Can a Mississippi lawyer accept a deed to a divorce client's interest in a jointly-owned marital home as payment of the lawyer's fee?

Plain-English summary

The Committee addressed a lawyer who had represented a client in a divorce in which the husband-client was ordered to make half of the monthly mortgage payments on the marital home jointly owned with his ex-wife, and who had been found in contempt for failing to pay. To satisfy unpaid fees, the client offered to convey his one-half undivided interest in the home to the lawyer; in exchange, the lawyer would pay the ex-wife the arrearage, begin making the husband's half of the mortgage payments, and, on any future sale, divide the proceeds with the ex-wife to recover the fees.

The opinion applied Rule 1.8(j), which bars a lawyer from acquiring a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting, with exceptions only for a lien securing the fee and a contingent fee in a civil case, neither of which applied. It also applied Rule 1.7(b) (representation materially limited by the lawyer's own interests, absent the client's consent after full disclosure) and Rule 1.8(a) (acquiring an interest adverse to a client without written consent after full disclosure). The opinion cited Maryland Ethics Opinion 86-40 (1985) and North Carolina Ethics Opinion 364 (1985) as out-of-state authority barring a lawyer from acquiring a mortgage on, or buying, a client's litigated property.

The opinion reasoned that even after a conveyance the husband would remain under the court decree to make the payments, so a default by the lawyer could expose the husband to contempt and put client and lawyer in opposition; and that the lawyer and the ex-wife would become joint owners forced to make business decisions together on a sale, which could soften the lawyer's adversarial posture and dilute loyalty to the client. The opinion concluded the proposed arrangement would create serious conflict-of-interest problems and should not be allowed. It declined, per established policy, to answer the underlying legal question of whether the ex-wife held a homestead interest requiring her signature on the deed.

Currency note

This opinion was issued in 1988, before the adoption of the current Mississippi Rules of Professional Conduct effective June 22, 1994 (amended February 5, 1999), though it cited Rules 1.8(j), 1.7(b), and 1.8(a) numbered as in the current rules. Mississippi did not adopt the ABA's 2002 Ethics 2000 revisions wholesale, and 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 take a deed to a divorce client's home to satisfy unpaid fees?

A: Under this opinion, no. It concluded the arrangement would have the lawyer acquire a proprietary interest in the subject matter of the litigation and create serious conflicts of interest, and should not be allowed.

Q: Why was taking the property interest a conflict?

A: The opinion reasoned the husband would remain bound by the decree to pay, so a default by the lawyer could expose him to contempt and put client and lawyer in opposition, and that becoming joint owners with the ex-wife could soften the lawyer's adversarial posture and dilute loyalty to the client.

Q: Did the attorney's-lien or contingent-fee exception save the arrangement?

A: No. The opinion found neither Rule 1.8(j) exception applied, because the lawyer claimed no attorney's lien on the home and there was no contingent fee contract.

Background and rules framework

The opinion interprets Mississippi Rule 1.8(j) (acquiring a proprietary interest in litigation, with lien and contingent-fee exceptions), Rule 1.7(b) (representation materially limited by the lawyer's own interests absent consent after full disclosure), and Rule 1.8(a) (acquiring an interest adverse to a client without written consent after full disclosure), all under the general heading of conflict of interest and corresponding to Model Rules 1.8 and 1.7.

Citations and references

Rules of Professional Conduct (Mississippi; cf. Model Rules):

• MRPC 1.8(j) (proprietary interest in litigation; lien and contingent-fee exceptions) (cf. Model Rule 1.8).
• MRPC 1.8(a) (business transaction or interest adverse to a client; written consent after full disclosure) (cf. Model Rule 1.8).
• MRPC 1.7(b) (representation materially limited by the lawyer's own interests) (cf. Model Rule 1.7).

Other opinions cited:

• Maryland Bar Association Ethics Opinion No. 86-40 (1985) (lawyer may not acquire a mortgage on a client's property to secure fees).
• North Carolina Bar Association Ethics Opinion No. 364 (1985) (lawyer may not purchase a client's judgment).

See also

• MS Bar Ethics Op. 159: Contingent-Fee Lawyer Joining as a Party Plaintiff
• MS Bar Ethics Op. 202: Lawyer Acquiring an Economic Interest in a Client's Product
• MS Bar Ethics Op. 184: Paying a Third Party From Settlement Funds Only When Legally Entitled

Source

• Landing page: https://www.msbar.org/ethics-discipline/ethics-opinions/formal-opinions/152/
• Original PDF: https://www.msbar.org/media/1436/35a_et_op_152.pdf

Original opinion text

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

ETHICS OPINION NO. 152

OF THE MISSISSIPPI BAR

RENDERED June 02, 1988

CONFLICT OF INTEREST - Where attorney represents husband in a divorce, and husband and wife own home jointly, and husband has been ordered to pay one-half of monthly house payment, attorney may not accept a deed conveying husband's interest in the home to the attorney as his fee.

