Can a lawyer pay the litigation costs for a nonprofit it represents pro bono because the nonprofit's wards are indigent?

Plain-English summary

The inquirer represents, pro bono, a nonprofit corporation that performs guardianship services, and asked whether he may pay the corporation's court costs and litigation expenses. The nonprofit is not indigent, but many of its wards are, and the lawyer wanted to pay because the organization serves indigent wards with disabilities. The lawyer identified the nonprofit corporation, not the wards, as his client.

The committee explained that under RPC 1.8(e) a client is primarily responsible for court costs and fees, a rule meant to prevent litigation brought simply because funds are available and to keep a lawyer from compromising independent judgment by financing the suit, that is, to prevent the lawyer from acquiring an improper interest in the litigation. RPC 1.8(e)(2) creates an exception allowing a lawyer to pay court costs and litigation expenses for an indigent client. The committee said that if the client were indigent, the exception would apply.

The committee concluded the nonprofit is not indigent. Citing Adult Student Housing v. Department of Revenue, it reasoned that being nonprofit does not by itself make a corporation benevolent or charitable, and that providing guardianship services to disabled wards, most of whom are indigent, does not make the corporation itself indigent. It noted that an incapacitated person under guardianship has the right to hire counsel (RCW 11.88.045(1)(b)) and that the guardian's role is distinct from the ward's attorney's. It added that the attorney's fiduciary obligation to the wards does not bring the exception into play, because the inquirer identified the nonprofit (not the wards, individually or jointly with the guardian) as his client. Treating an exception as strictly, not liberally, construed (citing Hugh Hall v. Corporation of Catholic Archbishop), the committee concluded the attorney may not pay the court costs and litigation expenses without violating RPC 1.8(e).

In practice

Under this opinion, and under RPC 1.8(e) as it stood at the time, whether a lawyer may pay a client's litigation costs turns on whether the identified client is indigent. The committee held that a nonprofit guardianship corporation is not indigent simply because most of the wards it serves are, so the RPC 1.8(e)(2) indigent-client exception does not let the lawyer pay the nonprofit's costs. The committee noted the outcome could differ if the lawyer instead represented an indigent ward directly, or the ward and guardian jointly; the controlling fact was that the lawyer identified the nonprofit corporation as the client. It applied the exception narrowly, treating exceptions to a general rule as strictly construed.

Common questions

Q: Can a lawyer pay the litigation costs of a nonprofit it represents because the nonprofit's clients are indigent?

A: No. The committee concluded the nonprofit is not itself indigent just because many of its wards are, so RPC 1.8(e)(2)'s indigent-client exception does not apply, and paying the costs would violate RPC 1.8(e).

Q: When can a lawyer pay a client's court costs under RPC 1.8(e)?

A: For an indigent client. The committee said RPC 1.8(e)(2) lets a lawyer representing an indigent client pay court costs and litigation expenses; otherwise the client is primarily responsible.

Q: Would the answer change if the lawyer represented the indigent wards instead?

A: The committee said it could. It noted that if the inquirer represented the ward directly, or the ward and guardian jointly, the answer would be different; here the lawyer identified the nonprofit corporation as his client.

Q: Why did the committee read the exception so narrowly?

A: It said an exception to a general rule is strictly, not liberally, construed (citing Hugh Hall v. Corporation of Catholic Archbishop), and that the general rule exists to keep lawyers from acquiring an improper interest in litigation.

Background and rules framework

The opinion interprets Washington RPC 1.8(e) (financial assistance to a client in connection with litigation; the counterpart to Model Rule 1.8(e)), under which a client is primarily responsible for costs, with RPC 1.8(e)(2) allowing a lawyer to pay court costs and litigation expenses for an indigent client. The committee applied the rule to a nonprofit guardianship corporation identified as the client and used Washington case law on strict construction of exceptions and on the meaning of nonprofit status to conclude the corporation is not indigent.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.8(e) / Washington RPC 1.8(e) (financial assistance to a client; RPC 1.8(e)(2) indigent-client exception)

Statutes:

• RCW 11.88.045(1)(b) (an incapacitated person under guardianship has the right to be represented by counsel of the person's choosing)

Cases:

• Adult Student Housing v. Department of Revenue, 41 Wn. App. 583 (1985), nonprofit status does not by itself make a corporation benevolent or charitable
• Hugh Hall v. Corporation of Catholic Archbishop, 80 Wn.2d 797 (1972), an exception to a general rule is strictly, not liberally, construed

See also

• WA Ethics Op. 1928: Advancing Litigation Costs for an Indigent Pro Bono Client
• WA Ethics Op. 1552: Advancing the Costs of Treatment or Examination
• WA Ethics Op. 2148: Cost Repayment Tied to a Settlement Decision

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1587

Original opinion text

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

Advisory Opinion: 2149
Year Issued: 2007
RPC(s): RPC 1.8(e)
Subject: A lawyer paying court costs and expenses of litigation for a non-profit guardianship agency client for whom litigation services are provided pro bono.

I. Facts and Questions

The inquirer asks if he may pay the court costs and litigation expenses for a nonprofit corporation performing guardianship services that he represents pro bono. The non-profit corporation is not indigent, but many of its wards are. The inquirer expresses a desire to pay for the costs and litigation expenses for the non-profit because it provides services to indigent wards who are persons with disabilities. The inquiring attorney correctly identifies and quotes from the appropriate Rule of Professional Conduct.

The attorney clearly identifies his client as the nonprofit organization.

II. Rule of Professional Conduct

RPC 1.8(e):

A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that … (2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

Under RPC 1.8(e), a client is primarily responsible for court costs and fees. This general rule exists to prevent a litigant or an attorney from bringing lawsuits simply because funds are available. The rule also seeks to preclude a lawyer from compromising his or her independent judgment when the attorney’s personal funds pay for the suit. In short, this rule seeks to prevent legal counsel from acquiring an improper interest in the litigation. RPC 1.8(e)(2) is an exception to the rule. The Comments to Rule 1.8(e)(2) provide simply that payment of court costs and litigation expenses for indigent clients is warranted. It is assumed that the reasons behind the primary rule are not concerns when an indigent client is the client represented. While this logic may be questionable, it is the rule we currently have.

If the client for the inquirer is indigent, then the exception applies and the attorney may pay the court costs and litigation expenses.

III. Discussion

Does a nonprofit corporation qualify as an indigent client? The court states in Adult Student Housing v. The Department of Revenue, 41 Wn. App. 583 (1985) that “Being nonprofit does not alone make a corporation benevolent or charitable. Neither does providing low rent housing to college students and faculty make it a benevolent service.” In the same way, providing guardianship services to the disabled even though “most” of its clients are indigent, does not make a nonprofit corporation indigent.

Moreover, an incapacitated person under a guardianship for disabilities has the right to hire his or her own counsel to advocate on their behalf. RCW 11.88.045(1)(b). A guardian’s role is distinct from that of the ward’s attorney. The guardian must advocate for the best interests of the ward, whereas the attorney must advocate in accordance with the ward’s directions. Ibid.

Does the attorney’s fiduciary obligation to the ward of the guardian he represents validate the use of this exception to the general rule? No. If the inquirer represents the ward of the guardian directly, or represents the ward and the guardian jointly, the answer would be different. However, the manner in which the inquirer phrased the inquiry indicates he considers the non-profit his client.

It is important to note that an exception to a general rule is strictly, not liberally, construed. Hugh Hall v. Corporation of Catholic Archbishop, 80 Wn.2d 797 (1972).

Under the circumstances outlined in this inquiry, the attorney may not pay the court costs and expenses of litigation without violating RPC 1.8(e).