Can a lawyer sell or advertise for sale a fee judgment against a former client, and what confidentiality limits apply?

Plain-English summary

A lawyer obtained a fee award against a former client from the Resolution of Fee Disputes Board, which was affirmed on appeal and entered as a judgment. The former client did not pay, appeared to have no South Carolina assets, and left the state but might own property elsewhere. The lawyer asked whether she could sell the judgment to a third party and, if so, whether any ethical constraints applied to advertising it for sale.

The Committee concluded the lawyer may sell the judgment and advertise it. The Rules of Professional Conduct do not subject a judgment against a former client to restrictions that would not apply to any other judgment, so the lawyer's judgment may be sold or transferred to the same extent as any other. The one limit comes from confidentiality. Rule 1.9(c) bars a lawyer from using or revealing information related to the representation of a former client to the client's detriment except as the Rules would permit for a current client, and Rule 1.6(b) identifies when disclosure without consent is permissible.

The Committee focused on Rule 1.6(b)(6), which permits disclosure necessary to establish a claim or defense in a controversy between the lawyer and the client. The Committee reasoned that exception would likely justify disclosure in the course of litigating the fee dispute itself (citing Ethics Advisory Opinion 93-38), but concluded that post-judgment transactions between the lawyer and third parties, such as advertising and selling the judgment, would not qualify as a controversy between the lawyer and the client. Accordingly, the Committee advised the lawyer not to disclose information related to the representation while advertising and selling the judgment.

In practice

Under this opinion, a lawyer holding a fee judgment against a former client may sell or transfer it like any other judgment and may advertise it for sale, but the confidentiality duties of Rule 1.9(c) and Rule 1.6(b) continue to apply. The opinion holds that the Rule 1.6(b)(6) exception for a controversy between lawyer and client does not extend to a post-judgment sale to third parties, so information related to the representation should not be disclosed in advertising or selling the judgment.

Common questions

Q: Can a lawyer sell an unpaid fee judgment against a former client to a third party?

A: Yes. The opinion concludes a judgment against a former client may be sold or transferred to the same extent as any other judgment, because the Rules impose no special restriction on it.

Q: Can the lawyer advertise the judgment for sale?

A: Yes, but with a confidentiality limit. The opinion concludes the lawyer may advertise the judgment for sale provided she does not disclose information related to the underlying representation.

Q: Does the exception for fee disputes let the lawyer disclose client information to a buyer?

A: No. The opinion concludes Rule 1.6(b)(6)'s exception for a controversy between lawyer and client does not cover post-judgment sale transactions with third parties, so the exception does not justify disclosure in the sale.

Background and rules framework

The opinion interprets Rule 1.9(c) (duties to former clients regarding use and disclosure of information) and Rule 1.6(b) (exceptions permitting disclosure without client consent), with particular attention to Rule 1.6(b)(6) (disclosure to establish a claim or defense in a controversy between the lawyer and the client). South Carolina's Rules 1.9 and 1.6 correspond to the ABA Model Rules. The Committee cited Ethics Advisory Opinion 93-38 on disclosure in the fee-dispute context.

Citations and references

Rules of Professional Conduct:

• MR 1.9 / SC RPC 1.9(c) (duties to former clients; use and disclosure of information)
• MR 1.6 / SC RPC 1.6(b) (exceptions to confidentiality; 1.6(b)(6) lawyer-client controversy)

Other opinions cited:

• S.C. Bar EAC Op. 93-38: disclosure of information in litigating a fee dispute.

See also

• ABA Formal Op. 479: The "Generally Known" Exception for Former-Client Information
• ABA Formal Op. 00-417: Settlement Terms Limiting Use of Information

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-19-02/
• Original PDF: https://www.scbar.org/media/ynhpzlq0/opinion_19_feb_13_on_letterhead.pdf

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER'S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

The Ethics Advisory Committee renders opinions exclusively to members of the South Carolina Bar concerning ethical issues raised by the inquirer's contemplated conduct not relating to a pending matter. This Committee has no disciplinary authority. Lawyer discipline in South Carolina is administered solely by the South Carolina Supreme Court through its Commission on Lawyer Conduct.

South Carolina Rules of Professional Conduct: 1.6(b), 1.9(c)

Factual Background: Lawyer received a favorable ruling from the Resolution of Fee Disputes Board against Former Client. The award of fees was affirmed on appeal and entered as a judgment. Former Client has not paid the judgment and appears to have no South Carolina assets subject to execution. Former Client has left South Carolina but may have property elsewhere.

Questions:

• May Lawyer sell the judgment to a third party?

• If so, are there any ethical constraints on advertising the judgment for sale?

Summary: Lawyer may sell the judgment, and advertise it for sale, provided she does not disclose information related to the underlying representation in doing so.

Discussion: The Rules of Professional Conduct do not provide that a judgment against a former client is subject to restrictions or limitations not applicable to other judgments. Thus, Lawyer's judgment against Former Client may be sold or transferred to the same extent as any other judgment. However, Rule 1.9(c) provides that lawyers may not use or disclose information related to the representation to the client's detriment except as the Rules would permit with respect to a current client. Rule 1.6(b) identifies circumstances in which disclosure of information without client consent is permissible.

Rule 1.6(b)(6) permits a lawyer to reveal information related to the representation if necessary "to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client." This likely would justify disclosure and use of information in the course of litigating the fee dispute itself. See Ethics Advisory Opinion 93-38. However, the committee does not believe that post-judgment transactions between Lawyer and third parties, such as advertisement and sale of the judgment, would qualify as "a controversy between the lawyer and the client." As such, Lawyer is advised not to disclose information related to the representation in the course of advertising and selling the judgment.