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Bar News - February 19, 2014

Ethics Committee Seeks Input on Client Assistance Rule

The NHBA Ethics Committee is seeking member input on a possible addition to Rule 1.8(e) of the Rules of Professional Conduct.

The current rule prohibits lawyers from providing assistance (other than the payment of certain court fees and litigation expenses) to an existing or potential litigation client. The contemplated change would allow lawyers to provide humanitarian aid to clients under limited circumstances.

Existing Rule 1.8(e) as adopted in New Hampshire reads:“(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that: (1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and (2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.”

The current rule is identical to the American Bar Association’s Model Rule of Professional Conduct 1.8(e).

ABA Comment 10 to Rule 1.8 reads: “Lawyers may not subsidize lawsuits or administrative proceedings brought on behalf of their clients, including making or guaranteeing loans to their clients for living expenses, because to do so would encourage clients to pursue lawsuits that might not otherwise be brought and because such assistance gives lawyers too great a financial stake in the litigation. These dangers do not warrant a prohibition on a lawyer lending a client court costs and litigation expenses, including the expenses of medical examination and the costs of obtaining and presenting evidence, because these advances are virtually indistinguishable from contingent fees and help ensure access to the courts. Similarly, an exception allowing lawyers representing indigent clients to pay court costs and litigation expenses regardless of whether these funds will be repaid is warranted.”

According to the ABA’s Annotated Model Rules of Professional Conduct, 7th edition (2011), “[m]ost jurisdictions have construed the prohibition on financial assistance as precluding any ‘humanitarian’ exception permitting lawyers to help needy clients in emergency situations.”

Among the concerns raised with permitting humanitarian assistance have been:

a) lawyers might use the availability of such aid as a means to market to prospective clients;

b) client dependence on the lawyer for living or medical expenses would complicate the lawyer-client relationship, including making it harder for the client to fire the lawyer;

c) some lawyers like to be able to point to an ethical rule when asked for help by their clients; and

d) the lawyer could be perceived as an interested party so that the aid could change the dynamic of the case.

Responding to these concerns, the NHBA Ethics Committee is considering a draft revision to Rule 1.8(e) for possible proposal to the NH Supreme Court Advisory Committee on Rules. The revision would add a new subsection (3) to the rule, as follows:

“(3) a lawyer may provide financial assistance to a client for reasonably necessary medical or living expenses, provided: (a) that such assistance is not based on any expectation of repayment; (b) there was no representation to the client prior to the beginning of the attorney/client relationship that such financial assistance would be provided; and (c) the lawyer shall not publicize or advertise a willingness to make or provide such assistance to clients.”

To our knowledge, the following states have adopted “humanitarian” exceptions to Rule 1.8(e): Alabama, District of Columbia, Louisiana, Minnesota and Texas.

The Ethics Committee is interested in your input as to the wisdom of permitting lawyers to give humanitarian aid to clients, any limitations on such aid, if permitted, the present limitation of the application of the current rule to the litigation context, and whether the form of assistance being regulated should be limited to financial assistance.

Please submit comments by Friday, Feb. 28, to committee liaison Rosemarie Atwood or to Rolf Goodwin, or mail them to Goodwin at McLane Graf Raulerson & Middleton, 900 Elm St., PO Box 326, Manchester, NH 03105.

If you are in doubt about the status of any meeting, please call the Bar Center at 603-224-6942 before you head out.

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