In the typical attorney-client relationship, attorneys may provide legal advice that is used to help clients achieve and maintain their business goals. Sometimes, based on their work together, attorneys and clients become friends and have social relationships independent of the attorney-client relationship or may look for other ways to work together. Imagine a client approaching their attorneys to describe a new business venture: Perhaps the attorney would consider forgoing a traditional fee arrangement to provide legal services for the venture in exchange for an ownership interest in the venture. What are the rules?

It is becoming more common for attorneys to invest financially in their clients, but there can be restrictions. As an initial matter, Georgia Rule of Professional Conduct 1.8 (a) provides guidance to attorneys considering whether to invest in their clients or enter into such business transactions. Rule 1.8 (a) provides that a lawyer shall neither enter into a business transaction with a client if the client expects the lawyer to exercise the lawyer’s professional judgment therein for the protection of the client, nor shall the lawyer knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:

    1. The terms of the transaction are fair and reasonable to the client and disclosed in writing.
    2. The client is informed of and given the chance to seek independent counsel regarding the transaction.
    3. The client provides written, informed consent to the essential terms of the transaction and the lawyer’s role in the transaction (including whether the lawyer is representing the client in the transaction).

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