment, and the usual danger in such a dealing is overreaching that grows out of the lawyer's informational advantage. Written disclosure, a written recommendation to seek independent advice, and a signature answer that danger directly, and the fairness requirement sets a floor under what the client can be asked to accept. Other provisions of Rule 1.8 treat the risk as too great for any of that to work.

Three of those provisions, each taught in detail in its own reading, show what a prohibition without a consent route looks like:

• The financial-assistance rule bars a lawyer from providing financial assistance to a client in connection with pending or contemplated litigation, except as the rule lists, and the client's consent is not the way through.¹¹
• The gift rule bars a lawyer from soliciting a substantial gift from a client, including a testamentary gift, and from preparing an instrument that gives the lawyer or a person related to the lawyer a substantial gift, unless the lawyer or other recipient is related to the client.¹²
• The literary-rights rule bars a lawyer, before the representation concludes, from making or negotiating an agreement for literary or media rights to a portrayal or account based in substantial part on information relating to the representation.¹³

The bar on acquiring a proprietary interest in the subject of the representation belongs to the same non-consentable group, and among these provisions only Rule 1.8(a) makes the client's signed, informed consent part of the answer.¹⁴ The gift rule shows the contrast most plainly. Its one way out is a family relationship, so a lawyer who is the client's grandchild may draft a will naming herself, while an unrelated lawyer may not solicit or draft the same gift, however willing the client is.¹⁵

The difference lies in what disclosure and independent advice can accomplish. In a business deal, they let the client compare the lawyer's terms with what an outside party would offer. When the lawyer's interest bears on the course of the litigation, on what is said publicly about the client's story, or on what the client leaves at death, that interest can shape the representation itself. A signed form then gives the client no way to check whether the lawyer's advice was bent by it, so the rules remove the option instead of regulating it.

Timing matters here, because the rule's own text confines the bar to the period before the representation concludes.¹⁶ An agreement of the same kind negotiated after the representation has ended falls outside that paragraph, which shows that the prohibition tracks the period in which the lawyer's interest can still affect the work. A fact pattern can also trigger both kinds of provision at once, as the loan during litigation did: the Rule 1.8(a) conditions were satisfied, and the financial-assistance bar still controlled. On any Rule 1.8 problem, then, identify the paragraph the dealing falls under before anything else. If that paragraph offers no consent route, signed informed consent is not the question. If it is Rule 1.8(a), ask whether each condition was met and whether the general personal-interest rule is also satisfied.