Can a South Carolina lawyer buy a client's structured settlement on the same terms a settlement-purchasing company offered, without violating duties to the client?
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This page answers the general question as of 1997. Ezel answers yours: whether it's allowed on your facts, under the current South Carolina Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer asked whether the lawyer could buy the structured part of a client's settlement on the same terms offered by a company in the business of purchasing structured settlements, without violating ethical obligations to the client.
The committee concluded the lawyer could, provided the lawyer complies with Rule 1.8(a), which governs a lawyer doing business with a client. Because of the obvious danger of a conflict of interest, the rule's requirements are strict, but if they are met the described transaction can occur.
The committee added that all of the lawyer's other duties continue to apply, including loyalty, competence, diligence, and determining that the client is not suffering under a disability. If the lawyer believes the transaction, whether with the settlement-purchasing company or with the lawyer, is not in the client's best interest, the lawyer should so advise the client in writing. The committee observed there may be times when a transaction is so unfair to the client that the lawyer prefers not to be involved, but that if all the rules are met there is nothing inherently wrong with the transaction.
Currency note
This opinion was issued in 1997, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 buy a client's structured settlement?
A: The committee concluded yes, but only by complying with Rule 1.8(a)'s strict requirements for business transactions with a client, given the conflict-of-interest danger.
Q: Do the lawyer's other duties still apply to the purchase?
A: Yes. The committee stated the duties of loyalty, competence, and diligence continue, including determining the client is not under a disability, and that the lawyer should advise the client in writing if the transaction is not in the client's best interest.
Q: Could the lawyer decline to be involved?
A: The committee observed there may be times a transaction is so unfair to the client that the lawyer prefers not to be involved, but if all rules are met there is nothing inherently wrong with the transaction.
Background and rules framework
The opinion applied Rule 1.8(a) (business transactions with a client, which require fair and reasonable terms, full written disclosure, advice to seek independent counsel, and the client's written informed consent), corresponding to the like-numbered Model Rule, alongside the lawyer's continuing duties of loyalty, competence, and diligence.
Citations and references
Rules of Professional Conduct:
- South Carolina RPC 1.8(a) / Model Rule 1.8: business transactions with a client.
See also
Source
- Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-97-26/
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.
Ethics Advisory Opinion 97-26
Can Attorney buy the structured part of the settlement under the same terms offered by a company which is in the business of purchasing structured settlements and not violate any ethical obligations to Client?
SUMMARY:
Attorney can purchase the structured settlement from Client provided Attorney complies with the requirements of Professional Conduct Rule 1.8(a).
OPINION:
Rule 1.8(a) deals specifically with the situation where a lawyer wishes to do business with a client. Because of the obvious danger of a conflict of interest, the requirements are strict, but if complied with, a transaction between Attorney and Client as described here can occur.
Of course, all of the other duties of attorneys to clients prescribed by the other ethical rules still apply, such as loyalty, competence, diligence and determining that Client is not suffering under a disability, and so, if Attorney believes that the transaction, whether with the structured settlement company or with Attorney, is not in the best interest of Client, Attorney should so advise, and do so in writing. There may be times when the transaction is so unfair to Client that Attorney prefers not to be involved. If all rules are met, however, there is nothing inherently wrong with the transaction.
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