Few law practices consider investing in clients as a method of payment. It raises a litany of issues, ranging from conflicts of interest to ethical limitations under most bar rules. However, faced with the economic realities of the modern law practice, many attorneys will confront this issue. Clients are looking for ways to pay attorneys with something other than cash. Attorneys are looking to move away from the standard billable hour toward fee arrangements that allow them to participate in the success of projects they help make happen.
As a threshold issue, bar ethics rules directly address investing in a client, whether as a stand-alone investment or as part of a fee arrangement with the client. The American Bar Association’s Model Rule 1.8, “Conflict of Interest: Current Clients,” permits an attorney to invest in a client, if three general requirements are satisfied:
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