Rule 1.8. 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 all of the following apply:

(1)

the transaction and terms on which the lawyer acquires the interest

are fair and reasonable to the client and are fully disclosed to the client 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;

(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)

Except as permitted or required by these rules, a lawyer shall not use

information relating to representation of a client to the disadvantage of the client unless

the client gives informed consent.

(c)

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

prepare on behalf of a client an instrument giving the lawyer, the lawyer’s partner,

associate, paralegal, law clerk, or other employee of the lawyer’s firm, a lawyer acting “of

counsel” in the lawyer’s firm, or a person related to the lawyer any gift unless the lawyer

or other recipient of the gift is related to the client. For purposes of division (c) of this rule:

(1)

“person related to the lawyer” includes a spouse, child, grandchild,

parent, grandparent, sibling, or other relative or individual with whom the lawyer or

the client maintains a close, familial relationship;

(2)

“gift” includes a testamentary gift.

the lawyer any gift unless the lawyer

or other recipient of the gift is related to the client. For purposes of division (c) of this rule:

(1)

“person related to the lawyer” includes a spouse, child, grandchild,

parent, grandparent, sibling, or other relative or individual with whom the lawyer or

the client maintains a close, familial relationship;

(2)

“gift” includes a testamentary gift.

(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 information relating to the representation.

(e)

A lawyer shall not provide financial assistance to a client in connection with

pending or contemplated litigation, except that a lawyer may do either of the following:

(1)

a lawyer may advance court costs and expenses of litigation, the

repayment of which may be contingent on the outcome of the matter;

(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

someone other than the client unless divisions (f)(1) to (3) and, if applicable, division (f)(4)

apply:

(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;

(3)

information relating to representation of a client is protected as

required by Rule 1.6;

epresenting a client from

someone other than the client unless divisions (f)(1) to (3) and, if applicable, division (f)(4)

apply:

(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;

(3)

information relating to representation of a client is protected as

required by Rule 1.6;

(4)

if the lawyer is compensated by an insurer to represent an insured,

the lawyer delivers a copy of the following Statement of Insured Client’s Rights to

the client in person at the first meeting or by mail within ten days after the lawyer

receives notice of retention by the insurer:

STATEMENT OF INSURED CLIENT’S RIGHTS

An insurance company has retained a lawyer to defend a lawsuit or claim against

you. This Statement of Insured Client’s Rights is being given to you to assure that you

are aware of your rights regarding your legal representation.

1. Your Lawyer: Your lawyer has been retained by the insurance company under the

terms of your policy. If you have questions about the selection of the lawyer, you

should discuss the matter with the insurance company or the lawyer.

2. Directing the Lawyer: Your policy may provide that the insurance company can

reasonably control the defense of the lawsuit. In addition, your insurance company

may establish guidelines governing how lawyers are to proceed in defending you—

guidelines that you are entitled to know. However, the lawyer cannot act on the

insurance company’s instructions when they are contrary to your interest.

3. Communications: Your lawyer should keep you informed about your case and

respond to your reasonable requests for information.

ddition, your insurance company

may establish guidelines governing how lawyers are to proceed in defending you—

guidelines that you are entitled to know. However, the lawyer cannot act on the

insurance company’s instructions when they are contrary to your interest.

3. Communications: Your lawyer should keep you informed about your case and

respond to your reasonable requests for information.

4. Confidentiality: Lawyers have a duty to keep secret the confidential information a

client provides, subject to limited exceptions. However, the lawyer chosen to

represent you also may have duty to share with the insurance company information

relating to the defense or settlement of the claim. Whenever a waiver of lawyer-client confidentiality is needed, your lawyer has a duty to consult with you and

obtain your informed consent.

5. Release of Information for Audits: Some insurance companies retain auditing

companies to review the billing and files of the lawyers they hire to represent

policyholders. If the lawyer believes an audit, bill review, or other action initiated

by the insurance company may release confidential information in a manner that

may be contrary to your interest, the lawyer must advise you regarding the matter

and provide an explanation of the purpose of the audit and the procedure involved.

