May a divorce lawyer take a mortgage on the client's former marital home to secure fees, if the mortgage is taken after the divorce judgment dividing the property is final?

Plain-English summary

In Opinion No. 97 (1989), the Commission had concluded that an attorney's acquisition of a mortgage on a client's marital home to secure fees during the client's divorce proceedings violated Bar Rule 3.7(c). The Commission was now asked whether acquiring such a mortgage after the divorce court has divided the property similarly violates the rule.

Rule 3.7(c) bars a lawyer from acquiring a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except to assert a statutory lien on the proceeds to secure the fee (not a lien on the client's file) or to contract for a reasonable contingent fee. The Commission identified the rule's primary concern as preventing the attorney's personal interests from being injected into the subject matter of litigation, because of the risk that acquiring an interest in the property in litigation will affect the attorney's professional judgment. It concluded that after the divorce judgment becomes final, the litigation is at an end and the prohibition in Rule 3.7(c) is generally inapplicable.

The Commission cautioned, however, that the general expectation of finality in marital-property litigation is not always justified. Residual issues, possession, sale or disposition, continued residence of a former spouse or minor children, or collateral security for continuing obligations, may return to the parties. Because of the infinite variety of factual circumstances surrounding divorce-related property dispositions, the Commission declined to articulate any simplistic rule and counseled the practitioner to carefully consider the risk that residual disputes might make taking a mortgage inappropriate under Rule 3.7(c).

Currency note

This opinion was issued in 1991, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). 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 Treat this page as historical context, not current guidance.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 divorce lawyer take a mortgage on the client's home to secure fees?

A: The opinion concluded that doing so during the divorce proceedings violates Rule 3.7(c) (per Opinion No. 97), but doing so after the judgment is final is generally not barred, because the litigation has ended.

Q: Why does the timing matter?

A: The opinion reasoned the rule's concern is the risk that an interest in property in litigation will affect the lawyer's professional judgment; once the judgment is final, the litigation is over and that concern is generally absent.

Q: Is a post-judgment mortgage always permissible?

A: The opinion concluded no. It cautioned that residual issues (possession, sale, continued residence, collateral security for continuing obligations) may arise, and a lawyer should weigh whether such disputes make a mortgage inappropriate under Rule 3.7(c).

Background and rules framework

The opinion interprets Maine Bar Rule 3.7(c), which bars a lawyer from acquiring a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting, subject to exceptions for a statutory lien on proceeds and a reasonable contingent fee. This corresponds to ABA Model Rule 1.8(i) (acquiring a proprietary interest in the cause of action or subject matter of litigation).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.8(i) (proprietary interest in the cause of action or subject matter of litigation)
• Maine Bar Rule 3.7(c), 3.7(c)(1), 3.7(c)(2)

Other opinions cited:

• Maine Professional Ethics Commission Op. 97 (1989): mortgage on the marital home during divorce proceedings violates Rule 3.7(c)

See also

• Maine Ethics Op. 144: Security Interest in Unrelated Client Property
• Maine Ethics Op. 152: Firm Granting Bank Security Interest in Receivables
• Maine Ethics Op. 116: Client Funds Owed to a Third Party

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89878

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: June 7, 1991

In Opinion No. 97, issued on May 3, 1989, the Commission opined that the acquisition by an attorney of a proprietary interest (in the form of a mortgage) on his client's marital home to secure his attorney's fees in connection with his client's divorce proceedings would constitute a violation of Bar Rule 3.7(c). The Commission has now been asked whether an attorney's acquisition of such a mortgage after the divorce court has divided the property in the divorce proceedings similarly violates the rule.

Opinion

Rule 3.7(c) provides as follows:

Interest in Litigation. A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:

(1) Assert a lien granted by law against the proceeds of such action or litigation to secure the lawyer's fee or expenses. This paragraph does not authorize an attorney to assert a lien on a client's file in order to secure payment of a fee. The assertion of such a lien (if any exists) is improper; and

(2) Contract with a client for a reasonable contingent fee as provided in Rule 8.

The primary concern of Rule 3.7(c) is to prohibit an attorney's personal interests from being interjected into the subject matter of the litigation because of the risk that the attorney's professional judgment will be affected by his acquisition of an interest in the property in litigation. The Commission is of the opinion that after the divorce judgment becomes final, the litigation is at an end, and the prohibition contained in Rule 3.7(c) is generally inapplicable. However, attorneys should recognize that the general expectation of the finality of marital property litigation in divorce proceedings is not always justified. Residual issues of possession, sale or other disposition, continued residence of the former spouse or minor children, or collateral security for continuing obligations may return to haunt the parties. The infinite variety of factual circumstance surrounding many divorce-inspired property dispositions both prevent this Commission from articulating any simplistic rule, and counsel the practitioner to carefully consider the risk, if any, that such residual disputes may make the taking of a mortgage inappropriate under Rule 3.7(c).