Rule 1.8. CONFLICT-OF-INTEREST: CURRENT CLIENTS: SPECIFIC RULES

CONFLICT-OF-INTEREST: CURRENT CLIENTS: SPECIFIC RULES

(a)

A lawyer shall not enter into a business transaction with a client

or knowingly acquire an ownership, possessory, security or other

pecuniary interest adverse to a client unless:

(1)

the transaction and terms on which the lawyer acquires the

interest are fair and reasonable to the client and are fully

disclosed and transmitted in writing in a manner that can be

reasonably understood by the client;

(2)

the client is advised in writing of the desirability of seeking and

is given a reasonable opportunity to seek the advice of

independent legal counsel on the transaction; and

(3)

the client gives informed consent, in a writing signed by the

client, 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.

(b)

A lawyer shall not use confidences or secrets of a client to the

disadvantage of the client unless the client gives informed consent,

except as permitted or required by these Rules.

(c)

A lawyer shall not solicit any substantial gift from a client,

including a testamentary gift, or prepare on behalf of a client an

instrument giving the lawyer or a person related to the lawyer any

substantial gift unless the lawyer or other recipient of the gift is

related to the client. For purposes of this paragraph, related persons

include a spouse, child, grandchild, parent, grandparent or other

relative or individual with whom the lawyer or the client maintains a

close, familial relationship.

(d)

Prior to the conclusion of representation of a client, a lawyer shall

not make or negotiate an agreement giving the lawyer literary or

media rights to a portrayal or account based in substantial part on

confidences or secrets of the client.

hild, grandchild, parent, grandparent or other

relative or individual with whom the lawyer or the client maintains a

close, familial relationship.

(d)

Prior to the conclusion of representation of a client, a lawyer shall

not make or negotiate an agreement giving the lawyer literary or

media rights to a portrayal or account based in substantial part on

confidences or secrets of the client.

(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.

(f)

A lawyer shall not accept compensation for representing a client

from one other than the client unless:

(1)

the client gives informed consent;

(2)

there is no interference with the lawyer’s independence of

professional judgment or with the client-lawyer relationship;

and

(3)

the confidences and secrets of a client are protected as

required by Rule 1.6.

(g)

A lawyer who represents two or more clients shall not participate

in making an aggregate settlement of the claims of or against the

clients, or in a criminal case an aggregated agreement as to guilty or

nolo contendere pleas, unless each client gives informed consent, in a

writing signed by the client. The lawyer’s disclosure shall include the

existence and nature of all the claims or pleas involved and of the

participation of each person in the settlement.

n making an aggregate settlement of the claims of or against the

clients, or in a criminal case an aggregated agreement as to guilty or

nolo contendere pleas, unless each client gives informed consent, in a

writing signed by the client. The lawyer’s disclosure shall include the

existence and nature of all the claims or pleas involved and of the

participation of each person in the settlement.

(h)

A lawyer shall not:

(1)

make an agreement prospectively limiting the lawyer’s liability

to a client for malpractice; or

(2)

settle a claim or potential claim for such liability with an

unrepresented client or former client unless that person is

advised in writing of the desirability of seeking and is given a

reasonable opportunity to seek the advice of independent legal

counsel in connection therewith.

(i)

A lawyer shall not acquire a proprietary interest in the cause of

action or subject matter of litigation the lawyer is conducting for a

client, except that the lawyer may:

(1)

acquire a lien authorized by law against the proceeds of such

action or litigation to secure the lawyer’s fee or expenses; and

(2)

contract with a client for a reasonable contingent fee in a civil

case, subject to the limitations in Rule 1.5(c) and (d).

(j)

A lawyer shall not have sexual relations with a client unless a

consensual sexual relationship existed between them when the

client-lawyer relationship commenced.

(k)

While lawyers are associated in a firm, a prohibition in the

foregoing paragraphs (a) through (i) that applies to any one of them

shall apply to all of them.

il

case, subject to the limitations in Rule 1.5(c) and (d).

