Collateralizing Unpaid Legal Fees: Can it be Done Ethically?

A recent Ethics Hotline call provides an example of how Wyoming lawyers can put a seldom-referenced Rule of Professional Conduct to good use:

“I have a potential client who does not have the cash to pay my retainer right now.  He wants to give me the deed to some property as security for my fee.  I don’t think I can do this, but I thought I would check on it.  I would like to help this guy if I can do it ethically.”

The answer is yes, as long as you comply with the requirements of Rule 1.8(a), the rule regarding business transactions with clients.  The arrangement must be on terms that are objectively fair and reasonable to the client and disclosed in writing in a manner than can be reasonably understood by the client.  The client must be advised of the desirability and given the opportunity to seek the advice of independent legal counsel on the transaction.  Finally, the client must give written, informed consent to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.

In the case of the deed as security for a fee, the lawyer may either document the arrangement in a mortgage which can then be recorded or may simply hold the deed in a safe place in compliance with Rule 1.15.  In either case, Rule 1.8(a) must be complied with.

Mark W. Gifford
Bar Counsel
(307) 432-2106

Share on Social Media