Ethics Forum: Questions and Answers on Professional Responsibility
A lawyers should never purchase a client's lawsuit. By purchasing lawsuits, a lawyer is taking advantage of the client.
February 27, 2020 at 11:31 AM
4 minute read
A lawyer should never purchase a client's lawsuit. By purchasing lawsuits, a lawyer is taking advantage of the client.
Can I purchase my client's lawsuit?
The answer is absolutely and emphatically no. In days of old, lawyers were not allowed to be involved in purchasing lawsuits in any way. Purchasing or investing in a lawsuit were serious matters. The actions of barratry and champerty prohibited such conduct. Some of these cases still exist in theory although they are rarely prosecuted.
A lawyer should not purchase a client's lawsuit. From a very practical standpoint the lawyer is supposed to be representing the client and protecting the client. By purchasing lawsuits, the lawyer is taking advantage of the client. The lawyer is doing business with a client and a lawyer can't do that unless and until there is a letter from the lawyer to the client about seeking independent legal advice and a letter back confirming the client is waiving that right. Rule of Professional Conduct 1.8(i) has an absolute prohibition of the lawyer acquiring a propriety interest in a cause of action that the lawyer is conducting for a client. There are two exceptions. A lawyer can acquire a lien authorized by law to secure the lawyer's fees or expenses. These are called retaining lien or legal lien. The other exception is a reasonable contingent fee in a civil case, which is allowed.
Comment 16 to Rule 1.8(i) notes as follows: "Like Paragraph E, the general rule has its basis in common law champerty and maintenance and is designed to avoid giving a lawyer too great an interest in the representation. In addition, when the lawyer acquires an ownership interest in the subject of the representation, it would be more difficult for a client to discharge the lawyer if the client so desires."
It is also noted that anytime a lawyer is going to do business with a client, they have to send a letter to the client advising them to seek independent counsel and of the nature of the conflict. That is Rule 1.8(a). This is a very important rule, which is often ignored by lawyers to their detriment.
It all comes down to what it means to be a professional. Purchasing a client's litigation, allowing nonlawyers to be part of a firm with an equity interest (Pennsylvania does not allow that, but several states do), is a very worrisome undermining of the professionalism of the legal practice.
If the client has not paid the legal fee, then the client must pay for the copying costs.
My client has discharged me and wants the file. Who pays for the copying costs?
The question is a very simple one. There is no Rule of Professional Conduct as to who pays the copying costs. The rule of thumb, which has has existed for several generations of lawyers has traditionally been that if the client has not paid the legal fee, then the client must pay the lawyer the monies to have the file copied. But if the client has already paid the legal fee then the copying is the lawyer's expense.
The better practice is to copy the client's file and give it to the client even if the client owes money. It is far better to bring the client in and then give the new lawyer the file than to have an angered client who can file multiple complaints against the attorney.
A good lawyer will know when to "smell out" a problem client. But the last thing a lawyer wants to do is to litigate or have multiple disputes with a problem client if it can be avoided.
Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllDe-Mystifying the Ethics of the Attorney Transition Process, Part 2
Embracing a ‘Stronger Together’ Mentality: Collaboration Best Practices for Attorneys
6 minute readUS Supreme Court Considers Further Narrowing of Federal Fraud Statutes
4 minute readTrending Stories
- 1The Law Firm Disrupted: Scrutinizing the Elephant More Than the Mouse
- 2Inherent Diminished Value Damages Unavailable to 3rd-Party Claimants, Court Says
- 3Pa. Defense Firm Sued by Client Over Ex-Eagles Player's $43.5M Med Mal Win
- 4Losses Mount at Morris Manning, but Departing Ex-Chair Stays Bullish About His Old Firm's Future
- 5Zoom Faces Intellectual Property Suit Over AI-Based Augmented Video Conferencing
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250