Petition for Writ of Certiorari — Leizerman v. Toledo Bar Ass'n

19 £ea2 6G Fires |

|_JAN 26 1933

OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

E. J. LEIZERMAN

Petitioner,

TOLEDO BAR ASSOCIATION

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT OF OHIO

PETITION FOR A WRIT OF CERTIORARI

Michael E. Tankersley Mark H. Aultman

(Counsel of Record) Charles W. Kettlewell

Alan B. Morrison 150 E. Wilson Bridge Road

Public Citizen Litigation Group Suite 200

2000 P Street, N.W., Suite 700 Worthington, Ohio 43085

Washington, D.C. 20036 (614) 436-2750

(202) 833-3000

Counsel for Petitioner

January 26, 1993

QUESTIONS PRESENTED’

1. Where federal courts have declared that it is

ethically permissible for lawyers to guarantee their clients’

loans for medical and living expenses that the clients need

to withstand delays in litigation, may states, consistent with

the Supremacy Clause, prohibit lawyers from guaranteeing

such loans when representing Federal Employers’ Liability

Act claimants in federal court?

2. Does a state prohibition on attorneys guaran-

teeing their clients’ loans for medical and living expenses

that the clients need to withstand delays in litigating their

personal injury claims unconstitutionally impair the rights

of access to the courts recognized under the First and

Fourteenth Amendment, where the state concedes that the

loan guarantees are not used to solicit clients, and do not

compromise the attorneys’ independent professional

judgment?

* In addition to parties the listed in the caption here, attorney

Michael E. McGill was also a party to the proceedings below as a

respondent, with petitioner Leizerman. See Al, A8, A10.

