In the Summer 2009 Journal, I wrote an article discussing a proposed amendment to Rule 1.8(e) then under consideration by the Ethics Committee. Rule 1.8(e) prohibits a lawyer from making or guaranteeing a loan to a client for living expenses. The impetus for the proposed amendment was regular calls to State Bar Ethics Counsel from lawyers seeking to assist clients who have become unable to provide for themselves or their families after a serious accident. The proposed amendment provided that a lawyer representing an indigent client could provide financial assistance for essential needs such as food, housing, and utilities, as long as there was no obligation to repay and there was no representation to the client prior to the legal representation that such financial assistance would be provided.
Lawyers were opposed to the proposed amendment on the ground that approval of the amendment would result in an unfair advantage to large firms with deep pockets. The fear was that clients would learn which law firms had a reputation for providing financial assistance to their clients and would select their lawyer based on that factor. The proposed amendment was not adopted.
The Ethics Committee is now considering an inquiry from a personal injury lawyer as to the feasibility of setting up a not-for-profit organization to assist needy clients. The inquiring lawyer states that the idea for the organization arose from his desire to help clients deal with the financial and emotional consequences of catastrophic injuries. The lawyer describes his proposed organization as similar to the North Carolina Crime Victim's Compensation Fund, but with the aim of assisting personal injury victims.
The proposed organization would accept tax-deductible donations and would be available to provide funding, housing assistance, and food to personal injury clients in need. Applications for assistance would be reviewed by the organization's review committee and assistance would be provided to those persons considered to be most worthy of need. The review committee would be made up of volunteer lawyers. Any law firm could submit applications for assistance for their clients.
Seems like a great idea. What could be wrong with something that makes you feel so warm and fuzzy? But wait, what if, just what if, some lawyers attempt to use the organization for personal gain rather than for the greater good? How can such an organization function without becoming a conduit for a lawyer's funds that are earmarked and disbursed to the lawyer's own client? And, what will prevent firms participating in the organization from gaining an unfair advantage in attracting clients?
The inquiring lawyer has recommended certain safeguards aimed to prevent such shenanigans. Safeguards suggested thus far include the requirement that application review be "blind" as to the amount of contributions made to the organization by a particular lawyer or firm. Lawyers serving on the review board would also not be allowed to participate in reviewing applications when they have a conflict of interest. In addition, lawyers would not be allowed to advertise their service on the organization's review board, their contributions to the organization, or their past successes in obtaining financial assistance for their clients from the organization.
What do you think? Would an organization established by lawyers to provide financial assistance to needy clients provide a solution to the current ethical/moral conundrum? Or is the State Bar being tempted by a wolf in sheep's clothing? The ethics inquiry will be discussed at the next quarterly meeting of the Ethics Committee. If you would like to comment on the ethical issues surrounding the establishment of a not-for-profit organization to assist needy clients, please send your written comments to Suzanne Lever, The North Carolina State Bar, PO Box 25908, Raleigh, NC 27611, slever@ ncbar.gov.
Suzanne Lever is assistant ethics counsel for the North Carolina State Bar.