(j)

A lawyer shall not have sexual relations with a client unless a

consensual sexual relationship existed between them when the

client-lawyer relationship commenced.

(k)

While lawyers are associated in a firm, a prohibition in the

foregoing paragraphs (a) through (i) that applies to any one of them

shall apply to all of them.

(l)

A lawyer related to another lawyer (as parent, child, sibling,

domestic associate or spouse), ordinarily may not represent a client

in a matter where the related lawyer is representing another party

who is or shall be adverse to the lawyer’s client, unless each client

gives informed consent, confirmed in writing.

COMMENT

Business Transactions Between Client and Lawyer

[1]

A lawyer’s legal skill and training, together with the relationship

of trust and confidence between lawyer and client, create the possibility of

overreaching when the lawyer participates in a business, property or financial

transaction with a client, for example, a loan or sales transaction or a lawyer

investment on behalf of a client. The requirements of paragraph (a) must be

met even when the transaction is not closely related to the subject matter of

the representation, as when a lawyer drafting a will for a client learns that the

client needs money for unrelated expenses and offers to make a loan to the

client. The Rule applies to lawyers engaged in the sale of goods or services

related to the practice of law, for example, the sale of title insurance or

investment services to existing clients of the lawyer’s legal practice. See Rule

5.7. It also applies to lawyers purchasing property from estates they

represent. It does not apply to ordinary fee arrangements between client and

lawyer, which are governed by Rule 1.5, although its requirements must be

met when the lawyer accepts an interest in the client’s business or other

nonmonetary property as payment of all or part of a fee

nts of the lawyer’s legal practice. See Rule

5.7. It also applies to lawyers purchasing property from estates they

represent. It does not apply to ordinary fee arrangements between client and

lawyer, which are governed by Rule 1.5, although its requirements must be

met when the lawyer accepts an interest in the client’s business or other

nonmonetary property as payment of all or part of a fee. In addition, the Rule

does not apply to standard commercial transactions between the lawyer and

the client for products or services that the client generally markets to others,

for example, banking or brokerage services, medical services, products

manufactured or distributed by the client, and utilities’ services. In such

transactions, the lawyer has no advantage in dealing with the client, and the

restrictions in paragraph (a) are unnecessary and impracticable.

[2]

Paragraph (a)(1) requires that the transaction itself be fair to the

client and that its essential terms be communicated to the client, in writing, in

a manner that can be reasonably understood. Paragraph (a)(2) requires that

the client also be advised, in writing, of the desirability of seeking the advice of

independent legal counsel. It also requires that the client be given a

reasonable opportunity to obtain such advice. Paragraph (a)(3) requires that

the lawyer obtain the client’s informed consent, in a writing signed by the

client, both to the essential terms of the transaction and to the lawyer’s role.

When necessary, the lawyer should discuss both the material risks of the

proposed transaction, including any risk presented by the lawyer’s

involvement, and the existence of reasonably available alternatives and

should explain why the advice of independent legal counsel is desirable. See

Rule 1.0(e) (definition of informed consent).

ssential terms of the transaction and to the lawyer’s role.

When necessary, the lawyer should discuss both the material risks of the

proposed transaction, including any risk presented by the lawyer’s

involvement, and the existence of reasonably available alternatives and

should explain why the advice of independent legal counsel is desirable. See

Rule 1.0(e) (definition of informed consent).

[3]

The risk to a client is greatest when the client expects the lawyer

to represent the client in the transaction itself or when the lawyer’s financial

interest otherwise poses a significant risk that the lawyer’s representation of

the client will be materially limited by the lawyer’s financial interest in the

transaction. Here the lawyer’s role requires that the lawyer must comply, not

only with the requirements of paragraph (a), but also with the requirements

of Rule 1.7. Under that Rule, the lawyer must disclose the risks associated with

the lawyer’s dual role as both legal adviser and participant in the transaction,

such as the risk that the lawyer will structure the transaction or give legal

advice in a way that favors the lawyer’s interests at the expense of the client.