ili

TABLE OF CONTENTS

QUESTIONS PRESENTED ..... ccc cccccccees i

GPU PO ccc cess ec ccesscccsesecs 1

er 2

STATUTORY AND CONSTITUTIONAL

PERAP VEEIEe MUVOVED occ c cece cece cccen 2

STATEMENT OF THE CASE ...... ccc ceeces 2

A. Evidence Concerning Loans to Clients. ..... 3

B. Findings and Decisions of the Board of

Grievances and Discipline and the Supreme

TE BaD ban eke ecb eseeenecess 7

SUMMARY OF REASONS FOR GRANTING

ee ee 11

REASONS FOR GRANTING THE WRIT ...... 12

I. OHIO’S APPLICATION OF ITS PROHIBI-

TION ON LOAN GUARANTEES FOR

LIVING EXPENSES TO LOANS FOR FED-

ERAL FELA CLAIMANTS, WHEN SUCH

GUARANTEES HAVE BEEN APPROVED

BY THE FEDERAL COURTS, PRESENTS

AN IMPORTANT ISSUE UNDER THE

SUPREMACY CLAUSE THAT SHOULD BE

RESOLVED BY THIS COURT............ 16

II. STATE RULES PROHIBITING ATTORNEYS

FROM GUARANTEEING LOANS FOR

CLIENTS WHO NEED FINANCIAL

ASSISTANCE TO WITHSTAND LITIGATION

DELAYS IMPAIR RIGHTS OF ACCESS TO

IV

THE COURTS PROTECTED BY THE FIRST

AND FOURTEENTH AMENDMENTS, AND

PRESENT IMPORTANT CONSTITUTIONAL

ISSUES THAT SHOULD BE SETTLED BY

pp ere ere eee Se ee ee

2: ee ee ee ta ae

ee | PUTT CTC

ere eh 8 Perr rere rrree rrr er eT eee ee

Vv

TABLE OF AUTHORITIES

Cases: Page

Bates v. State Bar of Arizona, 433 U.S. 350 (1977) .. 22

Baylson v. Disciplinary Board of the

Supreme Court of Pennsylvania,

764 F.Supp. 328, 348-49 (E.D. Pa. 1991) ...... 19

Boddie v. Connecticut, 401 U.S. 371 (1971) ..... 16, 24

Brady v. Southern Railway Co.,

ee ee rae 16

Brotherhood of Railroad Trainmen v. Virginia,

OFT We REED KVieacaaa seen 12, 16, 18, 21, 22

Brown v. Western Railway of Alabama,

Re ek ee ee 16, 18

Central Vermont Railway Co. v. White,

ge ree er eana 17

Committee on Professional Ethics v. Bitter,

ZIP WE ee ee CH BPTFD bbc es ecceeccccs 15

County of Suffolk v. Long Island Lighting Co.,

710 F. Supp. 1407 (E.D.N.Y. 1989) .......... 19

Dice v. Akron, Canton & Youngstown Railroad Company,

a ef PP eee eee 16

Gentile v. State Bar of Nevada,

See OM Pre eee 22

Goldberg v. Kelley, 397 US. 354 (1970) ........ 25, 29

vi

Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981) ....... 19

Jahn v. Champagne Lumber Co., 157 F. 407

ee eee 17

Lindsey v. Normet, 405 U.S. 56 (1972) ...... 27, 28, 29

Little v. Streater, 452 U.S. 1 (1981) ........ 16, 24, 27

Logan v. Zimmerman Brush Co.,

8 RE 20, 24, 27

Louisiana State Bar Ass’n v. Edwins,

329 SO. 26 437 (La. 1976) .......... 8, 15, 20, 25

Mahoning County Bar Ass’n v. Ruffalo,

176 Ohio St. 263, 199 N.E.2d 396 (1964),

cert. denied, 379 U.S. 931 (1964) ........... 6, 13

Matthews v. Eldridge, 424 U.S. 319 (1976) ........ 24

Monessen Southwestern Railway Co. v. Morgan,

EEE vaca nda ee case neciensns 16

Mullane v. Central Hanover Bank & Trust Co.,

eee eT eee eee ee 24

NAACP v. Button, 371 U.S. 415 (1963) ....... 21, 22

Norfolk and Western R. Co. v. Liepelt,

SO SEED pc ac cca wae eascecvavs 16

Ortwein v. Schwab, 410 U.S. 656 (1973) .......... 27

People ex rel Chicago Bar Ass’n v. McCallum,

341 Ill. $78, 173 N.E. 27 (1930) ............ 13

In re Primus, 436 U.S. 412 (1978) ......... 15, 21, 23

Vii

Be re GAL, GS UG. T91 CIBES) nc i ccc ceceves 22

Rand v. Monsanto Co., 926 F.2d 596

gts 2 Serre eer eee ee Tere 19

In re Ratner, 194 Kan. 362, 399 P.2d 865 (1965) ... 23

Rinaldi v. Yeager, 384 U.S. 305 (1966) ........... 27

In re Ruffalo, 249 F. Supp. 432

oo ree ees eee 6, 12, 17

In re Ruffalo, 390 U.S. 544 (1968),

reversing, 370 F.2d 447 (1966) ............. 6, 17

Shapero v. Kentucky Bar Ass’n,

ee Oe as ks an odbc oO wee 22

In re Snyder, 472 U.S. 634 (1985) ...........0.. 17

Sperry v. Florida, 373 U.S. 379 (1963) ........... 17

In re Teichner, 75 Ill. 2d 88,

ee Che TE i ao be BAK eve aeen ees 20

United Mine Workers v. Illinois State Bar Ass’n,

git & yg: ee ee 18, 21, 22

United States v. Kras, 409 U.S. 434 (1973) ........ 26

Waldman v. Waldman, 118 A.D.2d 577,

499 N.Y.S.2d 185 (2d Dep’t. 1986) ........ 14, 15

Walters v. National Association of

Radiation Survivors, 473 U.S. 305 (1985) ...... 26

Zauderer v. Office of Disciplinary Counsel,

471 U.S. 626 (1985) ........... 9, 15, 21, 22, 24

Vili

Statutes and Rules

Federal Employers’ Liability Act (FELA),

ke errr rr er er ere err re 2

Ala. Rules of Prof. Conduct, Rule 1.8(e)(3) ...... 15

D.C. Rules of Prof. Conduct, Rule 1.8(d) ........ 15

Minn. Rules of Prof. Conduct, Rule 1.8 ........ 8, 15

N.D. Ill., Local Rules, Gen. R. 39 .............. 17

N.D. Rules of Prof. Conduct, Rule 1.8(e)(3) ...... 15

Ohio Code of Prof. Responsibility, DR 5-103 .. passim

Ohio Code of Professional Responsibility,

ob | POPPE TO TOT EECCA ETE EET 7, 28

Se ee le aos oe ee 0 06980 O ee ee Y

Other Materials

ABA, Final Draft of the Model Rules of

Professional Conduct, 67 ABA Journal

eee 14

ABA Formal Opinion No. 288 (Oct. 11, 1954) .... 13

ABA, Model Code of Professional

Responsibility, DR 5-103 (1969) ........ 7, 13, 14

ABA, Model Rules of Professional Conduct,

SE DP RUENEE. b robbs ee ces edwsscers 13, 14

ALI, Tentative Draft No. 4, Restatement of the Law

Governing Lawyers (April 10, 1991) ........ 14, 26

CO ei OO OO

ix

Annotation, 8 A.L.R. 3d 1155 (1966) ............ 13

G. Hazard and W. Hodes, The Law of Lawyering:

A Handbook on the Model Rules of Professionai

Conduct, 274 (2d Ed. 1992 Supp.) .......... 14

Note, Guaranteeing Loans to Clients Under

Minnesota’s Code of Professional Responsibility,

FF Ue ere 13

Note, Loans to Clients for Living Expenses,

oe Oe Mh) eee re 13

C. Wolfram, Modern Legal Ethics (1986) ..... 7, 14, 26

In The

Supreme Court of the United States

October Term, 1992

No. 92-

E. J. LEIZERMAN

Petitioner,

TOLEDO BAR ASSOCIATION

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT OF OHIO

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the Supreme Court of the State of

Ohio is reported at 64 Ohio St. 3d 669, and is reprinted in

the Appendix to this petition at pages Al-6. The Findings

of Fact, Conclusions of Law, and Recommendation of the

Board of Commissioners on Grievances and Discipline of

the Supreme Court of Ohio is not reported, and is

reprinted in the Appendix at pages A7-14.

JURISDICTION

The decision of the Supreme Court of Ohio was

issued on September 16, 1992. Al. A timely petition for

rehearing by petitioner EJ. Leizerman was denied on

October 28, 1992. A1S. This Court has jurisdiction under

28 U.S.C. § 1257.

STATUTORY AND CONSTITUTIONAL

PROVISIONS INVOLVED

DR 5-103(B) of the Code of Professional

Responsibility of the State of Ohio provides as follows:

While representing a client in connection with

contemplated or pending litigation, a lawyer shall

not advance or guarantee financial assistance to

his client, except that a lawyer may advance or

guarantee the expenses of litigation, including

court costs, expenses of investigation, expenses of

medical examination, and costs of obtaining and

presenting evidence, provided the client remains

ultimately liable for such expenses.

Petitioner also relies on the First Amendment and

Fourteenth Amendments to, and the Supremacy Clause in

Article VI of, the Constitution of the United States, which

are set forth in the Appendix at A16.

STATEMENT OF THE CASE

The Toledo Bar Association brought disciplinary

proceedings against Petitioner EJ. Leizerman for assisting

injured clients in obtaining bank loans for medical and

living expenses pending delays in resolution of their claims

for lost income and other compensation under the Federal

Employers’ Liability Act, 45 U.S.C. §§ 51-60 (“FELA”).

The Ohio Board of Commissioners on Grievances and

Discipline found that petitioner had not engaged in any

improper solicitation, that the loans were given only to

existing clients who needed the money to withstand delays

sins Wanecmmmmelabnaiiaibacoanaiuaiial

in litigation, and that the loan guarantees had not

interfered with petitioner’s obligation to exercise

independent professional judgment on behalf of his clients.

Nonetheless, the Board and the Ohio Supreme Court con-

cluded that DR 5-103(B) of the Ohio Code of Professional

Responsibility, which states that a lawyer shall not guaran-

tee financial assistance to a client, except litigation

expenses, flatly prohibits a lawyer from guaranteeing loans

| for medical or living expenses, even under the circum-

| stances presented here.

Petitioner seeks review by this Court because

Ohio’s prohibition on guaranteeing loans needed to sur-

vive litigation delays forces FELA claimants to forfeit their

right to trial and accept inadequate settlements. This

application of the Ohio rule is preempted by federal court

decisions holding that such loans are appropriate because

they allow FELA claimants to vindicate their rights. In

addition, it violates rights of access to the courts

recognized by this Court’s decisions under the First and

Fourteenth Amendments.

A. Evidence Concerning Loans to Clients.

Petitioner E. J. Leizerman has been a member of

the Ohio Bar since 1976. His primary area of practice is

representing personal injury claimants, and the majority of

his cases involve claims under the FELA. Apart from this

case, he has never been the subject of a disciplinary

proceeding. A2, All. Petitioner cooperated fully with the

Bar Association’s investigation, and the hearing in these

proceedings was conducted on the basis of stipulated facts,

exhibits, affidavits, and one-day of live testimony, see A8-

10, which established the following facts about the loans

at issue.

Petitioner and his former associate, Michael E.

McGill, represented several personal injury claimants who

were unable to work due to their injuries, and lacked any

other adequate sources of income. Because of court

delays, obtaining a hearing on their claims for lost wages

and other compensation could take two to four years.

Hearing Tr. at 33, 42. During this period, the claimants

were left without funds for medical treatment and support.

Without financial assistance, they would have been forced

to settle their claims “on the basis of desperation and not

the reasonable value” of their case. A22 (Affidavit of Jerry

W. Smith 4 8).

The evidence also showed that the railroad

industry, taking advantage of the economic pressure that

prolonged litigation places on unaided personal injury

claimants, “intentionally attempts to delay FELA cases in

order to force injured employees to settle their claims.”

Al2. A retired claims adjuster for Consolidated Rail

Corporation stated that the carrier “frequently and

purposely delayed the resolution of and settlement of

cases,” particularly with respect to persons who were

unrepresented or known to have no sources of income,

and that these practices enabled it “to negotiate settle-

ments with these persons on a greatly reduced basis and

in amounts which were, in my opinion, grossly low and

inadequate.” A418 (Affidavit of Ron W. Ward, 91 5, 6).

Consequently, the investigator stated, it is not uncommon

for attorneys to advance funds or guarantee loans in order

to provide claimants with living expenses while awaiting

resolution of their claims. /d. { 4.

To aid clients who faced financial hardship, Mr.

