20000216 | Office of Legal Ethics Counsel & Advisory Committee of the Supreme Court of Missouri

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Informal Opinion Number: 20000216

Rules: 4–1.8

Client-Lawyer Relationship

Conflict of Interest: Prohibited Transactions

Subject: Business Transaction with Client (see also Conflict of Interest - Prohibited Transactions); Conflict of Interest - Prohibited Transactions (see also Business Transaction with Client); Corporate Clients; Fees - Generally

Summary: taking shares of stock of organizational client for payment of services

QUESTION: Attorney is in the process of incorporating a new company for a client and doing other corporate related work for the new company. May Attorney accept a percentage of stock as payment and if so, under what circumstances?

ANSWER: It is permissible to accept payment for services in stock or some other ownership interest in the client. Attorney must follow the steps set forth in Rule 4 dash–1.8(a). This situation creates the potential for a number of types of conflicts of interest to arise. Attorney should discuss the potential for conflicts and the result if they do arise with Attorney’s clients. For example, the discussion should include the potential that Attorney might have to withdraw and that Attorney might personally be in a position adverse to Attorney’s current clients.

Informal Opinions are ethics advisory opinions issued by the Office of Legal Ethics Counsel to members of the Bar about Rule 4 (Rules of Professional Conduct), Rule 5 (Complaints and Proceedings Thereon), and Rule 6 (Fees to Practice Law) pursuant to Missouri Supreme Court Rule 5.30(c). Written summaries of select Informal Opinions are published for informational purposes as determined by the Advisory Committee of the Supreme Court of Missouri pursuant to Rule 5.30(c). Informal opinion summaries are advisory in nature and are not binding. These opinions are published as an educational service and do not constitute legal advice.

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