The Florida Bar
(October 1, 1996)
An attorney may not unconditionally agree to be responsible for the costs associated with a client's litigation. While Rule 4-1.8(e) permits an attorney to advance costs and expenses of litigation on behalf of a non-indigent client, the rule contemplates repayment of such costs in the event of a recovery.
Opinions: 72-27; Iowa Opinion 93-2, Mississippi Opinion 225; North Carolina Opinion 124
A member of The Florida Bar has requested an advisory ethics opinion on the propriety of submitting a contract for representation proposal to a State agency in which the attorney agrees to be responsible for the costs, even if a recovery is obtained. Specifically, the contract provides, in pertinent part:
Payment for services covered by the resulting contracts will be based on a contingency fee percentage of the total dollars recovered and reimbursed to the Agency. Provider shall not separately bill costs, but shall absorb and pay all costs whatsoever. . . . and
All costs incurred by the contractors in performance under the contracts will be the responsibility of the contractors. No additional payments will be made to the contractors to reimburse them for travel expense, filing fees, court cost, or any other cost. . . .
The contracts resulting from this RFP will be based on a contingency fee for actual cash recoveries received by the state. The maximum acceptable contingency fee is 25%. Any proposals with a contingency fee greater than 25% will be determined nonresponsive by the Agency and will be rejected. All costs incurred by the contractor(s) in performance under the contract(s) will be the responsibility of the contractor(s)[.]
Rule 4-1.8(e), Rules Regulating The Florida Bar, is the governing ethical standard:
(e) Financial Assistance to a Client. A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:
(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and
(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.
This rule prohibits an attorney from providing financial assistance to a client in connection with pending or contemplated litigation. The rule, however, contains an exception permitting the attorney to advance court costs and expenses of litigation on behalf of a non-indigent client, the repayment of which may be contingent on the outcome of the matter. See, e.g., Florida Ethics Opinion 72-27; Iowa Opinion 93-2; Mississippi Opinion 225; North Carolina Opinion 124. Although this exception permits attorney and client to agree that the client's repayment of advanced costs and expenses will be contingent on the outcome of the matter, it clearly contemplates that such repayment will be made if a sufficient recovery is obtained. In contrast, the inquiring attorney proposes an outright payment of costs for a non-indigent client, rather than an advancement.
The concerns raised by Rule 4-1.8(e) are that of the common law doctrines of champerty and maintenance, as well as the conflict of interest created when an attorney has a personal economic interest in the outcome of the matter. The committee recognizes that the concerns underlying the rule may be minimized when the client is a state agency, but is constrained to apply the rule as it is written. Accordingly, the committee concludes that, under the plain language of Rule 4-1.8(e), it would be ethically impermissible for the inquiring attorney to unconditionally be responsible for all costs and expenses as provided in the proposed agreement.