Leizerman and Mr. McGill assisted them in obtaining

loans from a_ local bank by signing as co-makers of the

loans. The loan notes were drawn in amounts of a few

thousand dollars, rolled over periodically and renewed,

with additions, if necessary, on a ninety-day basis. AQ,

A11; Hearing Tr. at 31-35. In each instance, the attorneys

made clear that the clients were ultimately responsible for

repaying the loan. Al2, Al3. The loan proceeds were

used only for medical and/or living expenses during pend-

ing litigation or settlement negotiations. Ai1-12. In

addition, the possibility of obtaining loans was never used

as a basis for advertising or solicitation, but was only

discussed with existing clients who raised the need for such

assistance after the attorney-client relationship had been

established. All, A13.

The loans allowed clients to endure pretrial delays

and obtain judgments or settlements that were more favor-

able than the offers made by the defendants when the

claimants were facing financial difficulties. See, e.g., A19-

20: Hearing Tr. at 99-100, 193-94. The clients who

obtained these loans attested that they were satisfied with

the handling of their cases, and had no complaints

concerning the loan process or the representation they

received. A12, 13.

Petitioner deliberately limited the clients that he

assisted in obtaining loans to clients pursuing claims under

the FELA. A8-9. Consequently, his conduct (as distin-

guished from Mr. McGill’s) only resulted in advancing

funds to FELA claimants. A2, All.' All the cases at

issue in the disciplinary proceeding for which petitioner

was responsible were filed in the federal courts in Ohio,

which have held that it is permissible for lawyers to

guarantee loans for living expenses of clients who need

financial assistance to withstand delays in litigation.

Hearing Tr. at 156. Indeed, the Ohio and federal court

precedents on this issue are in direct conflict. In 1964 the

1 Nine of the twelve loans involved in the disciplinary proceeding

were for FELA claimants and were procured by both attorneys; the

other three loans for non-FELA claims were procured by Mr. McGill

alone. The Board found that, although Mr. Leizerman signed notes

for the non-FELA cases after funds had been disbursed in order to

protect the integrity of other FELA loans, his actions did not result

in advancing funds to non-FELA clients. All, A8-9.

Supreme Court of Ohio, interpreting the Canons of

Professional Ethics adopted by Ohio at that time,

suspended an attorney because he advanced small sums of

money for living expenses to two recently widowed clients

pursuing claims under the FELA for the death of their

husbands. Mahoning County Bar Ass’n v. Ruffalo, 176

Ohio St. 263, 199 N.E.2d 396 (1964), cert. denied, 379 U.S.

931 (1964). The district court for the Northern District of

Ohio then reviewed this decision, but refused to impose

discipline against Mr. Ruffalo for this same conduct

because it concluded that advancing funds to permit clients

to withstand delays in litigation under FELA was not un- |

ethical or improper. Jn re Ruffalo, 249 F. Supp. 432 (N.D.

Ohio 1965). The court expressly rejected the Ohio

Supreme Court’s views, and determined that prohibiting

advances to assist a needy client in meeting living expenses

“is not in consonance with this Court’s concept of justice

or the underlying purposes of the Canons of Professional

Ethics,” because, among other things, banning such ad-

vances would undermine the rights of plaintiffs in FELA

litigation. Id. at 440-45.2__ In the disciplinary proceeding

below, petitioner established that the federal district court

for the Northern District of Ohio still follows the views

announced in Jn re Ruffalo, and had specifically approved

petitioner’s request for permission to advance funds for

living expenses to a FELA claimant who need the funds

because of litigation delays. See A24-26.

? The Sixth Circuit, in a separate disciplinary proceeding, declined

to address whether the loans made by Ruffalo constituted a valid basis

for disbarment, but relied on the Ohio disciplinary board’s findings to

disbar Ruffalo on alternative grounds. This Court reversed the Sixth

Circuit’s decision, finding that Ruffalo had been denied due process

in the state board’s hearing on the disciplinary charges. In re Ruffalo,

390 U.S. 544 (1968), reversing, 370 F.2d 447 (1966).

EN ge ae

B. Findings and Decisions of the Board of

Grievances and Discipline and the Supreme

Court of Ohio.

In October 18, 1990, the Toledo Bar Association

filed complaints against petitioner and Mr. McGill,

alleging that the loans described above violated DR 5-

103(B) of the Ohio Code of Professional Responsibility,

which is identical to the same provision in the American

Bar Association ("ABA") Model Code of Professional

Responsibility. See p. 1, supra. The stated purpose of this

Rule is to prevent attorneys from obtaining a financial

interest in the outcome of litigation that would interfere

with ‘the exercise of the attorney’s independent

professional judgment on behalf of a client.? At times,

the Rule is also defended on the ground that it prevents

attorneys from using the promise of advances to solicit

clients.‘

Petitioner argued that DR 5-103(B) should be con-

strued narrowly so that it did not prohibit guaranteeing

loans for existing clients who needed financial assistance

to obtain their day in court, because applying the rule to

such situations did not serve the interests the Code was

intended to promote and, if so applied, (i) Ohio’s author-

ity to apply the rule to loans made to assist FELA claim-

ants was preempted by the federal court’s approval of such

loans; and (ii) the rule would be unconstitutional under

3 See Ohio Code of Professional Responsibility, EC (Ethical

Consideration) 5-8 (“A financial interest in the outcome of litigation

also results if monetary advances are made by the lawyer to his

client.”); C. Wolfram, Modern Legal Ethics, § 9.2.3 at 507 (1986).

* See A6, (Opinion of Holmes, J., dissenting) (“The basic purpose

underlying the Disciplinary Rule addressed in this matter is to curtail

or regulate the unprofessional solicitation of clients through the

advancement of monies, or the direct assistance in attorney monies,

during the course of litigation.”); C. Wolfram, supra, § 9.2.3 at 507.

the First Amendment, and the Due Process and Equal

Protection clauses of the Fourteenth Amendments.°

In support of his constitutional challenges,

petitioner presented testimony from the former Minnesota

Director of Lawyers Professional Responsibility, Michael

J. Hoover, who stated that experience in Minnesota shows

that applying the Rule broadly to reach loans to indigent

clients who would otherwise be forced to accept inade-

quate settlements is not necessary to prevent unethical

conduct. Mr. Hoover testified that Minnesota’s version of

DR 5-103(B) was changed in 1985 to explicitly permit such

loans, and that adding this language to the Rule did not

result in any problems in protecting the public from un-

professional behavior. See A12; Hearing Tr. at 240, 245.

Moreover, Mr. Hoover noted that lawyers are per-

mitted to advance funds and acquire financial interests in

the outcome of the litigation for other purposes. Under

DR 5-103 of the Ohio Code, and the professional codes of

Minnesota and other jurisdictions, attorneys are permitted

to acquire an interest in the outcome of civil litigation (1)

by contracting for a reasonable contingency fee; and (ii) by

making advances or guaranteeing loans for litigation

expenses for clients. See Ohio Code of Prof. Responsi-

bility, DR 5-103; Minn. Rules of Prof. Conduct, Rule 1.8.

The conflict of interest concerns raised by these permitted

financial interests, Mr. Hoover testified, were not different

from those presented by lawyers guaranteeing loans for

living expenses. Hearing Tr. at 240-45. The Bar Associa-

tion presented no counter-evidence to show any state

interest in prohibiting attorneys from guaranteeing loans

to impecunious clients, nor did it offer evidence of any

5 See Louisiana State Bar Ass’n v. Edwins, 329 So. 2d 437, 446 (La.

1976) (interpreting identical provision of Louisiana Professional Code

to permit loans to indigent clients because applying rule would not

promote purpose of the Code and would raise constitutional

problems).

state interest in distinguishing loans for living expenses,

which are prohibited, from loans for litigation expenses,

contingency fees or other financial interests that lawyers

are permitted to acquire under the Ohio rules.

