Lawyer’s Personal and Financial Relationships With Clients

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Do lawyers give advances on settlements

The attorney-client relationship is a fiduciary relationship where both parties have to comply with a particular code of conduct.

The client shares all essential details related to their business, personal life, or any other issues under consideration with their respective attorneys. 

Similarly, the attorney is bound to protect the clients’ interest to the best of his abilities. 

Both the parties are bound to maintain confidentiality. However, they are many unanswered questions related to the attorney-client relationship which demand an appropriate answer. 

This article will discuss financial and relationship questions for clients and attorneys.

For plaintiffs

Can a lawyer lend money to a client? 

No. Lawyers do not and cannot lend money or give advances on settlements to their clients.

The attorney-client relationship is a very significant relationship. Attorneys are bound to defend the legal rights of their clients to the best of their professional capabilities and provide every possible assistance to facilitate their situation. 

However, it is unethical for an attorney to give money or a loan to the client before a final settlement of the case. In some states, attorneys may face severe penalties for giving money to their clients, and an attorney can even be barred from practicing law. 

The most important rationale behind this restriction is that lending money to a client may create a monetary interest in the case, which can affect the professional judgment of an attorney. In this situation, an attorney may not be able to defend the rights of their clients in an unbiased manner if they were to give you a settlement advance. 

You can ask your attorney for an advance on your settlement from a third-party company—but remember, lawyers cannot directly advance you money.

How do you borrow money from a settlement?

Although lawyers cannot lend money to their clients, they may help them obtain pre-settlement loans, commonly known as lawsuit loans. 

The term lawsuit loan refers to a cash advance against a pending lawsuit settlement or jury award. This loan works like a cash advance in the form of a check or a wire. Upon eligibility, you can obtain it before the court’s final decision on your case. 

You may use lawsuit settlement loans to pay for living expenses, medical bills, and other emergency costs. 

To get a lawsuit loan, first, you apply with the company and ensure that your attorney is aware and compliant on working with them. 

The process typically takes 24 hours, and when approved, both attorney and client get a funding agreement to sign. The funds are released hours after the contract is dually signed.

Once your case settles by the courts of law and you obtain monetary compensation, your attorneys can repay the borrowed amount from the lawsuit proceeds. 

Should you get a pre-settlement lawsuit loan?

There are both positive and negative aspects of a pre-settlement lawsuit loan. On the one hand, the loan helps the client to cover mandatory expenses during the pendency of the case. 

However, every lawsuit loan lender charges interest on the loans. Some lenders predate on victims; thus, you must be very careful.

As the cases in the courts of law take time to be finally decided, during the period, the interest rate may pile up, and the borrower may have to pay a hefty amount in interest to the pre-settlement company if they are not careful.

Whatever your reasons might be for borrowing money against your pending lawsuit, if you are looking to acquire pre-settlement lawsuit loans, you should compare the positive and negative aspects.

Understanding your pros and cons will help you decide what is best suited for you in the given circumstances.

Alternatively, at Baker Street Funding, we provide lawsuit financing to serve your needs with no hassle and lower rates. 

Our low-interest pre-settlement loans are capped and non-compounding to protect you from getting over-charged once your settlement payment arrives.

For attorneys

Can lawyers accept gifts from clients?

Whether a client can present a gift to the attorney or not depends on the circumstances of the case. According to the American Bar Association Rules:

“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 another recipient of the gift is related to the client.”

 The question of whether a gift is substantial is determined by taking into consideration the financial standing of a client.

 If a client presents a gift as a token of appreciation for the lawyer’s services, they meet the general standards of fairness and do not fall in the category of substantiality. Overall, it is justified and permissible. 

Similarly, if the attorney and their client are related, they may exchange gifts, and there are no restrictions.

Can an attorney date a client?

No, it is against professional conduct to date a client. The American Bar Association Model Rule of Professional Conduct 1.8 (j) provides;

“A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.”

This rule makes it explicit that lawyers are not allowed to date a current client. However, there is no specific rule about dating a former client. Although these relationships do not end with the resolution of a case, both parties are bound to maintain the confidentiality of the matter and the client-attorney privilege should remain intact. Therefore, attorneys and clients should stay away from one another for at least 6 months of the final settlement of a case.

Can a lawyer sleep with a client? 

No, a lawyer cannot sleep with a client. The Minnesota Supreme Court had passed a judgment and suspended Thomas P. Lowe, an Eagan attorney, for having sexual relations with a client. The court held that the attorney was billing the client for their time together; similarly, the attorney broke up the relationship with the client, which caused them psychiatric damages, and the client was in a vulnerable position. Therefore, an attorney must maintain a professional code of conduct with their client and not develop an intimate relationship. It may place the client in a more vulnerable position and affect an attorney’s professional conduct. 

However, suppose an attorney has an intimate relationship with the client before their professional engagement; the relationship may just be justified. 

Learn more about how a legal loan from Baker Street Funding can help with attorneys and clients alike.

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