Your written consent must be given in order for an audit to be conducted. If you

withhold your consent, the audit shall not be conducted.

6. Conflicts of Interest: The lawyer is responsible for identifying conflicts of interest

and advising you of them. If at any time you have a concern about a conflict of

interest in your case, you should discuss your concern with the lawyer. If a conflict

of interest exists that cannot be resolved, the insurance company may be required

to provide you with another lawyer.

l not be conducted.

6. Conflicts of Interest: The lawyer is responsible for identifying conflicts of interest

and advising you of them. If at any time you have a concern about a conflict of

interest in your case, you should discuss your concern with the lawyer. If a conflict

of interest exists that cannot be resolved, the insurance company may be required

to provide you with another lawyer.

7. Settlement: Many insurance policies state that the insurance company alone may

make a decision regarding settlement of a claim. Some policies, however, require

your consent. You should discuss with your lawyer your rights under the policy

regarding settlement. No settlement requiring you to pay money in excess of your

policy limits can be reached without your agreement.

8. Fees and Costs: As provided in your insurance policy, the insurance company

usually pays all of the fees and costs of defending the claim. If you are responsible

for paying the lawyer any fees and costs, your lawyer must promptly inform you of

that.

9. Hiring your own Lawyer: The lawyer hired by the insurance company is only

representing you in defending the claim brought against you. If you desire to

pursue a claim against someone, you will need to hire your own lawyer. You may

also wish to hire your own lawyer if there is a risk that there might be a judgment

entered against you for more than the amount of your insurance. Your lawyer has

a duty to inform you of this risk and other reasonably foreseeable adverse results.

ing you in defending the claim brought against you. If you desire to

pursue a claim against someone, you will need to hire your own lawyer. You may

also wish to hire your own lawyer if there is a risk that there might be a judgment

entered against you for more than the amount of your insurance. Your lawyer has

a duty to inform you of this risk and other reasonably foreseeable adverse results.

(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 the settlement or

agreement is subject to court approval or 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 or

agreement.

(h)

A lawyer shall not do any of the following:

(1)

make an agreement prospectively limiting the lawyer’s liability to a

client for malpractice or requiring arbitration of a claim against the lawyer unless

the client is independently represented in making the agreement;

(2)

settle a claim or potential claim for such liability unless all of the

following apply:

(i)

the settlement is not unconscionable, inequitable, or unfair;

(ii)

the client or former client 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;

(iii)

the client or former client gives informed consent.

(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

do either of the following:

(1)

acquire a lien authorized by law to secure the lawyer’s fee or

expenses;

(2)

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

client gives informed consent.

(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

do either of the following:

(1)

acquire a lien authorized by law to secure the lawyer’s fee or

expenses;

(2)

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

(j)

A lawyer shall not solicit or engage in sexual activity 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 divisions (a) to (i) of

this rule that applies to any one of them shall apply to all of them.

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 division (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

ents 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 division

(a) are unnecessary and impracticable.

[2]

Division (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. Division (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. Division (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(f) (definition of informed consent).

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(f) (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 division (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, division (a)(2) of this

rule is inapplicable, and the division (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 division (a)(1) further requires.

Use of Information Related to Representation

ement 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 division (a)(1) further requires.

Use of Information Related to Representation

[5]

Use of information relating to the representation to the disadvantage of the client

violates the lawyer’s duty of loyalty. See also Rule 1.9(b). Division (b) applies whether or not

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. For example, a

lawyer who learns a government agency’s interpretation of a land-use regulation during the

representation of one client may properly use that information to benefit other clients. Division

(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

s a government agency’s interpretation of a land-use regulation during the

representation of one client may properly use that information to benefit other clients. Division

(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, division (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 division (c).

[7]

If effectuation of a 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

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

[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. Division (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 divisions (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

such assistance gives lawyers too great a financial stake in the litigation. These

dangers do not warrant a prohibition on a lawyer lending a client court costs and litigation

expenses, including the expenses of medical examination and the costs of obtaining and presenting

evidence, because these advances are virtually indistinguishable from contingent fees and help

ensure access to the courts. Similarly, an exception allowing lawyers representing indigent clients

to pay court costs and litigation expenses regardless of whether these funds will be repaid is

warranted.