Under Ohio procedures, disciplinary complaints

are heard by the Board of Commissioners on Grievances

and Discipline, which, in turn, makes a recommendation

to the Supreme Court of Ohio.® A Hearing Panel of the

Board heard all the evidence and made the following

factual findings, which were adopted by the full Board of

Commissioners on Grievances and Discipline:

The testimony is uncontroverted that all the loans

were given only to already existing clients who

needed the money to withstand delays in litigation.

There is no evidence of improper solicitation.

Once it was determined loans were needed, they

were facilitated openly from a regulated financial

institution. These loans were made only after the

clients personally convinced the respondents that

the loans were needed. There is no evidence of

any interference with Respondents’ independent

professional judgment.

A11-12 (record citations omitted), A3.

Although the Board found that none of the inter-

ests promoted by the Disciplinary Rule was implicated

since there was no advertising or solicitation involved, and

“no evidence that the independent professional judgment

of either Respondent was compromised in any way,” the

Board concluded that the conduct was a clear violation of

DR 5-103(B). A13-14. It recommended that petitioner

and Mr. McGill be disciplined with a six-month suspen-

© Ohio Gov. Bar. R. V, §§ 2, 6, 8; Zauderer v. Office of Disciplinary

Counsel, 471 U.S. 626, 654 (1985).

a eT

10

sion, to be stayed on the condition that there be no

further violations of DR 5-103(B). A14.

Petitioner presented his federal claims to the

Board, but the Board concluded that constitutional

challenges were “beyond its jurisdiction to consider.” A13.

Petitioner’s federal challenges under the First and

Fourteenth Amendment and the Supremacy Clause (and

other arguments) were then presented to the Ohio

Supreme Court. See A30-A34. In a per curiam opinion,

the Court affirmed the Board’s conclusion that financial

assistance to needy clients, even when made to withstand

delays in FELA litigation, are prohibited under Ohio’s

Code of Professional Conduct. The Court did not discuss

the federal claims. Although it noted that petitioner’s

arguments against DR 5-103(B) “warrant some review,”

the Court entered judgment against petitioner based on

the Board’s findings, and reduced the Board’s recom-

mended penalty to a public reprimand. See A4-5. Two

judges dissented on the basis that the recommended

penalty should not have been reduced. AS5-6.’

On September 23, 1992, respondent filed a motion

for reconsideration based on the Ohio Supreme Court’s

failure to discuss his preemption and other constitutional

challenges. A35. The motion was denied, without

opinion, on October 28, 1992. A15.

7 During the course of the disciplinary proceedings, on December

11, 1991, a petition was submitted to the Ohio Supreme Court to

amend DR 5-103(B) to explicitly recognize an exception for loans

needed to withstand delays in litigation, as has been done in

Minnesota and other jurisdictions. See A27, A13, A4 n.1. No

amendment of the Rule has been adopted, however.

ae

11

SUMMARY OF REASONS FOR GRANTING THE WRIT

Most states now have disciplinary rules that, like

the Ohio rule at issue here, prohibit lawyers from pro-

viding financial assistance to clients they represent in

litigation, with the exception of advances for litigation

expenses. When applied to forbid any assistance for

medical and living expenses needed to survive delays in

| litigation, as Ohio did here, these rules deny personal

injury claimants, including FELA claimants, the assistance

needed to obtain a hearing to vindicate valid claims. This

Court should grant certiorari to review two sets of

important constitutional issues presented by the Ohio

Supreme Court’s decision in this case.

1. The decision below raises important consti-

tutional issues under the Supremacy Clause because it

involves the use of state disciplinary proceedings to

discipline attorneys representing claimants under a federal

statute in federal court for conduct that the federal courts

have explicitly approved because it fosters the vindication

of federal rights. The FELA and the standards of profes-

sional conduct in federal court proceedings are governed

by federal law. But in the decision below Ohio has

encroached on federal rights and on the authority of

federal courts by prohibiting attorneys from guaranteeing

loans for FELA claimants — despite the fact that federal

courts have declared that such loans are ethical precisely

because they are often needed to preserve the claimants’

right to just resolution of their FELA claims. Because

virtually all members of the federal bar are subject to state

disciplinary rules that may be inconsistent with federal law,

this use of state authority over attorneys to impose a pro-

hibition that is contrary to federal law raises important

issues concerning the ability of states to trespass on the

federal courts’ authority over attorney conduct, and to

impair the ability to obtain relief under the FELA.

12

2. The decision below also raises important

constitutional questions under this Court’s decisions

concerning the rights of access to the courts under the

First Amendment, and the Due Process and the Equal

Protection Clauses of the Fourteenth Amendment. The

use of state disciplinary rules in Ohio, and other states, to

prohibit lawyers from providing financial assistance to

indigent clients who will otherwise be forced to abandon

or accept an inadequate settlement of their claims because

of financial hardship caused by court delays is inconsistent

with the decisions of this Court holding that states cannot

enforce professional conduct or other rules that impose

unjustified or arbitrary barriers on access to the courts.

Review by this Court is warranted because, by prohibiting

attorneys from guaranteeing loans such as those involved

here, states may deprive a wide range of personal injury

claimants of the financial assistance needed to survive

prolonged litigation and resolve their claims on the merits,

without serving any legitimate state interest in preventing

improper solicitation or conflicts of interest.

REASONS FOR GRANTING THE WRIT

This Court has recognized that defendants can,

and often do, use the delays inherent in litigation to force

claimants to accept quick and cheap settlements, partic-

ularly in FELA actions. See Brotherhood of Railroad

Trainmen v. Virginia, 377 U.S. 1, 3-4 (1964). “ ‘The impor-

tance of financial aid from his lawyer to an injured

workman may spell the difference between injustice and

justice.’ ” In re Ruffalo, 249 F. Supp. at 444 (quoting

Mahoning County Bar Ass’n v. Ruffalo, 176 Ohio St. 263,

199 N.E.2d 396, 403 (Herbert, J., dissenting)). Court

delays can slow final resolution of a claim for years, and

railroads and other defendants can wait-out indigent claim-

ants until they are forced to abandon their claims alto-

gether, or settle them for a small percentage of their

reasonable value. “ ‘In short, the powerful can close ,the

13

doors of the courts to the weak by reason of the lack of

finances of the claimant.’ ” Jd.

This barrier to just resolution of FELA claims is

strengthened when state disciplinary rules are applied, as

Ohio has done here, to prohibit attorneys from guaran-

teeing loans for medical and living expenses that clients

need to survive prolonged litigation and resolve their

claims based on the merits. The problem is not limited to

Ohio, however. Most states now have rules that prohibit

attorneys from providing financial assistance to clients they

represent in litigation, with an exception only for litigation

expenses. These rules are not only a vestige of the ancient

prohibitions on champerty and maintenance, but are ac-

tually more restrictive than the common law. Prior to the

ABA’s adoption of the Model Code of Professional Re-

sponsibility in 1969, most cases recognized that it was not

improper for attorneys to provide advances for living ex-

penses to assist indigent clients “where without such aid

[the client] would be unable to enforce a just claim.”*

But most jurisdictions have displaced the common law

principles and canons with codes by adopting DR 5-103(B)

8 People ex rel Chicago Bar Ass'n v. McCallum, 341 Ill. 578, 173

N.E. 827, 831 (1930); see generally Annotation, 8 A.L.R. 3d 1155, 1158,

1176-77 (1966) (reviewing cases and summarizing general rule as

permitting loans for living expenses where loans are not used for

solicitation); Note, Loans to Clients for Living Expenses, 55 Cal. L.

