Could a lawyer help a personal-injury client obtain a nonrecourse loan secured by the claim?

Plain-English summary

A client proposed borrowing from a corporation in return for assigning part of a personal-injury claim, with no repayment if there was no settlement.

The opinion said counsel should assess whether the transaction was champerty and could not assist if it was, because that would violate Rule 4-8.4(d). If it was not champerty, counsel first had to explain how required information access would affect confidentiality and privilege, including possible access by the opposing party.

Currency note

This opinion was issued in 2000, before Missouri’s 2007 revisions to the Rules of Professional Conduct. Later amendments or opinions may have changed the analysis. Treat this page as historical context and verify current rules before relying on it. The official Rule 4-1.9 and 4-1.10 reference notes identify July 1, 2007 amendments.

Common questions

Q: Did the opinion approve the loan outright?

A: No. It made assistance depend on the champerty analysis and confidentiality counseling.

Q: What if counsel found champerty?

A: The opinion said helping with the arrangement would violate Rule 4-8.4(d).

Background and rules framework

The opinion cited Rule 4-8.4(d) and Macke Laundry Serv. Ltd. v. Jetz Serv. for the proposed loan analysis.

Citations and references

Missouri Rules of Professional Conduct:

• Rule 4-8.4

Citations and references

Cases:

• Macke Laundry Serv. Ltd. v. Jetz Serv., 931 S.W.2d 166 (Mo.App.W.D. 1996)

See also

• Missouri Informal Op. 20030022: Mass-Tort Loan

Source

• Landing page: https://mo-legal-ethics.org/informal-opinion/20000229/

• Rule revision reference: Missouri Informal Opinion 20030007

Original opinion text

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

QUESTION: Attorney has submitted a solicitation from a Corporation with regard to loaning money to a client. Attorney’s client wishes to borrow money from the Corporation by assigning a portion of client’s interest in a personal injury case to the Corporation. The client would not have any obligation to repay the loan in the event that there is no settlement. Is this ethical?

ANSWER: Attorney should advise the client whether Attorney believes that such an arrangement would constitute champerty. Attorney may wish to review Macke Laundry Serv. Ltd. v. Jetz Serv., 931 S.W.2d 166 (Mo.App.W.D. 1996) regarding champerty. If Attorney concludes that the arrangement would constitute champerty, Attorney should not agree to assist Attorney’s client. Assisting with a champertous arrangement would violate Rule 8.4(d) of Supreme Court Rule 4, the Rules of Professional Conduct, relating to conduct prejudicial to the administration of justice. If Attorney concludes that the arrangement does not constitute champerty, before Attorney agrees to assist Attorney’s client with a transaction with the Corporation, Attorney must counsel Attorney’s client on the impact of the release and disclosure on confidentiality and the attorney-client privilege. Attorney should advise the client whether Attorney believes that providing the required access to information will also mean that the opposing party may have full access to the same information.