The Ethics Committee of the Mississippi State Bar has been requested to render an opinion on the following facts:

An attorney has represented a client for a number of years, most recently in a divorce proceeding. Under the terms of the client's divorce from his wife, the husband-client was to make one-half of the monthly mortgage payments on the home that is owned jointly by the client and his ex-wife. The client was cited for contempt by the ex-wife, and the Chancellor found him to be in contempt for failure to make the mortgage payments on the home, and awarded a judgment to the ex-wife for the amount of this arrearage and for past due child support payments.

The husband has paid his attorney only a small portion of the fees billed to him. In an effort to pay his attorney, the client has offered to convey his one-half undivided interest in the home of the parties to his attorney, and in return, the attorney would have to pay to the ex-wife the amount of the arrearage for the mortgage payments that the husband has failed to pay. The attorney would also begin making one-half of the monthly mortgage payments on the home that the husband was ordered by the Court to make. If and when the house were ever sold, the ex-wife and the husband's attorney would divide the proceeds from the sale, which would then be the means of paying the attorney's fees owed by the husband. The attorney wants to know if he may accept the deed from the husband in payment of his fees.

This case is governed by the following ethical rule:

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) acquire a lien granted by law to secure the lawyer's fee or expenses; and

(2) contract with a client for a reasonable contingent fee in a civil case...

Rule 1.8(j) Mississippi Rules of Professional Conduct

The subject matter of the litigation in this instance would be the home owned by the husband and ex-wife. The two exceptions to this rule, for attorney's liens and for contingent fee contracts, do not apply here. The lawyer is not claiming an attorney's lien on the home, and there is no contingent fee contract involved.

This case also comes within the contemplation of Rule 1.7(b) of the Mississippi Rules of Professional Conduct, which provides that a lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's own interests, except with the client's consent after full disclosure. Also coming into play here is Rule 1.8(a) of the Mississippi Rules of Professional Conduct, which provides that a lawyer shall not knowingly acquire an ownership, possessory, security or pecuniary interest adverse to a client, except with the client's written consent after full disclosure. All of the above provisions come under the general heading of "conflict of interest".

The Committee has been unable to find any reported decisions or ethical opinions that deal with this specific question. However, it has been decided elsewhere that a lawyer may not acquire a mortgage on his client's property in order to secure his fee for representing the client with respect to an existing mortgage on the property. By obtaining a mortgage on his client's property, the lawyer would obtain a personal interest in the litigation, so that his independent professional judgment would be impaired. Maryland Bar Association, Ethics Opinion No. 86-40 (1985). It has also been held that a lawyer may not purchase his client's judgment against an out-of-state defendant in exchange for cash, as a lawyer may not acquire a proprietary interest in the subject matter of the litigation that he is conducting for a client. North Carolina Bar Association, Ethics Opinion No. 364 (1985).

The factual summary states that the husband has been ordered by the Chancellor to make one-half of the monthly mortgage payments on the parties' home, and he has already been found by the Court to be in contempt for his failure to do so. But even if the husband conveyed his one-half undivided interest in the home to his lawyer, the husband would still be under the court decree requiring him to make the mortgage payments. As long as the lawyer made the mortgage payments, there might not be a problem. However, if the lawyer ever defaulted on his agreement to make the house payments, the husband could be cited for contempt by the ex-wife. The husband would then be looking to his lawyer to make the delinquent payments, which would place the husband and his lawyer in opposition to one another. This lawyer would then have a conflict of interest in his representation of the husband, in violation of the above cited rules.

Furthermore, if the husband were to convey his interest in the home to his lawyer, then the ex-wife and her husband's lawyer would be joint owners of the property. At some point after that, there is a good possibility that the property would be sold, and the husband's lawyer and the ex-wife would be having to reach an agreement on such matters as the sales price, the payment of closing costs and the like. The lawyer and the ex-wife would be thrust into a joint venture, in which they would have to make business decisions jointly. This situation may tend to soften the lawyer's adversarial attitude toward the ex-wife, and thereby dilute his loyalty to his client. In view of the foregoing, the Committee is of the opinion that the proposed arrangement to convey the husband's interest in the house to the lawyer would create serious conflict of interest problems for this lawyer to such an extent that said arrangement should not be allowed.

The obvious legal question presented here is whether the ex-wife has a homestead interest in the husband's one-half undivided interest in the home, so as to require her signature on the deed conveying the husband's interest to his lawyer. In accordance with established policy, the Committee declines to answer legal questions.