Rev. 1419, 1421-23 (1967) (cases prior to 1955 “favored loans for

living expenses, recognizing that with them clients might withstand

unjust settlement offers they would otherwise accept out of

necessity”); Note, Guaranteeing Loans to Clients Under Minnesota’s

Code of Professional Responsibility, 66 Minn. L. Rev. 1091, 1093-99

(1982) (cases interpreting common law and Canons of Ethics adopted

by the ABA in 1908 generally approved loans for living expenses).

The principal pre-1969 authorities concluding that assistance for living

expenses is flatly prohibited were ABA Formal Opinion No. 288 (Oct.

11, 1954), and the Ohio Supreme Court’s decision in Mahoning County

Bar Ass’n v. Ruffalo, supra.

14

of the ABA Model Code, Rule 1.8(e) of the 1983 ABA

Model Rules of Professional Conduct, or comparable

provisions, which contain no express exception for such

loans.’ Despite criticism that prohibiting all loans for

* See Waldman v. Waldman, 118 A.D.2d 577, 499 N.Y.S.2d 185 (2d

Dep’t 1986) (language of DR 5-103(B) prohibits advances of money

motivated solely by concern for client’s financial plight that would

have been proper under the former Canons of Ethics); C. Wolfram,

supra § 9.2.3 at 508-509 & nn. 86-88 (pre-Code authority was divided,

but most decisions under the Code hold assistance with living expenses

is prohibited, no matter how needful the client); ALI, Restatement of

the Law Governing Lawyers, Tent. Draft No. 4, § 48 at 227, 231

(April 10, 1991) (“Loans going beyond litigation expenses are barred

in most jurisdictions”).

All together, forty-five states have adopted rules against financial

assistance that provide no explicit exemption for living or medical

expenses. See infra note 10 (describing jurisdictions that have such

exemptions). Many, like Ohio, have adopted the language of DR 5-

103(B) of the Model Code of Professional Responsibility. See supra at

1. Over half the states have now adopted Model Rule 1.8(e), which

provides:

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 in-

digent client may pay court costs and expenses of litigation

on behalf of a client.

The final draft version of Model Rule 1.8(e) contained language

permitting advances of “reasonable and necessary medical and living

expenses,” see Final Draft of the Model Rules of Professional Con-

duct, 67 ABA Journal 12 (Spec. Supp., Oct., 1981), but it was amended

to remove this language before final adoption. G. Hazard and W.

Hodes, The Law of Lawyering: A Handbook on the Model Rules of

Professional Conduct, 274 (2d Ed. 1992 Supp.) Nevertheless, the

Model Rule is more liberal than DR 5-103 because it does not require

that the “client remains ultimately liable for [financial assistance with

litigation] expenses.” Thus, the attorney is permitted to finance

litigation expenses without the assurance that they will be repaid by

the client.

ee

living expenses is unjustified and prejudices the rights of

needy claimants, only a few jurisdictions have adopted

rules that explicitly permit such assistance.'°

The Ohio Supreme Court’s decision in this case

places the constitutional infirmities of rules that prohibit

loan guarantees needed to withstand litigation delays in

particularly sharp focus because (i) the decision is contrary

to the Ohio federal courts’ determination that such loans

should be permitted, and (ii) the findings of fact below

demonstrate that the ban does not serve any of the state

interests behind the ethics rules. The only result of

applying the state rule to bar the loan guarantees at issue

in this proceeding is to prevent needy clients who have

valid claims under the FELA from obtaining the financial

assistance necessary to survive until they can have their

claims heard in federal court. Thus, this rule falls within

a familiar pattern of cases in which prophylactic

disciplinary rules have been declared unconstitutional

when applied in a manner that does not serve the interests

behind the rule. See Zauderer v. Office of Disciplinary

Counsel, 471 U.S. 626, 644-45 (1985); In re Primus, 436

10 See A27, Minn. Rules of Professional Conduct, Rule 1.8(e)(3)

(lawyer may guarantee loan needed to withstand delays in litigation);

N.D. Rules of Prof. Conduct, Rule 1.8(e)(3) (same); A28, D.C. Rules

of Prof. Conduct, Rule 1.8(d) (lawyer may provide financial assistance

necessary to maintain litigation); Ala. Rules of Prof. Conduct, Rule

1.8(e)(3) (permitting emergency financial assistance); Texas Rules of

Professional Conduct, Rule 1.8(d)(1) (permitting advances for reason-

ably necessary medical and living expenses); Cal. Rules of Professional

Conduct, Rule 4-210(A)(2) (permitting loans to clients). Louisiana

has recognized such an exception by narrowly interpreting DR 5-

103(B) as not prohibiting loans to existing clients for necessary living

expenses. Louisiana State Bar Ass'n v. Edwins, 329 So.2d at 446. Other

jurisdictions, however, have concluded that such interpretations are

foreclosed by the language of their code or rules. See Waldman v.

Waldman, supra; Committee on Professional Ethics v. Bitter, 279

N.W.2d 521, 523 (Iowa 1979).

16

U.S. 412 (1978). Regardless of the general validity of the

rule, it is unconstitutional when applied in a manner that

serves no state interest, but “ ‘operates to deprive an

individual of a protected right.’ ” Little v. Streater, 452

USS. 1, 16 (1981) (quoting Boddie v. Connecticut, 401 U.S.

371, 379 (1971)). The decision below should be reviewed

by this Court because it infringes on both the rights

protected by the FELA, and the constitutional rights of

access to the courts protected by the First and Fourteenth

Amendments.

I. OHIO’S APPLICATION OF ITS PROHIBITION ON

LOAN GUARANTEES FOR LIVING EXPENSES TO

LOANS FOR FEDERAL FELA CLAIMANTS, WHEN

SUCH GUARANTEES HAVE BEEN APPROVED BY

THE FEDERAL COURTS, PRESENTS AN IMPOR-

TANT ISSUE UNDER THE SUPREMACY CLAUSE

THAT SHOULD BE RESOLVED BY THIS COURT.

The FELA was enacted to create a federal right to

compensation for injured railroad employees that would

displace state “common-law rules that sometimes made

recovery difficult or even impossible.” Brotherhood of

Railroad Trainmen, 377 U.S. at 3. In order to protect

these federal rights, this Court has on several occasions

granted certiorari to make clear that federal rights are not

“defeated by the forms of local practice,” Brown v. Western

Railway of Alabama, 338 U.S. 294, 296 (1949), and

underscore that “federal law governs cases under the

[FELA].” Dice v. Akron, Canton & Youngstown Railroad

Company, 342 U.S. 359, 361-62 (1952). In doing so, the

Court has held that state procedural and pleading rules

that impair the right of workers to vindicate their rights

under the FELA are preempted by federal law, even when

state courts are exercising concurrent FELA jurisdiction.

See Monessen Southwestern Railway Co. v. Morgan, 486

U.S. 330, 335-36 (1988); Norfolk and Western R. Co. v.

Liepelt, 444 U.S. 490, 493 (1980); Brady v. Southern

——<— ee

17

Railway Co., 320 U.S. 476 (1943); Central Vermont Railway

Co. v. White, 238 U.S. 507 (1915).

