94-F-134 - Attorney loaning funds to adverse party

Formal Ethics Opinion 94-F-134


Inquiry is made as to the propriety of an attorney loaning funds to the adverse party and whether a contingent fee may be charged in a child support matter.


The attorney represents a woman in an action to recover past due child support from her ex-husband. The ex-husband does not have the funds available to pay the child support. Therefore, the attorney offered to loan the ex-husband the funds so he can pay the attorney's client the past due child support. The attorney has a one-third contingent fee arrangement with his client.

The arrangement proposed by the attorney is clearly improper. DR 5-103(A) prohibits an attorney from acquiring a propriety interest in the subject matter of litigation he is conducting. In this case, the subject matter of the litigation is past due child support. By providing the means to pay the child support, the attorney is obtaining a proprietary interest in the subject matter of the litigation.


DR 5-103(B) prohibits an attorney from advancing or guaranteeing financial assistance to his client except in certain specified instances. The purpose of the loan would be to enable the exhusband to pay the past due child support. In a roundabout way, the attorney is providing financial assistance to his own client. Such a circumvention of the disciplinary rules is prohibited.


Furthermore, an attorney loaning money to an adverse party creates an appearance of impropriety. As the preamble to the Code of Professional Responsibility points out, lawyers, as guardians of, the law, play a vital role in the preservation of society. By virtue of this position, a lawyer is held to higher standards of competency and integrity than a non-lawyer. Therefore, an attorney should avoid any actions that may cast suspicion on his integrity or motives. The loan arrangement proposed by the attorney would undermine society's respect and confidence in the attorney and the legal profession as a whole.


Also at issue is whether the attorney may charge a contingent fee to collect the past due child support. While contingent fees in domestic matters are not absolutely prohibited in Tennessee (See EC 2-20 and Formal Ethics Opinion 82-F-26), it is against public policy to charge a contingent fee in a child support case. Child support is to benefit the child. It is designed to insure that the child receives adequate food, clothing and shelter. An attorney should not take his fee out of monies earmarked for the child's welfare.


This 14th day of September, 1994.


ETHICS COMMITTEE:


Herman Morris, Jr.
James M. Glasgow, Jr.
Walker T. Tipton


JB:mw


APPROVED AND ADOPTED BY THE BOARD