Can a lawyer advance living expenses to a client while waiting for the client's claim or settlement against a third party to be paid?

Plain-English summary

A member asked whether it is unethical for an attorney to advance money to a client for living expenses while awaiting payment of the client's claim against a third party, where the client badly needs the money for basic necessities. He asked whether it would make a difference (1) if there was no dispute as to liability, the third party was financially responsible, and the client was simply awaiting the result of medical treatment, or (2) if a settlement had been agreed upon and the attorney was merely awaiting the release and draft.

The committee concluded that an attorney may not advance living expenses to a client during the pendency of the claim. It applied Canon 6 (an attorney should not place himself in inconsistent positions) and Canon 10 (prohibiting an attorney from acquiring a financial interest in the subject matter of litigation he is handling), and agreed with ABA Opinion 288 and Bar Association of the City of New York Opinion 779, which held that an attorney may not lend or advance living expenses to clients during personal injury actions even though the clients are injured and cannot work. The additional circumstances posed did not prompt a different response in either case. The committee said the rule against acquiring a financial interest in a client's litigation had proved to benefit both the public and the bar; while a client's plight may invoke an attorney's sympathy, the solution was not to relax the standard but to help the client obtain essential support from appropriate sources or to postpone outstanding debts, particularly where payment of the third-party claim was assured.

Currency note

This opinion was issued in 1965, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canons 6 and 10 of the Canons of Professional Ethics; financial assistance to clients in connection with litigation is now governed by Rule 4-1.8(e) of the Rules Regulating The Florida Bar (Model Rule 1.8(e)). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Can a lawyer lend a client money for living expenses while a claim is pending?

A: No. The committee concluded an attorney may not advance living expenses to a client pending settlement and collection of a claim, judgment, or award.

Q: Does it matter that liability is clear or that a settlement has already been agreed?

A: No. The committee said the additional circumstances (undisputed liability with a financially responsible third party, or an agreed settlement awaiting the release and draft) did not prompt a different response.

Q: What rationale did the committee give?

A: It applied the prohibition on acquiring a financial interest in a client's litigation, agreeing with ABA Opinion 288 and New York City Opinion 779, and said the remedy for a needy client lay in helping obtain support from appropriate sources or postponing other debts, not in relaxing the rule.

Background and rules framework

The opinion applied former Canon 6 (an attorney should not allow himself to be placed in inconsistent positions) and Canon 10 (prohibiting an attorney from acquiring a financial interest in the subject matter of litigation he handles). Financial assistance to a client in connection with litigation is now addressed by Rule 4-1.8(e) of the Rules Regulating The Florida Bar (Model Rule 1.8(e)).

Citations and references

Rules of Professional Conduct:

• Canon 6 [Canons of Professional Ethics; inconsistent positions]
• Canon 10 [Canons of Professional Ethics; financial interest in litigation; see current Rule 4-1.8(e)]

Other opinions cited:

• ABA Op. 288: an attorney may not advance living expenses to clients during personal injury actions
• New York City Op. 779: same conclusion reached by the Bar Association of the City of New York

See also

• FL Bar Ethics Op. 68-15: Attorney-Funded Loan Program for Accident Victims
• FL Bar Ethics Op. 70-8: Indemnifying a Client's Cost-Bond Surety

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-65-39/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-65-39.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 65-39
June 15, 1965
Advisory ethics opinions are not binding.
A lawyer may not advance living expenses to a client pending settlement and collection of a claim, judgment, or award.
Canons: 6, 10
Opinions: ABA 288, NY City 779
Chairman Smith stated the opinion of the committee:
In fine, a member of The Florida Bar inquires if it is unethical for an attorney to advance money to a client for living expenses while awaiting payment of the client's claim against a third party. Further, he asks us to assume that the client badly needs the money for basic necessities and inquires if it would make a difference (1) if there was no dispute as to liability, the third party was financially responsible at the time, and the client was simply waiting to determine the result of medical treatment or (2) if settlement had been agreed upon and the attorney was merely awaiting receipt of the release and draft.
This Committee has considered and answered the same inquiry, or ones quite similar, on several occasions. Canon 6 provides that an attorney should not allow himself to be placed in inconsistent positions and Canon 10 prohibits an attorney from acquiring a financial interest in the subject matter of litigation he is handling. The member indicates his awareness of Opinion 288 of the Professional Ethics Committee of the American Bar Association and the holding therein that an attorney may not ethically lend or advance living expenses to clients during the pendency of personal injury actions even though the clients are injured and cannot work. The same conclusion has been reached by a similar committee for the Bar Association of the City of New York, Opinion 779.
This Committee heretofore has agreed with the views expressed in the opinions aforementioned. It continues to do so. Further, it is our opinion that the additional circumstances stated in this inquiry do not prompt a different response in either case posed.
The rule prohibiting an attorney from acquiring a financial interest in the litigation of a client has proved to be of benefit both to the public and the bar. The plight of a client undoubtedly will invoke the sympathies of his attorney from time to time. In our opinion, however, the solution does not lie in relaxing a salutary ethical standard. Generally the lawyer can assist his client in obtaining the essential financial support from appropriate sources and/or can assist in postponing payment of outstanding debts. This would be particularly true in those cases when payment of third party claims is assured. In those cases where such solution is not possible the remedy, in our opinion, does not lie in alteration of the Canons of Ethics.