Can a lawyer lend money to a personal injury client during the case, for living expenses or anything beyond litigation costs?

Plain-English summary

The inquiry asked under what circumstances, if any, a lawyer may lend money to a client for whom the lawyer is handling a personal injury claim.

The opinion concluded that Rule 5.3(b) generally prohibits a lawyer from advancing or guaranteeing financial assistance to a client while representing the client in connection with contemplated or pending litigation. It identified one narrow exception, which permits a lawyer to advance or guarantee the expenses of litigation, including court costs, expenses of investigation, expenses of medical examination, and costs of obtaining and presenting evidence, provided the client remains ultimately liable for those expenses.

Currency note

This opinion was issued in 1990, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. The financial-assistance provision it applies (Rule 5.3(b)) has since been renumbered and revised (the corresponding Model Rule is 1.8(e)). 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 Treat this page as historical context, not current guidance.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 lend a litigation client money for living expenses?

A: No. The opinion concluded that a lawyer generally may not advance or guarantee financial assistance to a client during contemplated or pending litigation; the only exception is for litigation expenses.

Q: What financial help is permitted?

A: The opinion stated that the lawyer may advance or guarantee litigation expenses, including court costs, investigation, medical examinations, and the cost of obtaining and presenting evidence.

Q: Does the client have to repay advanced litigation expenses?

A: Yes. The exception applies only if the client remains ultimately liable for those expenses.

Background and rules framework

The opinion applied North Carolina Rule 5.3(b), which barred advancing or guaranteeing financial assistance to a client in connection with litigation except for litigation expenses for which the client stays ultimately liable (corresponding to Model Rule 1.8(e)). The analysis turns on the distinction between general financial assistance, which is prohibited, and litigation expenses, which the lawyer may advance subject to the client's ultimate liability.

Citations and references

Rules of Professional Conduct:

• North Carolina Rule 5.3(b) (financial assistance to a client; litigation-expense exception)
• MR 1.8 (conflicts; financial assistance to clients)

See also

• NC Ethics Op. RPC 173: advancing funds to a client to post bond
• NC Ethics Op. RPC 187: proprietary interest in a domestic client's support payments

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-80/

Original opinion text

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

Inquiry:

Under what circumstances, if any, may a lawyer lend money to a client for whom the lawyer is handling a personal injury claim?

Opinion:

Rule 5.3(b) of the Rules of Professional Conduct generally prohibits lawyers advancing or guaranteeing financial assistance to a client while representing the client in connection with contemplated or pending litigation. There is one narrow exception to the rule which permits a lawyer to "advance or guarantee the expenses of litigation, including court costs, expenses of investigation, expenses of medical examination and costs of obtaining and presenting evidence, provided the client remains ultimately liable for such expenses."