For many attorneys, the prospect of investing in clients may set off alarm bells. Indeed, engaging in any type of business deal with a client implicates a wide range of potential issues, from ethical obligations to possible conflicts of interest. Although such investments can be ethical and proper, in most circumstances, attorneys presented with the possibility of investing in a client should tread carefully before deciding that it is proper under the circumstances.
One increasingly common way in which the issue may arise is through an alternative fee arrangement. If, for example, the client is a small and growing business, the attorney and the client may choose to eschew the billable hour in favor of an arrangement whereby the attorneys fee is tied to the success of the business.
