Conflicts of Interest · 12-18% of the exam
10.2When a lawyer deals with other people and payment structures (Rules 1.8(f), (g), (j); 1.8(h) in Chapter 12)
On this page
- Rule 1.8(f) — Third-party compensation (Model Rule 1.8(f))
- Rule 1.8(g) — Aggregate settlement (Model Rule 1.8(g))
- Rule 1.8(j) — Sexual relations with clients (Model Rule 1.8(j))
Why
Payment structures and personal relationships can distort a lawyer's duty of loyalty.
Plain English
These rules concern how outsiders, co-clients, and personal entanglements corrupt independent judgment. Which sub-rules require a signed writing and which do not is among the exam's most reliable testing points. So at each sub-rule, ask: does this one need a writing, and does that writing need the client's signature?
Rule
Rule 1.8(f) — Third-party compensation (Model Rule 1.8(f))
A lawyer shall not accept compensation for representing a client from someone other than the client unless:
- The client gives informed consent (no writing required);
- There is no interference with the lawyer's independent professional judgment or the client-lawyer relationship; and
- Client confidentiality is maintained.
Even where a client has consented to third-party payment, payor work control and settlement control remain independently impermissible and cannot be cured by consent:
- Work control
requiring the payor's authorization before the lawyer takes any legal action; and
- Settlement control
dictating the nature or amount of any settlement.
Information is on a different route. Rule 1.8(f)(3) requires that information relating to representation of a client be protected as required by Rule 1.6 — and Rule 1.6(a) permits revealing that information:
where the client gives informed consent;
where disclosure is impliedly authorized in order to carry out the representation; or
where Rule 1.6(b) permits it (Chapter 7).
So payor access to case information turns on Rule 1.6, the route Rule 1.8(f)(3) sets, and the client's informed consent is one gateway.
Rule
Rule 1.8(g) — Aggregate settlement (Model Rule 1.8(g))
A lawyer representing two or more clients shall not participate in an aggregate settlement (or, in criminal cases, an aggregate guilty plea or nolo contendere (no-contest) agreement) unless:
- Each client gives informed consent in a writing signed by the client; and
- The lawyer discloses the existence and nature of all the claims and the participation of each person in the settlement.
Every co-client must know what every other co-client is receiving — not merely that a settlement exists.
Quick review — Rule 1.8(h) (limiting and settling malpractice liability) (taught fully in Chapter 12)
Four points on limiting and settling malpractice liability, ending on what a client's signature alone cannot do:
- Prospective limits (1.8(h)(1)): a lawyer may not prospectively agree to limit malpractice liability to a client unless the client is independently represented in making the agreement.
- Arbitration of malpractice: permitted if proper under local law and the client understands the scope and effect; independent representation is not required.
- Settling with an unrepresented client or former client (1.8(h)(2)): the lawyer must advise in writing of the desirability of seeking independent counsel and give a reasonable opportunity to do so.
- Client consent is not a cure: the unrepresented client's signature alone doesn't satisfy 1.8(h) — independent representation (prospective) or written advisement plus opportunity (settlement) is required.
Rule
Rule 1.8(j) — Sexual relations with clients (Model Rule 1.8(j))
A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.
The client's consent is not a defense. The client's initiation is not a defense. The sole exception is a pre-existing relationship.
A pre-existing relationship may still create a material limitation conflict under Rule 1.7.
When the client is an organization, the prohibition covers persons who supervise, direct, or regularly consult with the lawyer concerning the organization's legal matters.
- Imputation (Rule 1.8(k))
while lawyers are associated in a firm, a prohibition in paragraphs (a)–(i) that applies to any one of them applies to all of them, whether or not a given lawyer worked on the matter. Paragraph (j) is the one that stays personal.
This conflict is personal to the individual lawyer and the paragraph (j) bar is NOT imputed to other firm lawyers; the involved lawyer steps aside.
But that is not the end of it. The same facts usually also create a Rule 1.7(a)(2) personal-interest conflict, and Rule 1.10(a)(1) imputes that one to the firm unless it presents no significant risk of materially limiting the remaining lawyers' representation (Chapter 9). So the firm may continue only if that second test is met.
Example 1
Ex. 1
Gina represents twelve plaintiffs in a products-liability suit. The insurer offers a lump sum. Gina meets each plaintiff individually; Hana and Ivan each sign a settlement form showing only their own payout. No plaintiff learns what any other is receiving. The arrangement violates Rule 1.8(g). An aggregate settlement requires each client's informed consent in a writing signed by the client, plus disclosure of the existence and nature of all claims and the participation of each person. A form showing only one plaintiff's share does not satisfy the disclosure requirement regardless of how many clients sign. Scan Hana's form for Ivan's number; it isn't there, and no number of signatures puts it there.
Rule 1.8(f)'s informed consent needs no writing — don't carry over Rule 1.7's confirmation-in-writing standard — but consent is one of three conditions. Client consent to third-party payment cannot authorize payor work control or settlement control; payor access to case information is the one that turns on Rule 1.6(a), which the client's informed consent opens. The 1.8(j) prohibition is personal to the involved lawyer and isn't imputed to other firm lawyers.
Trap
Tip
Questions · 2
Q 01ch10-e09
Question 1 of 2 · Rule 1.8(f)(2)
Attorney was retained by Insurer to defend Defendant, its policyholder, in a claim arising from a warehouse fire. Defendant was told that Insurer would pay the defense fees and, after Attorney explained the arrangement and its risks, agreed to it. Insurer then sent Attorney a standing directive: Attorney must obtain written authorization from Insurer before noticing any deposition, and Attorney must settle the claim for no more than forty thousand dollars whatever Attorney's own view of its value. Attorney followed both instructions and settled at that ceiling over Defendant's objection. Is Attorney subject to discipline?
Keys 1 to 4 choose.