20000238 | Office of Legal Ethics Counsel & Advisory Committee of the Supreme Court of Missouri

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Informal Opinion Number: 20000238

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)

Summary: lawyer acquiring proprietary interest in client's litigation

QUESTION: Would it be proper for Attorney to form a partnership with a client in connection with a matter that would otherwise have been handled on a traditional fee basis? The client would contribute the cause of action and Attorney’s firm would contribute its expertise in converting the cause of action into settlements or awards. Attorney would like to consider the use of such a partnership arrangement in the types of cases where the settlement or award would be considered taxable income to the client.

ANSWER: As I understand it, the proposed partnership arrangement would involve Attorney’s firm acquiring a proprietary interest in the litigation. Such an arrangement would violate Rule 1.8(j) of Supreme Court Rule 4, the Rules of Professional Conduct.

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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