Issues in Professional Liability

SOMETIMES CLIENTS genuinely wish to express thanks to their attorney. The giving of a gift can be a very appropriate and meaningful way for a client to say "thank you." However, a client gift can lead to serious problems, including malpractice claims. Extreme caution is in order.

Token gifts such as a thank-you note with a moderately priced gift certificate, a bottle of wine or tickets to a local event seem reasonable. Flowers or food or treats for the office would also be appropriate. In most instances, none of these gifts would be considered substantial and that is key. Substantial client gifts create the problems, and, typically, there are two potential sources of trouble: client heirs and your partners.

A common dilemma for attorneys occurs when a client expresses a desire to convey a gift to the attorney via a testamentary instrument and asks the attorney to prepare the instrument. If the attorney does this, and, if the heirs consider the gift to be substantial, they may challenge its legality. The burden will be on you to rebut a presumption of undue influence, and that can be difficult. Remember that under Model Rule 1.8 (c) "A lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling, or spouse any substantial gift from a client, including a testamentary gift, except where the client is related to the donee."

This rule seems clear, yet attorneys continue to try to find ways around it. Some attorneys will seek to rely on the length and nature of the attorney/client relationship as justification for proceeding. Others will personally try to advise the client (with documentation) as to legal consequences of the gift. Another approach is for the receiving attorney to ask another attorney, all too often a member of the same firm, to prepare the gift-giving instrument. The better course is to let the client know you are honored and grateful for such a gift, but that you cannot accept it. Some attorneys will argue that the client will continue to insist that the testamentary instrument be prepared and there is simply no way to say no to the client. In this situation, do what should always be done when a client wishes to convey a testamentary gift to an attorney and insist that the client seek independent legal advice about the proposed gift. This isn’t optional. Your peer will advise the client to drop the idea.

Clients do not always choose to gift via a testamentary instrument. They might simply drop off a new car or tickets for a two-week, all-expense-paid vacation for two overseas. In this case, heirs may not be the problem, but partners often are. This dispute will be over the ownership of the gift. The receiving attorney will view the gift as personal. Others in the firm may view the gift as a gift to the firm. Firm break-ups can and do occur under such circumstances. In the end, substantial client gifts are often not worth accepting. The best advice is to say thanks and politely decline.

As a final thought, recognize that the receipt of a substantial gift from a client invites a lawsuit against the receiving attorney and the firm. Should this happen, a final issue concerns insurance coverage. This is a problem because the gift may not constitute "damage" proximately resulting from an alleged error in professional services. Is receiving a gift worth the risk of protracted litigation without malpractice coverage? Personally, I don’t think so.

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