Can a lawyer who advanced litigation costs sue a solvent client to recover them, and must the lawyer pursue collection?

Plain-English summary

A lawyer represented a widow in a medical-negligence claim under an engagement contract in which she agreed to reimburse advanced expenses if there was no recovery. After she and her children discontinued the proceeding the day before the malpractice-panel hearing, the lawyer held the expense balance in trust, then remitted it to the client assuming the printer would not bill for the balance. About a year later the printer billed the lawyer, who paid it to protect his credit and billed the client; the client first agreed to pay in installments, then refused although she was able to pay. The lawyer asked whether he was obligated to undertake collection efforts against a solvent client responsible for the costs.

The committee restated that, in litigation or where a contingent-fee agreement exists, advancing court costs, litigation expenses, medical-examination expenses, and the costs of obtaining and presenting evidence is permissible only if the client remains ultimately liable for the actual costs incurred (citing DR 5-103(B) and LE Op. 1056). It noted LE Op. 1060's point that whether the lawyer was obligated to pay a medical provider for photocopies was a legal question, but that if the lawyer advanced the cost, the client still remained ultimately responsible.

The committee concluded that because the client is responsible for the actual costs, a lawyer who advanced or guaranteed them may take appropriate collection actions to recover unreimbursed amounts under DR 5-103(B), with all legal means presumed available. It added that the lawyer is not required to pursue collection that he has reason to believe would be fruitless or so expensive as to be not worthwhile, but that a consistent policy of not proceeding against clients for advanced expenses would be improper (citing also LE Op. 485).

Currency note

The Virginia State Bar withdrew this opinion on November 18, 2021. Treat the conclusions below as the historical record; the bar no longer maintains this opinion as guidance.

This opinion was issued in 1989, under Virginia's former Code of Professional Responsibility (the disciplinary rule 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 and expenses on behalf of an indigent client. Subsequent rule amendments or later opinions may have changed the analysis. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could the lawyer sue a solvent client to recover advanced litigation costs?

A: Under this withdrawn 1989 opinion, yes. The committee concluded that because the client is ultimately liable for the actual costs under DR 5-103(B), the lawyer may take appropriate collection actions for unreimbursed amounts.

Q: Did the lawyer have to pursue collection?

A: No. The committee said the lawyer is not required to pursue collection he reasonably believes would be fruitless or uneconomic, but it added that a consistent policy of never proceeding against clients for advanced expenses would be improper.

Q: Is this opinion still in force?

A: No. The Virginia State Bar withdrew it on November 18, 2021, so it is indexed here as historical research rather than current guidance.

Background and rules framework

The opinion interpreted former Virginia DR 5-103(B) (advancing litigation expenses where the client remains ultimately liable). The treatment of advanced costs is now within Virginia Rule 1.8(e); the committee note points to current Rule 1.8(e)(2), which allows paying litigation costs for an indigent client.

Citations and references

Rules of Professional Conduct:

• Former Virginia DR 5-103(B) (advancing litigation expenses; client ultimately liable)
• ABA Model Rule 1.8 (financial assistance to clients; advancing costs)

Other opinions cited:

• Virginia LE Op. 1056; LE Op. 1060; LE Op. 485: client liability for advanced costs and the duty not to adopt a no-collection policy.

See also

• VA LEO 1606: Fees Compendium (Retainers, Fixed, Contingent)
• VA LEO 1298: A Contingent Fee in a Post-Divorce Property Appeal
• VA LEO 1812: Termination of a Contingent-Fee Agreement
• VA LEO 1489: Client Loaning Money to the Attorney

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1237.pdf

Original opinion text

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

Committee Opinion
July 13, 1989
Committee Op Withdrawn
November 18, 2021
LEGAL ETHICS OPINION 1237

ADVANCING COSTS OF LITIGATION – CONTINGENT FEE AGREEMENT – FILING SUIT AGAINST CLIENT:
RECOVERY OF LITIGATION COSTS
ADVANCED BY ATTORNEY.

You have advised that Lawyer was retained by Widow to make a claim for medical negligence as the cause of her husband's death. The Widow signed Lawyer's standard engagement contract agreeing that Lawyer would advance funds for investigation, medical reports and other expenses. Widow further agreed that, if there was no recovery, she would make reasonable arrangements to reimburse her attorney for expenses advanced. Widow advanced initial monies and an additional sum when expenses of reproducing and distributing a large presentation for the malpractice review panel exceeded her available balance. On the day before the panel hearing, Widow and children insisted on discontinuing the proceeding. The attorney retained the balance in his trust account for several months, and, assuming that printer would not seek payment for the balance of the bill, remitted the trust account balance to the client. Approximately one year later, the attorney received a bill from printer for balance due which the printer will not address to the ex-client. To protect his own credit, the attorney paid the printer and billed Widow for the amount paid. Widow originally agreed to pay the balance in installments to the attorney; however, she subsequently refused to make any payments although she is able to do so.

You wish to know whether Lawyer is obligated to undertake collection efforts knowing that the client is solvent and is responsible for those costs associated with the litigation.

The Committee continues to be of the opinion that, in matters involving litigation, or where a contingency fee agreement has been entered into between an attorney and his client, advancement of court costs, expense of litigation, expenses of medical examination, and costs of obtaining and presenting evidence is permissible only if the client remains ultimately liable for the actual costs incurred. (See DR:5-103(B) and LE Op. 1056)

The Committee opined in LE Op. 1060 that whether the attorney was obligated to pay the medical provider for photocopies of medical records was a legal question; but, should the attorney advance the costs for the records, the client must still remain ultimately responsible for such expenses.

The Committee is of the view that since the client is responsible for the actual costs and expenses associated with the litigation, an attorney who has advanced or guaranteed such expense may properly take appropriate collection actions to recover any amount which he advanced on behalf of his client for which he has not been reimbursed by the client pursuant to DR:5-103(B). The Code of Professional Responsibility is silent regarding a specific course of action an attorney should follow under the circumstances, but all legal means are presumed available. It is the opinion of the Committee that you are not required to undertake collection efforts against your client if you have reason to believe that such efforts would be fruitless or involve so much expense that it would not be worthwhile. A consistent policy of not proceeding against clients for the collection of expenses advanced would be improper. (See also LE Op. 485)

Committee Opinion
July 13, 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.