May a Missouri lawyer crowdfund a client's legal fees and expenses?

Plain-English summary

Donor payment requires Rule 4-1.8(f) informed consent, no interference with judgment or the client relationship, and confidentiality. Advanced fees and expenses go directly to a lawyer trust account, not a platform account.

The platform must support proportional refunds when fees remain unearned, expenses unincurred, or the total becomes unreasonable. Solicitation discloses processing fees and remains truthful and nonmisleading. A platform percentage of raised legal fees violates Rule 4-5.4(a), and applicable law, including tax law, also applies.

In practice

Under this opinion, crowdfunding changes the payment source but not the duties governing third-party compensation, trust funds, refunds, confidentiality, fee sharing, or advertising.

Common questions

Q: May the platform temporarily hold donations?

A: No, when they are client or third-person property.

Q: Must unused money be refundable?

A: Yes, including proportional refunds.

Q: May the platform keep a percentage of legal fees?

A: No.

Background and rules framework

Rules 4-1.8(f), 4-1.15, 4-1.16, 4-5.4, and 4-7.1 govern payment, custody, refunds, fee sharing, and public statements.

Citations and references

• Missouri Rules 4-1.5, 4-1.6, 4-1.8(f), 4-1.15, 4-1.16(d), 4-4.1, 4-5.4(a), and 4-7.1
• Missouri Formal Opinion 128

See also

• ABA Formal Op. 499: Passive Investment in Alternative Business Structures
• Missouri Informal Op. 2018-12: Third-Party Fee Payment

Source

• Landing page: Missouri Informal Opinion 2018-10

Original opinion text

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

Question: May Attorney use a crowdfunding platform to solicit donations to cover Attorney’s fees and/or expenses in a matter in which Attorney’s client cannot afford to pay Attorney?

Answer: Attorney’s use of a crowdfunding platform to solicit donations for a client’s fees and/or expenses must be in accord with a lawyer’s obligations not to accept compensation from a third party except in compliance with Rule 4–1.8(f); to hold client and third party funds in compliance with Rule 4–1.15 and Formal Opinion 128; to protect confidential information (Rule 4–1.6); to be truthful (Rule 4–4.1); to refund unreasonable or unearned fees and/or expenses at the termination of representation (Rule 4–1.16(d) and Rule 4–1.5); not to share legal fees with a non-attorney (Rule 4–5.4); and to make no false or misleading statements about the lawyer or the lawyer’s services (Rule 4–7.1). Attorney may not accept compensation for representation from someone other than the client (including from donors to a crowdfunding platform) unless the requirements of Rule 4–1.8(f) are met. The client must give informed consent, the donation model must not interfere with Attorney’s independent professional judgment or with the client-lawyer relationship, and confidential information must be protected as required by Rule 4–1.6. If donations are used to fund an advanced payment of Attorney’s fee or expenses, the donations must be held in a client trust account in compliance with Rules 4–1.145 – 4–1.155 and Formal Opinion 128. Attorney may not hold property belonging to a client or third persons in an account held by the crowdfunding platform, even temporarily. See Rule 4–1.15(a). Before using a crowdfunding platform, Attorney must ensure donations are refundable and can be proportionally issued. Full or partial refunds must be provided to donors if all or part of an advanced payment of fees or expenses must be returned at the termination of the representation per Rule 4–1.16(d), or if upon the completion of the representation, the fees collected would constitute an unreasonable fee per Rule 4–1.5. In soliciting donations, Attorney must fully disclose any payment processing fees the platform will charge donors, including whether the donations will be debited for the processing fees. Attorney must not use a crowdfunding platform to solicit donations for legal fees if the crowdfunding platform retains a percentage of the funds raised as compensation for the platform’s services. See Rule 4–5.4(a). In soliciting donations, Attorney must protect the confidentiality of client information as required by Rule 4–1.6; be truthful (Rule 4–4.1); and make no false or misleading communication (Rule 4–7.1). Attorney must comply with applicable law, including, but not limited to, any tax law that may govern the reporting of donations.