In addition, this Court has made clear that the

rules of professional conduct in federal courts are

controlled by federal law, and not by state law. In re

Snyder, 472 U.S. 634, 645 n.6 (1985); In re Ruffalo, 390

US. 544, 547 (1968). Efforts by states to exercise their

disciplinary authority in a manner that conflicts with

federal law and impairs the ability of attorneys to vindicate

federal rights are preempted. See Sperry v. Florida, 373

U.S. 379 (1963) (state law against unauthorized practice of

law preempted by federal law licensing patent attorneys).

A state cannot hinder or obstruct “the right to perform

the functions within the scope of the federal authority.” Jd.

at 385.

The discipline imposed by the Supreme Court of

Ohio’s actions cannot be reconciled with either of these

lines of authority. First, by applying a state disciplinary

rule to FELA cases, the Ohio Supreme Court has imposed

standards that are inconsistent with the standards of

conduct established by the federal courts. The discipline

imposed here is contrary to the decision of the federal

District Court for the Northern District of Ohio specif-

ically rejecting the Ohio Supreme Court’s view and con-

cluding that it would be unjust to prohibit attorneys from

guaranteeing such loans for FELA claimants. Jn re Ruffalo,

249 F. Supp. at 442-45. It is also inconsistent with the

evidence showing that the federal court in Ohio still

endorses such assistance. A26."' The implications of the

1! The Ohio federal courts are not alone. See N.D. Ill. Local

Rules, Gen. R. 39 (providing that, for good cause shown, court may

approve advances by attorney to client for living costs); Jahn v.

Champagne Lumber Co., 157 F. 407, 418 (W.D. Wisc. 1908) (“It has

never been held violative of law or public policy to give financial aid

(continued...)

18

use of state disciplinary authority to interfere with the

representation of clients in federal court is not limited to

the FELA, however. Virtually all attorneys practicing in

federal court are members of state bars that may have

disciplinary rules that are contrary to federal law. Under

the Supremacy Clause, states cannot be permitted to

punish attorneys litigating in federal court for taking

actions that the federal courts have authorized.

Second, by prohibiting attorneys from representing

FELA claimants in a manner that has been expressly

approved by the federal courts, the Ohio Rule specifically

frustrates the ability of FELA claimants to obtain the fair

hearing of their claims under federal law. The Supremacy

Clause prohibits states from obstructing federally pro-

tected rights to relief in this manner. Cf. Brown v. Western

Railway, 338 U.S. at 296 (state pleading rule cannot be

used to defeat rights protected by the FELA). For

example, a state could not impose an ethics rule pro-

hibiting attorneys bringing class actions in federal court

from communicating with potential class members, because

such a rule would be inconsistent with the policies behind

the federal class action rule. Cf. Gulf Oil Co. v. Bernard,

452 U.S. 89, 99-102 (1981). Likewise, a state could not

frustrate the enforcement of federal legislation by prohibit-

ing attorneys from entering into reasonable contingent fee

arrangements, or forbidding advances for litigation ex-

penses, where such practices are consistent with federal

law and help to vindicate the federal rights at issue. See

County of Suffolk v. Long Island Lighting Co., 710 F. Supp.

1407, 1414-1S (E.D.N.Y. 1989) (DR 5-103(B) restrictions

on advancing litigation expenses preempted insofar as they

(continued)

to a poor suitor who is prosecuting a meritorious cause of action. . . .

The law does not tolerate the notion that a powerful defendant may

force the abandonment of a suit whenever he is able to exhaust the

slender means of a weak antagonist.”)

19

are inconsistent with national policies that underlie class

actions); accord Rand v. Monsanto Co., 926 F.2d 596, 600-

01 (7th Cir. 1991); Baylson v. Disciplinary Board of the

Supreme Court of Pennsylvania, 764 F.Supp. 328, 348-49

(E.D. Pa. 1991).

The disciplinary rule at issue here is preempted for

the same reason. The federal courts in Ohio have

declared that guaranteeing loans for indigent FELA claims

is ethical and assists in vindicating the rights created by

Congress under the FELA. Enforcement of the state’s

contrary rule in cases involving assistance to FELA claim-

ants undermines the rights created by Congress by denying

claimants the assistance that they need to resolve their

claims based on the merits, rather than financial despera-

tion. Moreover, the existence of similar disciplinary rules

in other jurisdictions prevents, or at least deters, such

assistance to FELA claimants because of the threat that

States may use their regulatory authority over attorneys to

prevent assistance to claimants in FELA cases, or similar

actions under federal law.””

Accordingly, the decision below undermines both

the authority of the federal courts and the rights protected

by the FELA. This Court should grant certiorari to

remove the inconsistency between the state and federal

2 This Court’s decision in Brotherhood of Railroad Trainmen,

rested on the First Amendment rather interference with the federal

FELA rights in violation of the Supremacy Clause. See United Mine

Workers, 389 U.S. 217, 224 n.9 (1967) (decisions in Button and

Brotherhood of Railroad Trainmen did not rest on state interference

with federal programs, so they are equally applicable to litigation

involving rights created by state law). Nevertheless, the Court did

note that “[a] State could not, by invoking the power to regulate the

professional conduct of attorneys, infringe in any way the right of

individuals and the public to be fairly represented in lawsuits

authorized by Congress to effectuate a basic public interest.”

Brotherhood of Railroad Trainmen, 377 U.S. at 7.

20

ethical standards, and declare that federal law controls

whether or not attorneys can guarantee loans needed for

FELA claimants to withstand delays in litigation.

II. STATE RULES PROHIBITING ATTORNEYS FROM

GUARANTEEING LOANS FOR CLIENTS WHO

NEED FINANCIAL ASSISTANCE TO WITHSTAND

LITIGATION DELAYS IMPAIR RIGHTS OF

ACCESS TO THE COURTS PROTECTED BY THE

FIRST AND FOURTEENTH AMENDMENTS, AND

PRESENT IMPORTANT CONSTITUTIONAL

ISSUES THAT SHOULD BE SETTLED BY THIS

COURT.

Prohibiting loans for living expenses of clients who,

without such financial assistance, will be unable to have

their day in court also presents important constitutional

issues under the decisions of this Court concerning the

rights protected by the First Amendment, and by the Due

Process and Equal Protection Clauses of the Fourteenth

Amendment. Lower courts have repeatedly questioned

the constitutionality of applying these rules to impede the

ability of indigent personal injury claimants to pursue their

claims in Court. See Louisiana State Bar Ass’n v. Edwins,

329 So.2d 437, 446 (La. 1976); In re Teichner, 75 Ill. 2d 88,

387 N.E.2d 265, 271-72 (1979). These important issues

should be resolved by this Court.

This Court’s decisions have declared that the First

Amendment, and the Due Process and Equal Protection

Clauses of the Fourteenth Amendment establish closely

related and, to some extent, overlapping restrictions on

states’ abilities to impose prohibitions that handicap access

to the courts. See Logan v. Zimmerman Brush Co., 455

U.S. 422, 430 n.5 (1982). Ohio’s ban on assisting needy

clients to withstand delays in litigation by guaranteeing

bank loans fails to satisfy the tests established by the

Court under each of these provisions.

21

A. The First Amendment. This Court has recog-

nized that litigation, and assistance to litigants, is protected

by the First Amendment. NAACP v. Button, 371 U.S. 415,

429-30 (1963); accord In re Primus, 436 U.S. at 431-32.