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).

ohibited 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. Under Rule 1.7(a), a conflict of interest exists if there is substantial 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 that paragraph. Under Rule 1.7(b), the informed consent must be confirmed

in writing.

[12A] Divisions (f)(1) to (f)(3) apply to insurance defense counsel compensated by an

insurer to defend an insured, subject to the unique aspects of that relationship. Whether employed

or retained by an insurance company, insurance defense counsel owes the insured the same duties

to avoid conflicts, keep confidences, exercise independent judgment, and communicate as a lawyer

owes any other client. These duties are subject only to the rights of the insurer, if any, pursuant to

the policy contract with its insured, to control the defense, receive information relating to the

defense or settlement of the claim, and settle the case

e counsel owes the insured the same duties

to avoid conflicts, keep confidences, exercise independent judgment, and communicate as a lawyer

owes any other client. These duties are subject only to the rights of the insurer, if any, pursuant to

the policy contract with its insured, to control the defense, receive information relating to the

defense or settlement of the claim, and settle the case. Insurance defense counsel may not permit

an insurer’s right to control the defense to compromise the lawyer’s independent judgment, for

example, regarding the legal research or factual investigation necessary to support the defense.

The lawyer may not permit an insurer’s right to receive information to result in the disclosure to

the insurer, or its agent, of confidences of the insured. The insured’s consent to the insurer’s

payment of defense counsel, required by Rule 1.8(f)(1), can be inferred from the policy contract.

Nevertheless, an insured may not understand how defense counsel’s relationship with and duties

to the insurer will affect the representation. Therefore, to ensure that such consent is informed,

these rules require a lawyer who undertakes defense of an insured at the expense of an insurer to

provide to the client insured, at the commencement of representation, the “Statement of Insured

Client’s Rights.”

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 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

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 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. See also Rule 1.0(f) (definition of informed consent).

Alternatively, where a settlement is subject to court approval, as in a class action, the interests of

multiple clients are protected when the lawyer complies with applicable rules of civil procedure

and orders of the court concerning review of the settlement.

Limiting Liability and Settling Malpractice Claims

[14]

Agreements prospectively limiting a lawyer’s liability for malpractice are

prohibited unless the client is independently represented in making the agreement 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. Division (h)(1) also prohibits a

lawyer from prospectively entering into an agreement with the client to arbitrate any claim unless

the client is independently represented

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. Division (h)(1) also prohibits a

lawyer from prospectively entering into an agreement with the client to arbitrate any claim unless

the client is independently represented. This division, however, does not 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. However, the settlement may not be unconscionable, inequitable, or unfair, and, 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

yer 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]

Division (i) states the traditional general rule that lawyers are prohibited from

acquiring a proprietary interest in litigation. Like division (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 division (e). In addition, division (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 division (a). Contracts for contingent fees in civil

cases are governed by Rule 1.5.

Client-Lawyer Sexual Relationships

act 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 division (a). Contracts for contingent fees in civil

cases are governed by Rule 1.5.

Client-Lawyer Sexual Relationships

[17]

The relationship between lawyer and client is a fiduciary one in which the lawyer

occupies the highest position of trust and confidence. The relationship is almost always unequal;

thus, a sexual relationship between lawyer and client can involve unfair exploitation of the

lawyer’s fiduciary role, in violation of the lawyer’s basic ethical obligation not to use the trust of

the client to the client’s disadvantage. In addition, such a relationship presents a significant danger

that, because of the lawyer’s emotional involvement, the lawyer will be unable to represent the

client without impairment of the exercise of independent professional judgment. Moreover, a

blurred line between the professional and personal relationships may make it difficult to predict to

what extent client confidences will be protected by the attorney-client evidentiary privilege, since

client confidences are protected by privilege only when they are imparted in the context of the

client-lawyer relationship. Because of the significant danger of harm to client interests and

because the client’s own emotional involvement renders it unlikely that the client could give

adequate informed consent, this rule prohibits the lawyer from engaging in sexual activity with a

client regardless of whether the relationship is consensual and regardless of the absence of

prejudice to the client, unless the sexual relationship predates the client-lawyer relationship. A

lawyer also is prohibited from soliciting a sexual relationship with a client.

