Can plaintiff's counsel agree to bear all or part of the costs of litigation, whether in a class action or an ordinary civil suit?

Plain-English summary

The inquiry asked whether, in a class action under Rule 23 of the Federal Rules of Civil Procedure, plaintiff's counsel could agree to bear all or part of the litigation costs, and whether in an ordinary civil suit there are any circumstances in which counsel could agree to bear the costs.

The opinion concluded that an attorney may never ethically agree to be ultimately responsible for the costs of litigation. Rule 5.3(b) allows a lawyer to advance the costs of litigation only if the client remains ultimately liable for those expenses. The rule contains no exception for lawyers prosecuting class action litigation in federal court, so it is impermissible for an attorney to agree with the client to bear some or all of the costs of such litigation.

Currency note

This opinion was issued in 1992, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. The opinion now carries an editor's note pointing readers to In re S.E. Hotel Properties Ltd. Partnership, 151 F.R.D. 597 (W.D.N.C. 1993). Subsequent rule amendments or later authority 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 Treat this page as historical context, not current guidance.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 agree to be ultimately responsible for the costs of a case?

A: No. The opinion held that an attorney may never ethically agree to be ultimately responsible for litigation costs.

Q: How may a lawyer handle litigation costs instead?

A: The opinion held that Rule 5.3(b) permits a lawyer to advance the costs of litigation only if the client remains ultimately liable for them.

Q: Is there a special rule for class actions in federal court?

A: No. The opinion held that Rule 5.3(b) contains no exception for class actions in federal court, so counsel cannot agree to bear those costs.

Background and rules framework

The opinion applied North Carolina Rule 5.3(b), permitting a lawyer to advance litigation costs only where the client remains ultimately liable (corresponding to Model Rule 1.8(e)). The analysis turns on the absence of any class-action exception to that requirement. An editor's note directs readers to In re S.E. Hotel Properties for related federal authority.

Citations and references

Rules of Professional Conduct:

• MR 1.8 (advancing litigation costs; client's ultimate liability)
• North Carolina Rule 5.3(b) (advancing costs only if the client remains ultimately liable)

Cases:

• In re S.E. Hotel Properties Ltd. Partnership, 151 F.R.D. 597 (W.D.N.C. 1993) (noted in the opinion's editor's note)

See also

• NC Ethics Op. RPC 141: contingent fees and structured settlements
• NC Ethics Op. RPC 158: advance payment of legal fees

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-124/

Original opinion text

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

Editors Note: But see In re S.E. Hotel Properties Ltd. Partnership, 151 F.R.D. 597 (W.D.N.C. 1993).

Inquiry:

In a class action under Rule 23 of the Federal Rules of Civil Procedure, can the plaintiff's counsel agree to bear all or part of the costs of the litigation? In an ordinary civil suit, are there any circumstances under which the plaintiff's counsel can agree to bear the costs of litigation? If so, what are some of those circumstances?

Opinion:

An attorney may never ethically agree to be ultimately responsible for the costs of litigation. Rule 5.3(b) of the Rules of Professional Conduct allows a lawyer to advance the costs of litigation if the client remains ultimately liable for such expenses. The rule contains no exception for lawyers prosecuting class action litigation in federal court. It is therefore impermissible for an attorney to agree with his or her client to bear some or all of the costs of such litigation.