Moreover, the Court has specifically held that efforts to

assist injured workers in pursuing FELA claims are pro-

tected by the First Amendment, Brotherhood of Railroad

Trainmen, 377 U.S. 1 (Virginia prohibition on union plan

for advising injured workers to obtain representation of

union-approved attorneys for FELA claims violates First

Amendment). The First Amendment interests recognized

in Button are equally applicable to litigation “solely

designed to compensate the victims of industrial acci-

dents.” United Mine Workers v. Illinois State Bar Ass’n, 389

U.S. 217, 223 (1967).

These cases hold that state professional conduct

rules that handicap the ability to provide assistance to

litigants must be drawn “with narrow specificity.” Button

371 U.S. at 433, 438. Prophylactic rules aimed at pre-

venting maintenance of baseless litigation or conflicting

interests may not be applied broadly unless the state

demonstrates a “substantial regulatory interest, in the form

of substantive evils flowing from the petitioner’s activities,

which can justify the broad prohibitions which it has

imposed.” Id. at 444; accord United Mine Workers v.

Illinois State Bar Ass’n, 389 U.S. at 222-23; Brotherhood of

Railroad Trainmen v. Virginia, 377 U.S. at 7-8. Moreover,

the state’s interest must not be speculative or theoretical;

the state bears the burden of making a “showing of a

serious danger here of professionally reprehensible

conflicts,” to justify the rule. Button, 371 U.S. at 443;

accord Brotherhood of Railroad Trainmen, 377 U.S. at 8.

Thus, “the burden is on the State to present a substantial

government interest justifying the restriction . . . and to

demonstrate that the restriction vindicates that interest

through the least restrictive means.” Zauderer, 571 U.S.

at 647.

22

This Court’s holdings in Button and Brotherhood of

Railroad Trainmen were summarized in United Mine

Workers v. Illinois State Bar Ass’n, which held that applying

Illinois’ rules against the unauthorized practice of law to

prohibit a union from hiring a lawyer to handle workmen’s

compensation claims for its members violates the First and

Fourteenth Amendments. The state prohibition on

solicitation struck down in Button violated the First

Amendment, the Court said, because “the dangers of

baseless litigation and conflicting interests” it purported to

prevent were “far too speculative to justify the broad

remedy invoked by the State.” Jd. at 223. Likewise, in

Brotherhood of Railroad Trainmen v. Virginia, Virginia’s

prohibition on a union plan for advising injured workers

to obtain representation by union-approved attorneys to

assist them in pursuing FELA claims was found unconsti-

tutional because there was only “a theoretical possibility”

of conflict of interests, and this “distant possibility of harm

could not justify” the prohibition on the union’s efforts to

assure that “each injured member would be justly compen-

sated for his injuries.” Id. In United Mine Workers the

state’s prohibition was struck down because “there was

absolutely no indication that the theoretically imaginable

divergence between the interests of the union and member

arose in the context of the particular lawsuit,” id. at 224,

and the state failed to produce any evidence that per-

mitting assistance to injured workers would result in any

harm to the public. Jd. at 225.

Subsequent cases have reaffirmed these principles

in concluding that certain prophylactic disciplinary rules of

Ohio and other states are unconstitutional under the First

Amendment. See, e.g., Gentile v. State Bar of Nevada, __

U.S. ___ (1991); Shapero v. Kentucky Bar Ass’n, 486 U.S.

466, 472-78 (1988); Zauderer, 471 U.S. at 639-48; Bates v.

State Bar of Arizona, 433 U.S. 350 (1977). These cases

firmly establish that state disciplinary rules that infringe on

First Amendment rights cannot be applied indiscriminately

1 manana

:

23

to circumstances where the conflicts of interest or other

substantive evil the rules purport to regulate are absent, or

are merely hypothetical. See In re RJ.M., 455 U.S. 191,

207 (1982); In re Primus, 436 U.S. at 436.

Ohio’s application of its prohibition on financial

assistance to clients to the conduct at issue here cannot

withstand scrutiny under the test in Button and its progeny.

The decision below plainly frustrates access to the courts.

The state acknowledged that the loan guarantees were

given only to clients who demonstrated a need for finan-

cial assistance in order to continue to pursue their claims

during the delays in litigation. Thus, prohibiting such

guarantees strengthens defendants’ ability to force claim-

ants to accept settlements based on financial hardship, and

prevents indigent clients from pursuing valid claims. By

barring the financial assistance necessary for claimants to

survive court delays and resolve their claims on the merits,

the rule infringes on rights protected by the First

Amendment.

The state’s own findings establish that there is no

countervailing state interest to justify this infringement.

The Board acknowledged that the loans were made

through an independent financial institution, that there

was no improper solicitation, and that there was no

conflict of interest involved. Indeed, the state was unable

to identify any state interest served by prohibiting loans

for living expenses needed to allow claimants to survive

court delays and obtain a hearing on their claims.”

While the rule reduces litigation by limiting the ability of

impecunious clients to pursue their claims through pretrial

13 See also In re Ratner, 194 Kan. 362, 399 P.2d 865, 874 (1965)

(where there is no improper solicitation, loaning money to client so

he could live until case was tried rather than being forced to settle

does not present any of the evils addressed by rules against

maintenance).

hte

24

delays, this does not reflect a legitimate state interest but,

to the contrary, underscores the constitutional infirmities

of the rule. This Court has made clear that “we cannot

endorse the proposition that a lawsuit, as such, is an evil.

... That our citizens have access to their civil courts is not

an evil to be regretted; rather it is an attribute of our

system of justice in which we ought to take pride.”

Zauderer, 471 U.S. at 643. Thus, by prohibiting financial

assistance needed to permit litigants to have their day in

court, the state unconstitutionally violates rights protected

by the First Amendment.

B. Due Process. A client’s cause of action under

the FELA is plainly “a species of property protected by

the Fourteenth Amendment’s Due Process Clause.” Logan

v. Zimmerman Brush Co., 455 U.S. at 428-31; Mullane v.

Central Hanover Bank & Trust Co., 339 U.S. 306, 313

(1950). The Due Process Clause protects access to the

courts to obtain a hearing on such claims, and requires

that state laws that deprive litigants of that access be

justified by an overriding state interest. “[H]aving made

access to the courts an entitlement or a necessity, the

State may not deprive someone of that access unless the

balance of state and private interests favors the govern-

ment scheme.” Logan 455 U.S. at 430 n. 5; see also Little

v. Streater, 452 U.S. at 13-16; Matthews v. Eldridge, 424

U.S. 319, 335 (1976) (due process requires balancing

private interests, and risk of erroneous deprivation, against

government’s interests); Boddie v. Connecticut, 401 U.S. at

3%

Ohio’s prohibition on guaranteeing loans for living

expenses to clients who need financial assistance in order

to withstand delays in litigation cannot withstand scrutiny

under this balancing test. The private interests affected by

the prohibition are substantial. The prohibition on obtain-

ing assistance for living expenses not only burdens, but

25

ee

may deprive, indigent claimants of their right to obtain a

hearing on their claims:

If an impoverished person is unable to secure

subsistence from some source during disability, he

may be deprived of the only effective means by

which he can wait out the necessary delays that

result from litigation to enforce his cause of

action. He may, for reasons of economic necessity

and physical need, be forced to settle his claim for

an inadequate amount.

Louisiana State Bar Ass’n v. Edwins, 329 So.2d at 446.

