Also known as: business transaction with a client · business transactions with clients · client business transactions · Rule 1.8 transactions
Written by attorneys · grounded in primary & secondary sources — see below
A prohibition that bars a lawyer from entering into a business transaction with a current client or knowingly acquiring any ownership, possessory, security, or other pecuniary interest adverse to the client. The prohibition does not apply if the transaction and its terms are fair and reasonable to the client, are fully disclosed and transmitted in writing in a manner reasonably understandable by the client, the client is advised in writing of the desirability of seeking independent legal counsel and given a reasonable opportunity to do so, and the client gives informed consent confirmed in a writing signed by the client.
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Beatrice Brown, a junior associate at a firm representing Boreal Energy in patent litigation, privately agrees with the company's founder to receive a small equity interest in exchange for introducing investors. Brown provides no written disclosure of the terms, gives no written advice about independent counsel, and obtains no written consent. The arrangement violates the safeguards required for any business transaction between a lawyer and current client.
After the equity arrangement comes to light, the supervising partner at the same firm proposes an identical equity-for-services deal with Boreal Energy. The partner supplies no written fairness disclosures, no written advice to seek independent counsel, and no written informed consent. Because the first lawyer's violation is imputed to all lawyers associated in the firm, the partner's proposal is likewise prohibited.
No. Rule 1.8(k) imputes the prohibitions in paragraphs (a) through (i) to every lawyer associated in the firm. Once one lawyer is barred from entering a particular type of business transaction with a client, all associated lawyers are subject to the same bar while the association continues.
No. The rule is violated by entering into the transaction without the required written disclosures, advice about independent counsel, and informed consent. Actual harm to the client is not an element of the disciplinary violation.
No. The safeguards are mandatory regardless of the client's sophistication. Written disclosure of terms, written advice to seek independent counsel, and written informed consent must still be furnished.
The imputation rule makes the prohibition firm-wide for disciplinary purposes. Whether the firm may continue the representation requires separate analysis under Rules 1.7, 1.10, and 1.16, but the violation itself is attributed to the entire firm.