Moreover, the lawyer must obtain the client’s informed consent. In some

cases, the lawyer’s interest may be such that Rule 1.7 will preclude the lawyer

from seeking the client’s consent to the transaction.

[4]

If the client is independently represented in the transaction,

paragraph (a)(2) of this Rule is inapplicable, and the paragraph (a)(1)

requirement for full disclosure is satisfied either by a written disclosure by

the lawyer involved in the transaction or by the client’s independent counsel.

The fact that the client was independently represented in the transaction is

relevant in determining whether the agreement was fair and reasonable to the

client as paragraph (a)(1) further requires.

napplicable, and the paragraph (a)(1)

requirement for full disclosure is satisfied either by a written disclosure by

the lawyer involved in the transaction or by the client’s independent counsel.

The fact that the client was independently represented in the transaction is

relevant in determining whether the agreement was fair and reasonable to the

client as paragraph (a)(1) further requires.

Use of Confidences and Secrets

[5]

Use of confidences and secrets of the client to the disadvantage of

the client violates the lawyer’s duty of loyalty. Paragraph (b) applies when the

information is used to benefit either the lawyer or a third person, such as

another client or business associate of the lawyer. For example, if a lawyer

learns that a client intends to purchase and develop several parcels of land,

the lawyer may not use that information to purchase one of the parcels in

competition with the client or to recommend that another client make such a

purchase. The Rule does not prohibit uses that do not disadvantage the client.

Paragraph (b) prohibits disadvantageous use of client information unless the

client gives informed consent, except as permitted or required by these Rules.

See Rules 1.2(d), 1.6, 1.9(c), 3.3, 4.1(b), 8.1 and 8.3.

Gifts to Lawyers

[6]

A lawyer may accept a gift from a client, if the transaction meets

general standards of fairness. For example, a simple gift such as a present

given at a holiday or as a token of appreciation is permitted. If a client offers

the lawyer a more substantial gift, paragraph (c) does not prohibit the lawyer

from accepting it, although such a gift may be voidable by the client under the

doctrine of undue influence, which treats client gifts as presumptively

fraudulent. In any event, due to concerns about overreaching and imposition

on clients, a lawyer may not suggest that a substantial gift be made to the

lawyer or for the lawyer’s benefit, except where the lawyer is related to the

client as set forth in paragraph (c).

gh such a gift may be voidable by the client under the

doctrine of undue influence, which treats client gifts as presumptively

fraudulent. In any event, due to concerns about overreaching and imposition

on clients, a lawyer may not suggest that a substantial gift be made to the

lawyer or for the lawyer’s benefit, except where the lawyer is related to the

client as set forth in paragraph (c).

[7]

If effectuation of a substantial gift requires preparing a legal

instrument such as a will or conveyance the client should have the detached

advice that another lawyer can provide. The sole exception to this Rule is

where the client is a relative of the donee.

[8]

This Rule does not prohibit a lawyer from seeking to have the

lawyer or a partner or associate of the lawyer named as executor of the

client’s estate or to another potentially lucrative fiduciary position.

Nevertheless, such appointments will be subject to the general conflict-of-

interest provision in Rule 1.7 when there is a significant risk that the lawyer’s

interest in obtaining the appointment will materially limit the lawyer’s

independent professional judgment in advising the client concerning the

choice of an executor or other fiduciary. In obtaining the client’s informed

consent to the conflict, the lawyer should advise the client concerning the

nature and extent of the lawyer’s financial interest in the appointment, as well

as the availability of alternative candidates for the position.

Literary Rights

wyer’s

independent professional judgment in advising the client concerning the

choice of an executor or other fiduciary. In obtaining the client’s informed

consent to the conflict, the lawyer should advise the client concerning the

nature and extent of the lawyer’s financial interest in the appointment, as well

as the availability of alternative candidates for the position.

