April 29, 1983
It is ethically improper for a lawyer to acquire an interest in the subject matter of litigation for which the lawyer was being retained.
A lawyer may not acquire an interest in the same real property from the client in whose behalf litigation is undertaken. Such a relationship creates potential conflicts of interest and may impair the lawyer's independent judgment and duty of undivided loyalty to the client.
References: MCPR DR 5-101(A), DR 5-103(A).
A lawyer has been asked to represent a client in litigation to settle an easement relating to client property. The lawyer seeks input on the propriety of a client fee agreement. The lawyer's fee would be secured against real property of the client.
If the land is part of the parcel of which is to be litigated, then MCPR DR 5-103(A) would prohibit the transaction. MCPR DR 5-103(A) exhorts lawyers to avoid acquiring a proprietary interest in the litigation subject matter except as a lien to secure fees or expenses, or as a reasonable fee in a contingent fee civil case. The proposed arrangement satisfies neither of these exceptions and is, therefore, ethically inappropriate
There are few transactions which cause the courts to exercise more scrutiny through dealings between lawyers and their clients. At the very least a lawyer must prepared to show that the relationship was not exploited, that the client was fully and fairly informed of all material facts, and that the transaction is free from fraud, overreaching or duress. The must also examine acquisition of a proprietary interest in the litigation subject matter will permit the lawyer to retain independence of jugment or whether it would tend to impair the lawyer's duty of undivided loyalty. MCPR DR 5-101(A). From even a cursory review of the problem, the location of an easement, whether to be on the client's portion or the lawyer's, will raise the difficulty of conflicting interests particularly where landlocked property is concerned.