Another lawyer and I want to lend money to B so B can pay off a mortgage a court ordered as a condition of a land transfer. B is not my client. Does Rule 1.8 stop me?

Plain-English summary

The inquiring attorney described a Superior Court order directing A to convey a parcel of land to B on the condition that B pay in full the outstanding mortgage on the parcel. B was unable to pay the mortgage in full. One of several lawyers involved in the matter suggested that he and the inquiring attorney lend B the funds to pay off the balance. The inquiring attorney stated that neither A nor B was his client.

The Panel set out Rule 1.8(a), which imposes mandatory safeguards on business transactions between a client and a lawyer: the transaction must be fair and reasonable to the client, the client must be given the opportunity to seek independent counsel, the transaction must be disclosed in writing, and the client must consent in writing.

The Panel concluded that the attorney may lend B money because B was not the attorney's client, and a violation of Rule 1.8(a) requires an attorney-client relationship. It added a caution: although the inquiry was not entirely clear, the attorney might be participating in the loan with B's own attorney, and the attorney's "knowing assistance" of another attorney's violation of Rule 1.8(a) would constitute a violation of Rule 8.4(a).

Currency note

This opinion was issued in 1994 (Opinion 94-23, issued May 5, 1994), after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rules 1.8 and 8.4 as originally adopted. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which amended Rule 1.8. 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 Treat this page as historical context, not current guidance.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 mentioned here.

Common questions

Q: Does Rule 1.8(a) restrict a loan to someone who is not the lawyer's client?

A: No. The Panel concluded the attorney may lend B money because B was not the attorney's client, and Rule 1.8(a) applies only where an attorney-client relationship exists.

Q: Is there any risk in joining another lawyer's loan to that lawyer's client?

A: Yes. The Panel cautioned that knowingly assisting another attorney's violation of Rule 1.8(a) would violate Rule 8.4(a).

Background and rules framework

The opinion interprets Rhode Island Rules of Professional Conduct 1.8 (conflict of interest: prohibited transactions) and 8.4 (misconduct), the state analogs of the corresponding Model Rules. Rule 1.8(a) governed business transactions between a lawyer and a client, requiring fairness, written disclosure, an opportunity for independent counsel, and written consent. Because Rule 1.8(a) presupposes an attorney-client relationship, it did not reach the attorney's loan to a non-client, but Rule 8.4(a) reached knowing assistance in another lawyer's violation.

Citations and references

Rules of Professional Conduct:

• MR 1.8 / RI RPC 1.8(a) (business transactions with a client; safeguards)
• MR 8.4 / RI RPC 8.4(a) (misconduct; knowingly assisting another's violation)

See also

• RI EAP Opinion 93-100: loans to clients for purposes unrelated to the representation under Rule 1.8
• RI EAP Opinion 91-26: Rule 1.8(e) bars lending a personal-injury client money for a mortgage

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2094-23.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

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FINAL

ETHICS ADVISORY PANEL
OPINION #94-23 REQUEST #481
Issued May 5, 1994

The inquiring attorney set forth the following situation. A Superior Court order directed A to convey a parcel of land to B on condition that B pay in full the outstanding mortgage on this parcel. B is unable to pay the mortgage in full. One of several lawyers involved in this matter suggested that he/she and the inquiring attorney lend B the funds to pay off the balance. The inquiring attorney states that neither A nor B is his/her client.

Rule 1.8(a) provides mandatory safeguards regarding business transactions between client and lawyer. The transaction must be fair and reasonable to the client. The client must be given the opportunity to seek the advice of independent counsel, the transaction must be disclosed in writing to the client and the client must consent to the transaction in writing.

The Panel believes that the inquiring attorney may lend B money because B is not the inquiring attorney's client. For a violation of Rule 1.8(a) to occur, an attorney-client relationship must exist.

While it is not clear from the inquiry, the inquiring attorney may be participating in the proposed loan with B's attorney in the matter. The Panel cautions that the inquiring attorney's "knowing assistance" of another attorney's violation of Rule 1.8(a) would constitute a violation of Rule 8.4(a).