Chapter 4. Ethics & Professionalism - Client expenses

Rule of Professional Conduct 1.8(e), which governs payment of client expenses, provides:

(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; or
• (2) a lawyer representing a client unable to pay court costs and expenses of litigation may pay those costs and expenses on behalf of the client.

This is a significant departure from the old Code of Professional Responsibility, which required that the client remain ultimately liable for reimbursement of advanced expenses, regardless of the outcome of the representation. The result of the old rule was that lawyers often engaged in a legal fiction, while explaining to clients that they would never really sue them for the expenses if they lost the case.

The first exception to Rule 1.8(e) permits a lawyer to advance the court costs and expenses of litigation, and unlike the predecessor Code rule, it does not require that the client guarantee repayment of the advances, win or lose, as repayment may be contingent on the outcome of the matter. This change better reflects the economic reality of most personal injury litigation, in which the only fund realistically available for reimbursement of expenses is the fund recovered in the case.

The second exception to Rule 1.8(e) now permits a lawyer to expressly assume responsibility for court costs and expenses on behalf of an client who cannot pay. While the Model Rule 1.8(e)(2) refers to an “indigent client,” the Georgia version uses the broader description, “a client unable to pay court costs and expenses of litigation.” ¹

The Rule is clear that a lawyer may not advance living expenses to a client during the pendency of a personal injury case. The gist of this prohibition is both to protect the public and the integrity of the system from the ills of barratry, champerty, and maintenance, and incidentally to shield well-meaning lawyers from client requests for financial assistance. But sanctions may vary according to the apparent intent.² In a New Jersey case, a lawyer was disbarred for using runners and advancing funds to clients up to amount of contemplated net settlement of claims.³ Public censure was deemed appropriate for an Oklahoma lawyer who made noninterest-bearing loans for humanitarian reasons to destitute clients during pendency of their disability proceedings.⁴ But all disciplinary charges were dismissed against a Florida lawyer who gave indigent client secondhand clothing for her child and $200 for “basic necessities.” ⁵

So what is a lawyer to do when the catastrophically injured client has exhausted all resources, is without money for food, the children are without clothes, and the gas and electricity are about to be disconnected in the middle of the winter? As suggested above, the tough choices are not between good and bad, but between good and good, and between bad and bad. Does one pay the utility bill, deliver a load of hand-me-down children's clothes and some groceries, and consider reporting oneself to the Bar with a request for forgiveness rather than permission? While the Rule is good and must be observed and obeyed, occasions may arise when the lawyer must decide whether compassion and humanitarian concern must prevail over the letter of the Rule.

¹ State Bar of Georgia, Rules of Professional Conduct, Rule 1.8.

² State Bar of Georgia, Rules of Professional Conduct, Rule 1.8.

³ In re Pajerowski, 156 N.J. 509, 721 A.2d 992 (1998).

⁴ State ex rel. Oklahoma Bar Ass'n v. Smolen, 1992 OK 116, 837 P.2d 894 (Okla. 1992).

⁵ The Florida Bar v. Taylor, 648 So. 2d 1190 (Fla. 1994).

On May 22, 2018, former State Bar of Georgia president Ken Shigley will be a candidate for election to the Georgia Court of Appeals. The only other candidate is Ken Hodges, a former Dougherty County District Attorney. Ken Hodges was the Democratic Party nominee for Attorney General in 2010.