Ezel / Ethics Opinions / DCBAR
DCBAR March 2003

Can a D.C. lawyer buy a legal claim (a chose in action) from a nonlawyer who is not the lawyer's client?

Short answer: The opinion concludes that the D.C. Rules do not bar a lawyer (not acting for a client) from buying a legal claim, a chose in action, from a nonlawyer who is not and has not been the lawyer's client; the old ABA prohibition (Formal Op. 51) rested on a Canon the D.C. Rules do not carry forward. The lawyer's conduct in the deal is still governed by Rule 8.4(c)'s honesty requirement. The opinion cautions that if the seller is unrepresented, the lawyer should avoid giving legal advice during negotiation, because that risks creating a lawyer-client relationship that would subject the purchase to Rule 1.8(a).

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This page answers the general question as of 2003. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.

Currency note: this opinion is from 2003
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Opinion 319 (adopted March 2003) asks whether a lawyer may buy a chose in action, a legal claim a person could pursue in court, from a nonlawyer who is not the lawyer's client. A 1931 ABA opinion (Formal Op. 51) had said no, reasoning under Canon 28 that buying claims to collect at a profit "stirs up strife and litigation." The opinion concludes that reasoning does not survive under the D.C. Rules, which carry no equivalent to Canon 28. Under D.C. law a chose in action can be assigned and the assignee may sue in its own name (D.C. Code section 28-2304), and the Restatement (section 36, comment b) does not disapprove a lawyer's purchase of a claim so long as the seller is not a current or former client. The opinion notes the old Canon actually let lawyers recommend litigation to existing clients while barring such advice to non-clients, an inequity the current Rules do not preserve.

That said, the opinion identifies two D.C. Rules that bear on the transaction. Rule 8.4(c) makes dishonesty, fraud, deceit, or misrepresentation misconduct in any context, so it constrains how the lawyer negotiates and executes the purchase. And the central premise of the inquiry, that the seller is not the lawyer's client, carries a caution: if the seller were a client, Rule 1.8(a) would impose strict conditions on the business transaction (objective fairness, written terms the client can understand, written informed consent, and a reasonable chance to consult independent counsel).

The opinion's main warning is about unrepresented sellers. Because almost everything about the existence and worth of a chose in action is a legal question, a lawyer-buyer holds a large knowledge advantage over an ordinary seller, and a seller might rely on the buyer's statements about the claim's value or chances. Citing Opinion 313 on how a lawyer-client relationship forms and Nelson v. Nationwide Mortgage Corp., 659 F. Supp. 611 (D.D.C. 1987), the opinion explains that representations made in negotiation, even if accurate, could be reasonably relied on by the seller and create ambiguity about whether a lawyer-client relationship arose, which would in turn trigger Rule 1.8(a). The opinion therefore recommends dealing only with sellers who have counsel and strongly suggesting counsel for those who do not. It also notes (footnote 6) that if the lawyer instead forms a corporation and acts as its agent to buy the claim, the lawyer would likely be treated as representing the corporation, bringing Rules 4.1 and 4.3 into play in dealings with the seller.

In practice

Under the D.C. rules as they stood at the time of the opinion, the opinion concludes a lawyer may purchase a legal claim from a nonlawyer who is not the lawyer's client; the Rules contain no general bar. The opinion treats the lawyer's negotiating conduct as governed by Rule 8.4(c)'s prohibition on dishonesty.

The opinion's practical caution is that buying from an unrepresented seller is risky: representations the lawyer makes about the claim's legal value could be reasonably relied on, raising a later argument that a lawyer-client relationship formed and that Rule 1.8(a)'s fair-and-reasonable, written-consent, and independent-counsel requirements applied. The opinion recommends dealing with represented sellers, or strongly suggesting that an unrepresented seller obtain counsel. Because the opinion predates later rule developments, verify the current D.C. rules before relying on specific requirements.

Common questions

Q: Can a D.C. lawyer buy someone's legal claim and pursue it for profit?

A: The opinion concludes yes, where the seller is a nonlawyer who is not and has not been the lawyer's client; the D.C. Rules contain no equivalent to the old ABA Canon 28 that once forbade this.

Q: What rule governs how I conduct the purchase?

A: The opinion concludes Rule 8.4(c) applies: the lawyer may not engage in dishonesty, fraud, deceit, or misrepresentation in negotiating or executing the transaction.

Q: What is the risk if the seller has no lawyer?

A: The opinion concludes the lawyer's statements about the claim's legal value could be reasonably relied on, creating ambiguity about whether a lawyer-client relationship formed and, if it did, triggering Rule 1.8(a)'s strict business-transaction requirements.

Q: Does buying through a corporation I control avoid the problem?

A: The opinion concludes it likely does not help: if the lawyer forms a corporation and acts as its agent, the lawyer would probably be treated as representing the corporation, so Rules 4.1 and 4.3 would limit what the lawyer could say to the unrepresented seller.

Background and rules framework

The opinion interprets D.C. Rule 1.8(a) (business transactions with a client), which would apply only if a lawyer-client relationship exists, and Rule 8.4(c) (dishonesty, fraud, deceit, or misrepresentation), which applies regardless. It discusses how a lawyer-client relationship can form (Opinion 313; Restatement section 14), the assignability of claims under D.C. Code section 28-2304, and the obsolescence of ABA Canon 28 and ABA Formal Op. 51. It references Rules 4.1, 4.3, and 7.1 for the corporation-as-buyer variant and for advising prospective clients about possible litigation.

Citations and references

Rules of Professional Conduct:

  • D.C. RPC 1.8(a) / Model Rule 1.8(a) (business transactions with a client)
  • D.C. RPC 8.4(c) / Model Rule 8.4(c) (dishonesty, fraud, deceit, misrepresentation)
  • D.C. RPC 4.1, 4.3, 7.1 / Model Rules 4.1, 4.3, 7.1 (truthfulness; unrepresented persons; communications about services)

Statutes:

  • D.C. Code section 28-2304 (assignment of choses in action; assignee may sue in its own name)

Cases:

  • Nelson v. Nationwide Mortgage Corp., 659 F. Supp. 611 (D.D.C. 1987) (reliance on a lawyer's statements can support a malpractice claim despite no formal retainer)

Other opinions cited:

  • ABA Formal Op. 51 (1931) (superseded reasoning under former Canon 28)
  • D.C. Ethics Op. 313 (formation of a lawyer-client relationship); Restatement of the Law Governing Lawyers sections 14, 36

See also

Source

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