Resource Page: Litigation Loans
Missouri Supreme Court Rules
Frequently Asked Questions
What factors should a lawyer consider when a client is considering securing a loan against the proceeds of litigation?
- QUESTION: What factors should a lawyer consider when a client is considering securing a loan against the proceeds of litigation?
- ANSWER: A lawyer should not assist a client in an arrangement or transaction involving champerty. A lawyer’s participation in a champertous transaction violates Rule 4-8.4(d) as conduct prejudicial to the administration of justice. See Informal Opinion 2023-10; Informal Opinion 20030022; and 20000229. Rule 4-1.8(e) prohibits a lawyer from providing financial assistance to a client in connection with litigation except under certain circumstances. See Formal Opinion 119 and Formal Opinion 125. In advising a client about the client’s securing of a litigation loan, a lawyer’s duties of competence (Rule 4-1.1) and diligence (Rule 4-1.3) may require the lawyer to advise the client about issues including, but not limited to, the impact of any requirement by the lender that the client disclose confidential information; any need for a confidentiality agreement with the lender; and the lawyer’s obligation pursuant to Rule 4-1.15(e) if lender and client both claim an interest in settlement funds or other proceeds of the litigation. See Informal Opinion 2020-16.
Requesting an Informal Advisory Opinion
Missouri attorneys may request an informal advisory opinion from the Legal Ethics Counsel. Guidelines for requesting an informal advisory opinion, in writing or by telephone, are found here. The Office of Legal Ethics Counsel may be reached by telephone at 573-638-2263.
Updated October 19, 2023