When a lawyer represents a legal services nonprofit pro bono, can the lawyer pay litigation expenses without the organization remaining liable for them?

Plain-English summary

Lawyers frequently provide pro bono legal services to organizations that serve the indigent, including litigation in pursuit of the organization's own interests. The committee was asked under what circumstances a lawyer representing such an organization may pay the expenses of litigation without the organization remaining ultimately liable for them. The client here is the organization itself, not the people it serves.

The committee starts from DR 5-103(B), which bars a lawyer from advancing or guaranteeing financial assistance to a client in litigation, with two exceptions: (1) advancing litigation expenses provided the client remains ultimately liable, and (2) a lawyer representing an indigent client on a pro bono basis may pay court costs and reasonable litigation expenses on the client's behalf. The rule rests on concerns that an excessive financial stake can impair the lawyer's free judgment and that subsidizing suits encourages litigation that might not otherwise be brought. The exception in DR 5-103(B)(2) requires both that the client be indigent and that the lawyer proceed pro bono. So the question is whether a legal services organization can be "indigent."

The Code does not define "indigent." The committee reviews case law defining the term as a lack of means and surveys the difficulty courts have had applying it to corporations, including Rowland v. California Men's Colony, where the Supreme Court held organizations are not "persons" who may proceed in forma pauperis. The committee declines to read "indigent client" as limited to natural persons, finding the contextual features that drove Rowland absent from DR 5-103(B)(2). It concludes that an organization can be indigent (an association of prisoners barred from holding bank accounts would qualify) but that depending on charity or government funding does not by itself make an organization indigent, since universities, museums, and some legal services providers hold substantial resources. The committee refuses to base indigence on the worthiness of the cause, which would be unbounded and arbitrary; the test is objective financial wherewithal, applied the same way to any organization regardless of its mission. The committee notes a lawyer remains free to decline to collect expenses the lawyer has paid, just as a lawyer may decline to collect a fee, but may not, during the pendency of the suit, relieve a non-indigent organization of ultimate responsibility for the expenses.

In practice

Under the New York Code as it stood at the time, the opinion holds that a lawyer representing a legal services nonprofit pro bono may absorb the organization's litigation expenses only if the organization is itself indigent, measured by its objective financial wherewithal rather than by its charitable purpose or its preference to spend its funds elsewhere. The committee distinguishes between relieving the client of ultimate liability during the suit (barred for a non-indigent organization) and simply declining afterward to collect expenses the lawyer advanced (permitted, like waiving a fee).

Common questions

Q: Can a lawyer pay a nonprofit client's litigation costs and not seek repayment?

A: Only if the organization is indigent. For a non-indigent organization, DR 5-103(B) requires the client to remain ultimately liable for advanced expenses during the litigation.

Q: Does serving poor people make the organization "indigent"?

A: No. The committee holds indigence depends on the organization's own financial wherewithal, not on the population it serves or the worthiness of its cause.

Q: Does relying on charity or government grants make an organization indigent?

A: Not by itself. The committee notes many grant- or charity-funded organizations hold substantial resources and so would not qualify.

Q: Can the lawyer simply choose not to collect the expenses later?

A: Yes. The committee notes a lawyer may decline to seek recovery of advanced expenses, just as a lawyer may decline to collect a fee, but may not relieve a non-indigent client of ultimate liability while the suit is pending.

Background and rules framework

The opinion applies New York's former Code of Professional Responsibility. DR 5-103(B) restricts a lawyer's financial assistance to a client in litigation and sets out the advance-with-ultimate-liability rule and the indigent-pro-bono-client exception (analogous to Model Rule 1.8(e), though New York's version is more restrictive, retaining "ultimately liable" rather than allowing repayment contingent on outcome). EC 5-7 and EC 5-8 supply the policy rationale.

Citations and references

Rules of Professional Conduct:

• MR 1.8(e) (financial assistance to a client in litigation); NY DR 5-103(B)

Cases:

• Rowland v. California Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194 (1993), organizations are not "persons" who may proceed in forma pauperis
• Gideon v. Wainwright, 372 U.S. 335 (1963), using "indigent" and "unable to employ counsel" interchangeably

Other opinions cited:

• N.Y. State 464 (1977): financing clients' causes would generate unmeritorious suits
• N.Y. State 37(a) (1966): the rule's basis in champerty, maintenance, and barratry

See also

• NY State Bar Op. 840: Lawyer paying a pro bono client's litigation expenses
• NY State Bar Op. 1044: Advancing a client's transportation costs as a litigation expense
• NY State Bar Op. 808: Security interest in litigation proceeds for fees
• NY State Bar Op. 1066: Guaranteeing a client's loan for legal fees

Source

• Landing page: https://nysba.org/ethics-opinion-786/