Indeed, the impact of the rule is particularly acute

in personal injury claims, like the FELA claims at issue

here, where the claimant’s need for assistance and the

claim of entitlement that has been delayed are directly

linked. In such actions, the claimant alleges that it is the

defendants’ tortious conduct that resulted in the injuries

that give rise to his or her medical expenses and loss of

earnings — but, without financial assistance, the claimant

will be unable to survive the delays necessary to obtain a

hearing on his or her entitlement to compensation for

these very same losses. This Court has recognized that

delays in resolving a claim of entitlement to funds that are

needed for the claimant’s support raise special

constitutional concerns. See Goldberg v. Kelley, 397 U.S.

254, 264-65 (1970) (due process requires pre-termination

hearing where claim is for benefits that provide essential

means of support). The prohibition on financial assistance

imposed by Ohio not only ignores this problem, but

assures that defendants that are allegedly responsible for

the claimants’ hardship also have every incentive and

opportunity to use litigation delays to place even more

economic pressure on injured FELA claimants in order to

deprive them of their day in court. See C. Wolfram, supra

§ 9.2.3 at 509.

26

On the other hand, no countervailing substantial

state interest is advanced by applying this prohibition to

the type of loans prohibited by the Ohio Supreme Court

here. Narrower rules, drawn to recognize that it is

permissible to guarantee a loan that “is needed to with-

stand delay in litigation that otherwise might unjustly

induce the client to settle or dismiss a case because of

financial hardship rather than on the merits,” adequately

protect the state’s interest in preventing unethical conduct.

ALI, Tentative Draft No. 4, Restatement of the Law

Governing Lawyers § 48(2)(b), pp. 224-25, 227-28; see A27-

29; supra note 10 (describing rules of other jurisdictions

permitting loans for living expenses).

In the proceedings below, the Toledo Bar Associa-

tion asserted that the prohibition raised no due process

concerns by relying on United States v. Kras, 409 U.S. 434

(1973), and Walters v. National Association of Radiation

Survivors, 473 U.S. 305 (1985). Those decisions are plainly

inapposite. In Kras the Court concluded that there was no

due process violation presented by conditioning discharge

of debts in voluntary bankruptcy on the payment of filing

fees because bankruptcy was not a fundamental right.

This case, however, involves denial of the right to a

hearing on a property right claim under FELA — a funda-

mental right protected by the Due Process Clause. In

Walters, the Court upheld a limitation on attorneys fees

because the administrative hearings provided to claimants

were designed to be informal, nonadversarial, and favor

the claimant. 473 U.S. at 323-24, 333-34. There was no

contention that the claimants were deprived of their right

to a hearing, only that they were effectively denied the

ability to retain counsel. In contrast, the only hearing

FELA claimants may obtain is a formal, adversarial

hearing in court, and the claimants who cannot survive

27

court delays without financial assistance are wholly

deprived of any hearing."

C. Equal Protection. The Equal Protection

Clause requires that state rules drawing distinctions that

impose particular burdens on the right to be heard “must

be kept free of unreasoned distinctions that can only

impede open and equal access to the courts.” Rinaldi v.

Yeager, 384 U.S. 305, 310-11 (1966). Accordingly, this

Court has held that state rules that limit the rights of

particular categories of claimants by creating distinctions

that are not rationally related to legitimate governmental

objectives are unconstitutional under the Equal Protection

Clause. Logan, 455 U.S. at 439 (Blackmun, J., con-

curring); id. at 444 (Powell, J., concurring); see also

Lindsey v. Normet, 405 U.S. 56 (1972) (special requirement

that defendants in summary ejectment proceedings post

double bond to appeal violates equal protection).

Ohio’s disciplinary rules violate the Equal Protec-

tion principles established in these cases by flatly pro-

hibiting loans for medical and living expenses, while

permitting attorneys to acquire interests in the outcome of

the litigation through other means. The different treat-

ment afforded various financial interests under the Ohio

Rules is not “reasonably tailored to achieve” any state

interest. Lindsey v. Normet, 405 U.S. at 78-79. The state

permits lawyers to enter into agreements for contingent

fees and advance costs for litigation expenses because

4 The decision in Ortwein v. Schwab, 410 U.S. 656 (1973), is

distinguishable for the same reason. In Ortwein this Court held that

a $25 filing fee to appeal decisions rendered after a state

administrative hearing did not violate the due process clause because

the claimants were afforded an administrative hearing that satisfied

the requirements of due process. No such administrative hearing is

available here. See Little v. Streater, 452 U.S. at 16 n.12 (where interest

is constitutionally significant and no alternative forum exists, case is

comparable to Boddie rather than to Kras and Ortwein).

28

these practices “may be the only way a client can enforce

his cause of action.”’* But the state arbitrarily forbids

all loans for medical or living expenses — even though such

advances may be equally necessary for clients to enforce

their rights.

This arbitrary distinction leads to irrational results.

Under the Ohio rules, attorneys can advance funds to pay

a physician to perform a medical evaluation of a client’s

injuries in preparation for trial, but cannot guarantee a

loan to pay for the treatment of those same injuries —

even when the treatment is necessary to mitigate the harm

from the injury. In addition, loans for medical and living

expenses are prohibited regardless of the amount or cir-

cumstances, while advances for litigation costs are un-

limited. Thus, the rules permit attorneys to make

advances for litigation expenses that may result in their

acquiring a substantial interest in the outcome of the

claim, but prohibit any guarantees for living expenses — no

matter how modest those expenses are in relation to the

claim. These distinctions are not justified by any interest

in preventing attorneys from acquiring a financial stake

that would impair professional judgment, as such impair-

ment depends upon the amount of the advances or inter-

est, not the type of expenses needed to pursue the

litigation.

Moreover, the burden imposed by the prohibition

obviously falls only upon poor clients, and places a

particular burden on claimants who are in need of finan-

cial assistance precisely because they have been injured,

and their request for compensation has been delayed in

the courts. Such claimants, because they are unable to

obtain financial assistance, may be foreclosed from

pursuing their claim for the loss wages and injuries that

give rise to their financial distress “no matter how

15 Chio Code of Professional Responsibility, EC 5-7, 5-8.

29

meritorious their case may be.” Lindsey v. Normet, 405

U.S. at 79; cf. Goldberg v. Kelley, 397 U.S. at 264-65.

Thus, the different treatment afforded to living and

medical expenses, litigation expenses, and contingency

fees, is not rationally related to any legitimate govern-

mental purpose, and merely serves to impair the rights of

needy clients to pursue legitimate claims that they are

entitled to compensation to cover their living and medical

expenses.

For all these reasons, the application of state

professional codes to prohibit loans for living expenses in

order to withstand delays in litigation, as Ohio has done

here, presents important constitutional issues that should

be resolved by this Court.

CONCLUSION

The Court should issue a writ of certiorari to

review the federal constitutional challenges to the

Supreme Court of Ohio’s application of DR 5-103(B) to

prohibit loans for medical and living expenses needed in

order for FELA claimants to withstand delays in litigation.

Respectfully submitted,

Michael E. Tankersley Mark H. Aultman

(Counsel of Record) Charles W. Kettlewell

David C. Vladeck 150 East Wilson Bridge Road

Alan B. Morrison Suite 200

Public Citizen Worthington, Ohio 43085

Litigation Group (614) 436-2750

2000 P Street, N.W., Suite 700

Washington, D.C. 20036

(202) 833-3000

January 26, 1993 Counsel for Petitioner