Informal Opinion Number: 20000229

Rules: 4-8.4
Maintaining the Integrity of the Profession
Summary: attorney’s duties when client proposes use of litigation loan

QUESTION: Attorney has submitted a solicitation from a Corporation with regard to loaning money to a client. Attorney’s client wishes to borrow money from the Corporation by assigning a portion of client’s interest in a personal injury case to the Corporation. The client would not have any obligation to repay the loan in the event that there is no settlement. Is this ethical?
ANSWER: Attorney should advise the client whether Attorney believes that such an arrangement would constitute champerty. Attorney may wish to review Macke Laundry Serv. Ltd. v. Jetz Serv., 931 S.W.2d 166 (Mo.App.W.D. 1996) regarding champerty. If Attorney concludes that the arrangement would constitute champerty, Attorney should not agree to assist Attorney’s client. Assisting with a champertous arrangement would violate Rule 8.4(d) of Supreme Court Rule 4, the Rules of Professional Conduct, relating to conduct prejudicial to the administration of justice. If Attorney concludes that the arrangement does not constitute champerty, before Attorney agrees to assist Attorney’s client with a transaction with the Corporation, Attorney must counsel Attorney’s client on the impact of the release and disclosure on confidentiality and the attorney-client privilege. Attorney should advise the client whether Attorney believes that providing the required access to information will also mean that the opposing party may have full access to the same information.

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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