Model Rule 1.8: Conflict of Interest: Current Clients: Specific Rules

When it applies

This rule shows up whenever a lawyer's personal or financial interests intersect with a client matter in a concrete transactional way, such as a lawyer wanting to buy property from a client, write a book about the case, or lend the client money for living expenses. On the MPRE, it is tested through fact patterns involving business dealings, gifts, loans, or sexual relationships with clients where students must identify which specific subsection applies.

What the rule requires

• A lawyer entering a business transaction with a client, or acquiring an interest adverse to the client, must ensure the terms are fair and fully disclosed in writing, the client is advised in writing to seek independent counsel, and the client gives informed consent in a signed writing.
• A lawyer may not use information relating to representation of a client to the client's disadvantage without informed consent, except as otherwise permitted by the rules.
• A lawyer generally may not prepare an instrument giving the lawyer or a close relative a substantial gift from a client, unless the client is related to the lawyer.
• A lawyer may not acquire literary or media rights to a portrayal based on the representation before the representation is concluded.
• A lawyer generally may not provide financial assistance to a client in connection with pending or contemplated litigation. However, the lawyer may advance court costs and litigation expenses, and repayment may be made contingent on the outcome for any client. For an indigent client, the lawyer may pay those costs and expenses outright. A lawyer representing an indigent client pro bono may also give modest gifts for basic living expenses.
• A lawyer representing multiple clients in a matter may not participate in an aggregate settlement without each client's informed consent in a writing signed by the client. The disclosure must cover the existence and nature of all claims and each client's share.
• A lawyer must obtain informed consent before accepting compensation for representing a client from someone other than the client, and must preserve confidentiality and independent judgment.
• A lawyer may not have sexual relations with a client unless a consensual relationship existed before the representation began.
• A lawyer may not prospectively limit malpractice liability to a client unless the client has independent representation in making that agreement. A lawyer also may not settle a malpractice claim with an unrepresented client or former client without first advising that person in writing to seek independent counsel and giving a reasonable opportunity to do so.

Exceptions

• The gift-drafting prohibition does not apply when the client is a relative of the lawyer.
• Advancing court costs and litigation expenses is permitted even though general financial assistance to clients is barred. Repayment of such advances can be made contingent on the outcome for any client. For indigent clients, the lawyer may simply pay those costs and expenses.
• A lawyer may acquire a lien to secure fees or expenses, and may contract for a reasonable contingent fee, without violating the proprietary-interest restriction.
• The sexual relationship ban does not apply to a consensual relationship that predates the attorney-client relationship.
• Some of these prohibitions can be satisfied through proper informed consent and disclosure procedures: business transactions, use of client information, third-party payment of fees, and aggregate settlements. Others are absolute bars that client consent cannot cure: soliciting or drafting substantial gifts, media rights, financial assistance, proprietary interests in litigation, and sexual relations.

How the MPRE tests Model Rule 1.8

• Students often confuse the business-transaction safeguards (fair terms, written disclosure, written consent, advice to seek outside counsel) with the simpler informed-consent-confirmed-in-writing standard used elsewhere in the rules; 1.8 business deals require more formality.
• The financial assistance prohibition is frequently tested with a sympathetic fact pattern, such as a client who needs rent money, to see if students correctly say it is prohibited despite the equities. The narrow exception is that a lawyer representing an indigent client pro bono may give modest gifts for basic living expenses.
• Students forget that court costs and litigation expenses are treated differently from general financial assistance. They may be advanced with repayment contingent on the outcome, and for indigent clients they may be paid outright.
• The imputation provision extending most of these restrictions firmwide is often missed, since students assume 1.8's personal-interest restrictions bind only the individual lawyer involved. The sexual-relations ban is the one prohibition that is not imputed to other lawyers in the firm.