that the client could give

adequate informed consent, this rule prohibits the lawyer from engaging in sexual activity with a

client regardless of whether the relationship is consensual and regardless of the absence of

prejudice to the client, unless the sexual relationship predates the client-lawyer relationship. A

lawyer also is prohibited from soliciting a sexual relationship with a client.

[18]

Sexual relationships that predate the client-lawyer relationship are not prohibited.

Issues relating to the exploitation of the fiduciary relationship and client dependency are

diminished when the sexual relationship existed prior to the commencement of the client-lawyer

relationship. However, before proceeding with the representation in these circumstances, the

lawyer should consider whether the lawyer’s ability to represent the client will be materially

limited by the relationship. See Rule 1.7(a)(2).

[19]

When the client is an organization, division (j) of this rule prohibits a lawyer for

the organization (whether inside counsel or outside counsel) from having a sexual relationship

with a constituent of the organization who supervises, directs, or regularly consults with that

lawyer concerning the organization’s legal matters.

Imputation of Prohibitions

[20]

Under division (k), a prohibition on conduct by an individual lawyer in divisions

(a) to (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 division (a), even if the first lawyer is not personally

involved in the representation of the client. The prohibition set forth in division (j) is personal and

is not applied to associated lawyers.

Comparison to former Ohio Code of Professional Responsibility

With the exception of division (f)(4), each part of Rule 1.8 corresponds to an Ohio

disciplinary rule or decided case, as stated below.

sion (a), even if the first lawyer is not personally

involved in the representation of the client. The prohibition set forth in division (j) is personal and

is not applied to associated lawyers.

Comparison to former Ohio Code of Professional Responsibility

With the exception of division (f)(4), each part of Rule 1.8 corresponds to an Ohio

disciplinary rule or decided case, as stated below.

Rule 1.8(a) corresponds, in substance, to DR 5-104(A) and the ruling in Cincinnati Bar

Assn v. Hartke (1993), 67 Ohio St.3d 65, except for the addition of a requirement that the client’s

consent be in writing. This writing requirement is consistent with the requirement for confirmation

of conflict waivers in Rule 1.7.

Rule 1.8(b) is similar to DR 4-101(B)(2), but the prohibition against adverse use of

confidential information applies to all information relating to the representation, consistent with

Rule 1.6(a). As suggested by Comment [5], these rules, unlike DR 4-101(B)(3), do not expressly

prohibit the lawyer from using information relating to the representation for the benefit of the

lawyer or another person. Because of the peril that such use would violate another duty that the

lawyer has to the client (or to a third party, for example, by reason of a confidentiality agreement),

lawyers should approach such issues carefully.

Rule 1.8(c) has been revised principally to conform it to the absolute ban, now stated in

DR 5-101(A)(2), upon a lawyer’s preparing an instrument for a client by which a gift would be

made to the lawyer, or a relative or colleague of the lawyer. DR 5-101(A)(2) does not prohibit a

lawyer from soliciting a gift. The first portion of Rule 1.8(c) addresses a matter not specifically

addressed in the Ohio Code in that Rule 1.8(c) would permit a lawyer to solicit an insubstantial

gift from a client

)(2), upon a lawyer’s preparing an instrument for a client by which a gift would be

made to the lawyer, or a relative or colleague of the lawyer. DR 5-101(A)(2) does not prohibit a

lawyer from soliciting a gift. The first portion of Rule 1.8(c) addresses a matter not specifically

addressed in the Ohio Code in that Rule 1.8(c) would permit a lawyer to solicit an insubstantial

gift from a client. This rule would permit, for example, a lawyer to request that a client make a

small gift to a charity on whose board the lawyer serves, but not to abuse the attorney-client

relationship by requesting a substantial gift.

