Rule 1.04. In addition, this Rule does not apply to standard commercial transactions between

RULE 1.04. In addition, this 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. If the client is not independently represented in the transaction, 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.

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 the lawyer to comply, not

only with the requirements of paragraph (a), but also with the requirements of Rule 1.06.

Under Rule 1.06, 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 1.06 will preclude the lawyer from

seeking the client’s consent to the transaction.

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ipant 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 1.06 will preclude the lawyer from

seeking the client’s consent to the transaction.

4. If the client is independently represented in the transaction, 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.

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Literary Rights

5. An agreement by which a lawyer acquires literary or media rights concerning the conduct

of 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 (c) 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 1.04 and to paragraph (h) of this Rule.

Person Paying for Lawyers Services

6. Paragraph (e) requires disclosure to the client of the fact that the lawyers services are being

paid for by a third party. Such an arrangement must also conform to the requirements of Rule

1.05 concerning confidentiality and Rule 1.06 concerning conflict of interest. Where the client

is a class, consent may be obtained on behalf of the class by court-supervised procedure

Lawyers Services

6. Paragraph (e) requires disclosure to the client of the fact that the lawyers services are being

paid for by a third party. Such an arrangement must also conform to the requirements of Rule

1.05 concerning confidentiality and Rule 1.06 concerning conflict of interest. Where the client

is a class, consent may be obtained on behalf of the class by court-supervised procedure.

Where an insurance company pays the lawyer’s fee for representing an insured, normally the

insured has consented to the arrangement by the terms of the insurance contract.

Prospectively Limiting Liability

7. Paragraph (g) is not intended to apply to customary qualification and limitations in legal

opinions and memoranda.

Acquisition of Interest in Litigation

8. This Rule embodies the traditional general precept that lawyers are prohibited from

acquiring a proprietary interest in the subject matter of litigation. This general precept, which

has its basis in common law champerty and maintenance, is subject to specific exceptions

developed in decisional law and continued in these Rules, such as the exception for contingent

fees set forth in Rule 1.04 and the exception for certain advances of the costs of litigation set

forth in paragraph (d). A special instance arises when a lawyer proposes to incur litigation or

other expenses with an entity in which the lawyer has a pecuniary interest. A lawyer should

not incur such expenses unless the client has entered into a written agreement complying with

paragraph (a) that contains a full disclosure of the nature and amount of the possible expenses

and the relationship between the lawyer and the other entity involved.

Imputed Disqualifications

9. The prohibitions imposed on an individual lawyer by this Rule are imposed by paragraph

(i) upon all other lawyers while practicing with that lawyer’s firm.