Literary Rights

[9]

An agreement by which a lawyer acquires literary or media rights

concerning the conduct of the representation creates a conflict between the

interests of the client and the personal interests of the lawyer. Measures

suitable in the representation of the client may detract from the publication

value of an account of the representation. Paragraph (d) does not prohibit a

lawyer representing a client in a transaction concerning literary property

from agreeing that the lawyer’s fee shall consist of a share in ownership in the

property, if the arrangement conforms to Rule 1.5 and paragraphs (a) and (i).

Financial Assistance

[10] 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. Repayment of an advance of these costs and

expenses may be waived by the lawyer.

angers 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. Repayment of an advance of these costs and

expenses may be waived by the lawyer.

Person Paying for a Lawyer’s Services

[11] Lawyers are frequently asked to represent a client under

circumstances in which a third person will compensate the lawyer, in whole

or in part. The third person might be a relative or friend, an indemnitor (such

as a liability insurance company) or a co-client (such as a corporation sued

along with one or more of its employees). Because third-party payers

frequently have interests that differ from those of the client, including

interests in minimizing the amount spent on the representation and in

learning how the representation is progressing, lawyers are prohibited from

accepting or continuing such representations unless the lawyer determines

that there will be no interference with the lawyer’s independent professional

judgment and there is informed consent from the client. See also Rule 5.4(c)

(prohibiting interference with a lawyer’s professional judgment by one who

recommends, employs or pays the lawyer to render legal services for

another).

[12] Sometimes, it will be sufficient for the lawyer to obtain the client’s

informed consent regarding the fact of the payment and the identity of the

third-party payer. If, however, the fee arrangement creates a conflict-of-

interest for the lawyer, then the lawyer must comply with Rule. 1.7. The

lawyer must also conform to the requirements of Rule 1.6 concerning

confidentiality

another).

[12] Sometimes, it will be sufficient for the lawyer to obtain the client’s

informed consent regarding the fact of the payment and the identity of the

third-party payer. If, however, the fee arrangement creates a conflict-of-

interest for the lawyer, then the lawyer must comply with Rule. 1.7. The

lawyer must also conform to the requirements of Rule 1.6 concerning

confidentiality. Under Rule 1.7(a), a conflict-of-interest exists if there is

significant risk that the lawyer’s representation of the client will be materially

limited by the lawyer’s own interest in the fee arrangement or by the lawyer’s

responsibilities to the third-party payer (for example, when the third-party

payer is a co-client). Under Rule 1.7(b), the lawyer may accept or continue the

representation with the informed consent of each affected client, unless the

conflict is nonconsentable under paragraph 1.7(c). Under Rule 1.7(b), the

informed consent must be confirmed in writing.

Aggregate Settlements

[13] Differences in willingness to make or accept an offer of settlement

are among the risks of common representation of multiple clients by a single

lawyer. Under Rule 1.7, this is one of the risks that should be discussed before

undertaking the representation, as part of the process of obtaining the clients’

informed consent. In this circumstance the informed consent must be in

writing, signed by the clients. In addition, Rule 1.2(a) protects each client’s

right to have the final say in deciding whether to accept or reject an offer of

settlement and in deciding whether to enter a guilty or nolo contendere plea in

a criminal case. The rule stated in this paragraph is a corollary of both these

Rules and provides that, before any settlement offer or plea bargain is made

or accepted on behalf of multiple clients, the lawyer must inform each of them

about all the material terms of the settlement, including what the other clients

will receive or pay if the settlement or plea offer is accepted

endere plea in

a criminal case. The rule stated in this paragraph is a corollary of both these

Rules and provides that, before any settlement offer or plea bargain is made

or accepted on behalf of multiple clients, the lawyer must inform each of them

about all the material terms of the settlement, including what the other clients

will receive or pay if the settlement or plea offer is accepted. See also Rule

1.0(e) (definition of informed consent). Lawyers representing a class of

plaintiffs or defendants, or those proceeding derivatively, may not have a full

client-lawyer relationship with each member of the class; nevertheless, such

lawyers must comply with applicable rules regulating notification of class

members and other procedural requirements designed to ensure adequate

protection of the entire class.

