Can a lawyer agree to be responsible for all of a client's litigation costs even if the client recovers?

Plain-English summary

A member asked about the propriety of submitting a representation proposal to a state agency in which the attorney would agree to be responsible for all costs even if a recovery were obtained. The proposed contract provided for a contingency fee of up to 25 percent of cash recoveries, with the provider absorbing and paying all costs (travel, filing fees, court costs, and any other cost) and no additional reimbursement.

The committee set out Rule 4-1.8(e), which prohibits providing financial assistance to a client in connection with litigation, with two exceptions: a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome, and a lawyer representing an indigent client may pay those costs. The committee explained that although the exception permits making the client's repayment of advanced costs contingent on the outcome, it clearly contemplates that repayment will be made if a sufficient recovery is obtained. The inquirer, by contrast, proposed an outright payment of costs for a non-indigent client rather than an advancement.

The opinion identified the concerns underlying the rule as the common-law doctrines of champerty and maintenance and the conflict created when an attorney has a personal economic interest in the outcome. The committee recognized that those concerns might be minimized when the client is a state agency, but held it was constrained to apply the rule as written. It concluded that, under the plain language of Rule 4-1.8(e), it would be ethically impermissible for the attorney to unconditionally be responsible for all costs and expenses as provided in the proposed agreement.

Currency note

This opinion was issued in 1996, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer advance a client's litigation costs?

A: Per the opinion, yes; Rule 4-1.8(e) permits advancing court costs and expenses of litigation, with repayment that may be made contingent on the outcome of the matter.

Q: Can the lawyer agree to absorb those costs entirely, even if the client wins?

A: Under this opinion, no, for a non-indigent client; the committee concluded that the rule contemplates repayment if a sufficient recovery is obtained, so an unconditional agreement to absorb all costs was impermissible.

Q: Did it matter that the client was a state agency?

A: The committee acknowledged the concerns underlying the rule might be minimized when the client is a state agency, but concluded it was constrained to apply the rule as written.

Background and rules framework

The opinion interpreted Rule 4-1.8(e) (financial assistance to a client in litigation, Model Rule 1.8(e)), including its exceptions for advancing costs (with contingent repayment) and paying costs for an indigent client, against the common-law doctrines of champerty and maintenance.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.8(e) / Fla. Rule 4-1.8(e) (financial assistance to a client)

Other opinions cited:

• Fla. Ethics Op. 72-27; Iowa Op. 93-2; Mississippi Op. 225; North Carolina Op. 124

See also

• FL Bar Ethics Op. 96-3: Agreeing to Pay a Client's Offer-of-Judgment Costs
• FL Bar Ethics Op. 00-3: Non-Recourse Litigation Funding
• FL Bar Ethics Op. 98-1: Contingency-Fee Medical-Legal Consultant

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-96-1/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-96-1.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 96-1
October 1, 1996
Advisory ethics opinions are not binding.
An attorney may not unconditionally agree to be responsible for the costs associated with a client’s litigation. While Rule 4-1.8(e) permits an attorney to advance costs and expenses of litigation on behalf of a non-indigent client, the rule contemplates repayment of such costs in the event of a recovery. RPC: 4-1.8(e) Opinions: 72-27; Iowa Opinion 93-2, Mississippi Opinion 225; North Carolina Opinion 124 A member of The Florida Bar has requested an advisory ethics opinion on the propriety of submitting a contract for representation proposal to a State agency in which the attorney agrees to be responsible for the costs, even if a recovery is obtained. Specifically, the contract provides, in pertinent part: Payment for services covered by the resulting contracts will be based on a contingency fee percentage of the total dollars recovered and reimbursed to the Agency. Provider shall not separately bill costs, but shall absorb and pay all costs whatsoever. . . . and All costs incurred by the contractors in performance under the contracts will be the responsibility of the contractors. No additional payments will be made to the contractors to reimburse them for travel expense, filing fees, court cost, or any other cost. . . . The contracts resulting from this RFP will be based on a contingency fee for actual cash recoveries received by the state. The maximum acceptable contingency fee is 25%. Any proposals with a contingency fee greater than 25% will be determined nonresponsive by the Agency and will be rejected. All costs incurred by the contractor(s) in performance under the contract(s) will be the responsibility of the contractor(s)[.] Rule 4-1.8(e), Rules Regulating The Florida Bar, is the governing ethical standard: (e) Financial Assistance to a Client. A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that: (1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and (2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client. This rule prohibits an attorney from providing financial assistance to a client in connection with pending or contemplated litigation. The rule, however, contains an exception permitting the attorney to advance court costs and expenses of litigation on behalf of a non- indigent client, the repayment of which may be contingent on the outcome of the matter. See, e.g., Florida Ethics Opinion 72-27; Iowa Opinion 93-2; Mississippi Opinion 225; North Carolina Opinion 124. Although this exception permits attorney and client to agree that the client’s repayment of advanced costs and expenses will be contingent on the outcome of the matter, it clearly contemplates that such repayment will be made if a sufficient recovery is obtained. In contrast, the inquiring attorney proposes an outright payment of costs for a non-indigent client, rather than an advancement. The concerns raised by Rule 4-1.8(e) are that of the common law doctrines of champerty and maintenance, as well as the conflict of interest created when an attorney has a personal economic interest in the outcome of the matter. The committee recognizes that the concerns underlying the rule may be minimized when the client is a state agency, but is constrained to apply the rule as it is written. Accordingly, the committee concludes that, under the plain language of Rule 4-1.8(e), it would be ethically impermissible for the inquiring attorney to unconditionally be responsible for all costs and expenses as provided in the proposed agreement.