Can a lawyer sign a contract agreeing to pay a client's medical provider and expert-witness fees out of the client's recovery?

Plain-English summary

A lawyer representing an automobile-accident victim was asked by a healthcare provider to sign and become a party to an agreement requiring payment of the provider's fee for both medical services and time as an expert witness, out of the client's recovery. The lawyer was concerned about creating personal contractual liability and its effect on the attorney-client relationship, particularly if the client later disputed the provider's bill and instructed the lawyer not to pay the disputed amount, where refusing would expose the lawyer to contractual liability. The lawyer asked whether full disclosure to the client would be enough to relieve the ethical exposure.

The committee identified DR 5-103(B) as controlling: a lawyer may advance or guarantee litigation expenses, including court costs, investigation, medical examination, and the cost of obtaining and presenting evidence, provided the client remains ultimately liable. As to witnesses, a lawyer may advance, guarantee, or acquiesce in paying a witness's reasonable expenses, lost time, and the reasonable fees of an expert witness, but may never agree to pay a witness a contingent fee (citing DR 7-108(C) and EC 7-25). It noted prior opinions holding that guaranteeing a physician's charges or compensating a witness for the fair value of time is permissible only if the client remains ultimately liable (LE Op. 587, 582, 485, 449).

The committee concluded that while it is not improper per se to contract with a healthcare provider to authorize paying the provider's fees from the client's recovery, the lawyer should avoid any potential contractual liability with a third party or expert that might later affect the attorney-client relationship. It suggested a more effective solution is to have the client execute a release or consent form authorizing the lawyer to pay or deliver the fees owed, and added that even with a contractual disclaimer that the lawyer is not personally guaranteeing the charges, the lawyer should remain mindful of the duty to act in the client's best interest.

Currency note

This opinion was issued in 1989, under Virginia's former Code of Professional Responsibility (the disciplinary rules it cites), before the Virginia State Bar's adoption of the Rules of Professional Conduct effective January 1, 2000. As the committee note observes, current Rule 1.8(e)(2) allows a lawyer to pay litigation costs for an indigent client, and a 2019 amendment to Rule 1.8(e) allows repayment of costs to be contingent on the outcome, a change from this opinion's "client ultimately liable" requirement. Witness-payment limits are now within Rule 3.4. 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 guarantee a client's medical or expert-witness fees?

A: Under this 1989 opinion, yes, but only if the client remains ultimately liable for the expenses under DR 5-103(B), and never as a contingent fee to a witness.

Q: Is it improper to contract directly with the healthcare provider?

A: The committee said it is not improper per se, but the lawyer should avoid third-party contractual liability that could later conflict with the client's wishes, for example if the client disputes the bill.

Q: What did the committee suggest instead?

A: It said a more effective solution is to have the client execute a release or consent form authorizing the lawyer to pay or deliver the fees owed to the provider or expert.

Background and rules framework

The opinion interpreted former Virginia DR 5-103(B) (advancing litigation expenses where the client remains ultimately liable) and DR 7-108(C) with EC 7-25 (witness compensation, and no contingent fee to a witness). Advancing costs is now within Rule 1.8(e), and witness-payment limits within Rule 3.4(b).

Citations and references

Rules of Professional Conduct:

• Former Virginia DR 5-103(B) (advancing litigation expenses; client ultimately liable)
• Former Virginia DR 7-108(C); EC 7-25 (witness compensation; no contingent fee to a witness)
• ABA Model Rule 1.8 (financial assistance to clients); Model Rule 3.4 (fairness; witness payment)

Other opinions cited:

• Virginia LE Op. 449; LE Op. 587; LE Op. 582; LE Op. 485: advancing provider and witness fees only where the client remains ultimately liable.

See also

• VA LEO 1237: Collecting Advanced Litigation Costs From a Client
• VA LEO 1865: Third-Party Liens on Settlement Funds
• VA LEO 1747: Honoring a Third-Party Assignment or Lien
• VA LEO 1606: Fees Compendium (Retainers, Fixed, Contingent)

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1182.pdf

Original opinion text

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

Committee Opinion
January 31, 1989
Committee Op Note Update
November 18, 2021
LEGAL ETHICS OPINION 1182

ACQUIRING AN INTEREST IN
LITIGATION – DISCLOSURE:
ATTORNEY CONTRACTING WITH
HEALTH CARE PROVIDER.

You have asked for further clarification of LE Op. 449 as it relates to an attorney entering into a contract with a medical care provider for payment of the provider's fee from the client's recovery. During the course of your representation of an automobile accident victim, the healthcare provider requested that you sign and become a party to an agreement, a copy of which is enclosed, which would require the payment of the provider's fee for (1) medical services rendered and (2) for his time as an expert witness.

You are concerned with the creation of a contractual liability on the part of an attorney and its effect on the attorney/client relationship. You allege further that after signing the agreement in question and at the time of disbursement of the recovery, the client may indicate that he has a dispute with the healthcare provider's bill and instruct his attorney not to pay the disputed amount. In that instance, an attorney may violate a number of ethical canons if he refuses to adhere to his client's wishes; however, refusal to pay the healthcare provider would result in contractual liability of the attorney personally.

You wish to know whether full disclosure to the client of the requirement that you pay the entire fee requested by the healthcare provider, whether disputed or not, is sufficient to alleviate you from further exposure from an ethical standpoint.

The Committee believes the appropriate and controlling rule is DR:5-103(B) which provides that an attorney may advance or guarantee the expenses of litigation, including court costs, expenses of investigation, expenses of medical examination, and cost of obtaining and presenting evidence in connection with contemplated or pending litigation, provided that the client remains ultimately liable for such expenses. With regard to compensation of a witness, a lawyer may advance, guarantee, or acquiesce in the payment of expenses reasonably incurred by the witness to provide testimony, loss of time in attending or testifying and the reasonable fees for the professional services of an expert witness. In no event shall a lawyer agree to pay a contingent fee to a witness. (See DR:7-108(C) and EC:7-25) The Committee has previously opined that advancements or guaranteeing of charges to a physician, or compensating a witness for reasonable fair value of the time expended in preparing for and rendering of testimony in litigation, is ethically permissible only if the client remains ultimately liable. (See LE Op. 587, LE Op. 582, LE Op. 485, and LE Op. 449)

The Committee further opines that while it may not be improper per se for an attorney to enter into a contract with a healthcare provider for the purpose of authorizing the attorney to pay the heathcare provider's fees from the client's recovery, an attorney should avoid any potential contractual liability with a third-party/expert which may later affect the attorney/client relationship. The Committee believes a more effective solution is to have the client execute a release or consent form authorizing the attorney to pay or deliver the fees owed to the healthcare provider/expert. Even where there is a disclaimer in the contract that the attorney is not personally guaranteeing payment of the provider's charges, an attorney should be mindful of his responsibilities to act in the best interest of the client.

Committee Opinion
January 31, 1989

Legal Ethics Committee Notes. – Rule 1.8(e)(2) allows a lawyer to pay litigation costs and expenses on behalf of an indigent client. A 2019 amendment to Rule 1.8(e) allows repayment of costs and expenses to be contingent on the outcome of the matter.