Limiting Liability and Settling Malpractice Claims

[14] Agreements prospectively limiting a lawyer’s liability for

malpractice are prohibited because they are likely to undermine competent

and diligent representation. Also, many clients are unable to evaluate the

desirability of making such an agreement before a dispute has arisen,

particularly if they are then represented by the lawyer seeking the agreement.

This paragraph does not, however, prohibit a lawyer from entering into an

agreement with the client to arbitrate legal malpractice claims, provided such

agreements are enforceable and the client is fully informed of the scope and

effect of the agreement. Nor does this paragraph limit the ability of lawyers to

practice in the form of a limited-liability entity, where permitted by law,

provided that each lawyer remains personally liable to the client for his or her

own conduct and the firm complies with any conditions required by law, such

as provisions requiring client notification or maintenance of adequate liability

insurance

the agreement. Nor does this paragraph limit the ability of lawyers to

practice in the form of a limited-liability entity, where permitted by law,

provided that each lawyer remains personally liable to the client for his or her

own conduct and the firm complies with any conditions required by law, such

as provisions requiring client notification or maintenance of adequate liability

insurance. Nor does it prohibit an agreement in accordance with Rule 1.2 that

defines the scope of the representation, although a definition of scope that

makes the obligations of representation illusory will amount to an attempt to

limit liability.

[15] Agreements settling a claim or a potential claim for malpractice

are not prohibited by this Rule. Nevertheless, in view of the danger that a

lawyer will take unfair advantage of an unrepresented client or former client,

the lawyer must first advise such a person in writing of the appropriateness of

independent representation in connection with such a settlement. In addition,

the lawyer must give the client or former client a reasonable opportunity to

find and consult independent counsel.

Acquiring Proprietary Interest in Litigation

[16] Paragraph (i) states the traditional general rule that lawyers are

prohibited from acquiring a proprietary interest in litigation. Like paragraph

(e), the general rule has its basis in common law champerty and maintenance

and is designed to avoid giving the lawyer too great an interest in the

representation. In addition, when the lawyer acquires an ownership interest

in the subject of the representation, it will be more difficult for a client to

discharge the lawyer if the client so desires. The Rule is subject to specific

exceptions developed in decisional law and continued in these Rules. The

exception for certain advances of the costs of litigation is set forth in

paragraph (e)

representation. In addition, when the lawyer acquires an ownership interest

in the subject of the representation, it will be more difficult for a client to

discharge the lawyer if the client so desires. The Rule is subject to specific

exceptions developed in decisional law and continued in these Rules. The

exception for certain advances of the costs of litigation is set forth in

paragraph (e). In addition, paragraph (i) sets forth exceptions for liens

authorized by law to secure the lawyer’s fees or expenses and contracts for

reasonable contingent fees. The law of each jurisdiction determines which

liens are authorized by law. These may include liens granted by statute, liens

originating in common law and liens acquired by contract with the client.

When a lawyer acquires by contract a security interest in property other than

that recovered through the lawyer’s efforts in the litigation, such an

acquisition is a business or financial transaction with a client and is governed

by the requirements of paragraph (a). Contracts for contingent fees in civil

cases are governed by Rule 1.5.

Client-Lawyer Sexual Relationships

[17] The Maine Rules of Professional Conduct do not include the Model

Rule (2002) categorically prohibiting sexual relations between lawyer and

client. See Rule 1.7 Comment [12].

[18] Reserved.

[19] Reserved.

Imputation of Prohibitions

[20] Under paragraph (k), a prohibition on conduct by an individual

lawyer in paragraphs (a) through (i) also applies to all lawyers associated in a

firm with the personally prohibited lawyer. For example, one lawyer in a firm

may not enter into a business transaction with a client of another member of

the firm without complying with paragraph (a), even if the first lawyer is not

personally involved in the representation of the client. The prohibition set

forth in paragraph (l) is personal and is not applied to associated lawyers.