Rule 1.8(d) is similar to DR 5-104(B), but creates greater latitude for a lawyer to enter a

contract for publication or media rights with a client because Rule 1.8(d) prohibits making such

an arrangement only during the representation, and only if the portrayal or account would be based,

in substantial part, on information relating to the representation. In contrast, DR 5-104(B) forbids

a lawyer to make any such arrangement during the pendency of the matter, even if the

representation has ended.

Rule 1.8(e) is similar to DR 5-103(B). Unlike DR 5-103(B), Rule 1.8(e) expressly permits

a lawyer to pay court costs and expenses on behalf of an indigent client.

Rule 1.8(f)(1), (2), and (3) use different terms, but are virtually identical to DR 5-107(A)

and (B). Rule 1.8(f)(4) and the “Statement of Insured Client’s Rights” is new and is based on the

reports of the Ohio State Bar Association’s House Counsel Task Force and the Insurance and Audit

Practices and Controls Committee. Both reports were accepted by the House of Delegates of the

Ohio State Bar Association.

Rule 1.8(g) corresponds to DR 5-106. Unlike DR 5-106, Rule 1.8(g) permits aggregate

agreements in criminal cases and agreements subject to court approval.

and is based on the

reports of the Ohio State Bar Association’s House Counsel Task Force and the Insurance and Audit

Practices and Controls Committee. Both reports were accepted by the House of Delegates of the

Ohio State Bar Association.

Rule 1.8(g) corresponds to DR 5-106. Unlike DR 5-106, Rule 1.8(g) permits aggregate

agreements in criminal cases and agreements subject to court approval.

Rule 1.8(h) corresponds to DR 6-102, as interpreted by the Supreme Court in Disciplinary

Counsel v. Clavner (1997), 77 Ohio St.3d 431. A portion of Rule 1.8(h)(1) is based on Opinion

96-9 of the Board of Commissioners on Grievances and Discipline.

Rule 1.8(i) corresponds to DR 5-103(A).

Rule 1.8(j) has no analogue in the Disciplinary Rules, but is consistent with the Supreme

Court’s rulings in Cleveland Bar Assn v. Feneli (1999), 86 Ohio St.3d 102 and Disciplinary

Counsel v. Moore (2004), 101 Ohio St.3d 261.

Rule 1.8(k) may be compared to DR 5-105(D).

Comparison to ABA Model Rules of Professional Conduct

Rule 1.8 contains several changes from the Model Rule. Rule 1.8(c) is revised to conform

to DR 5-101(A)(2). Rule 1.8(f)(4) references specific obligations of insurance defense counsel.

Rule 1.8(h) conforms the rule—on the circumstances in which a lawyer may enter into an

agreement with a client settling a claim against the lawyer—with Ohio law as stated in Clavner.

Division (f)(4) and a “Statement of Insured Client’s Rights” is added based on a

recommendation from the Ohio State Bar Association’s House Counsel Task Force. Comment

[12A] also is added to correspond to speak directly to the insurance defense lawyer’s ethical duties.

The defense provided to an insured by a lawyer retained by an insurer is the most frequent situation

in which a lawyer is paid by someone other than the lawyer’s client

d Client’s Rights” is added based on a

recommendation from the Ohio State Bar Association’s House Counsel Task Force. Comment

[12A] also is added to correspond to speak directly to the insurance defense lawyer’s ethical duties.

The defense provided to an insured by a lawyer retained by an insurer is the most frequent situation

in which a lawyer is paid by someone other than the lawyer’s client. The comment is based on

Advisory Opinions 2000-2 and 2000-3 of the Board of Commissioners on Grievances and

Discipline, as well as the Report of the House Counsel Task Force of the Ohio State Bar

Association, as adopted by the OSBA House of Delegates in November 2002, which the Supreme

Court charged the Task Force to review, and the Report of the OSBA’s Insurance and Audit

Practices and Controls Committee, as adopted by the OSBA House of Delegates in May 2004.