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Ethics Opinion

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RI-65

December 19, 1990

SYLLABUS

    A lawyer may not serve as surety for a client, since the client's failure to comply with the terms of the surety agreement places the client's interests in conflict with the lawyer's own interests as surety.

    References: MRPC 1.7(b), 1.8(a) and (c), 1.15(b); CI-365; MCLA 600.2665.

TEXT

A lawyer maintains a client trust account in which monies are deposited, which have been received from clients for the purpose of paying for the costs of their litigation or legal matters. The lawyer questions whether, if the amount a particular client has on deposit in the trust account exceeds the amount of the client's required bond, the lawyer may utilize such funds and post bond for the client at the client's request. The lawyer specifically questions whether such action would violate MCLA 600.2665.

MCLA 600.2665 states:

    "No practicing attorney or counselor shall become a surety or post bond for any client in criminal or civil matters. This section shall not apply to any bond of $100.00 or less required to be filed by a fiduciary in the probate court."

Whether the action violates MCLA 600.2665 is a question of law rather than ethics, and is beyond the scope and jurisdiction of this Committee. While it is unlikely this statute would preclude a lawyer from using client funds to post bond, the determination is not for this Committee to make. Consequently, this opinion will address only the ethical considerations of the lawyer's contemplated action.

MRPC 1.15(b) states:

    "Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property."

Thus, a lawyer holding funds of a client shall disburse those funds as directed by the client, unless such disbursement is prohibited by law. If the client directs the lawyer to use the funds for the client's bond, the lawyer shall do so.

Whether the lawyer may personally serve as the client's surety on the bond is a separate question. Clearly a lawyer is prohibited from using the lawyer's own monies to post the client's bond, pursuant to MRPC 1.8(e): "A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation . . . [except on terms not relevant here]."

MRPC 1.8(a) would appear to allow the lawyer and client to agree that the lawyer act as surety. MRPC 1.8(a) states:

    "A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client unless:

      "(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client;

      "(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction: and

      "(3) the client consents in writing thereto."

However, a lawyer may not enter into such an agreement when the lawyer's representation of the client may be materially limited by the lawyer's own interests, MRPC 1.7(b). In the event of the client's disappearance, or refusal or inability to satisfy the terms of the surety, the lawyer's interest as surety conflicts with what may be the client's interests in staying at large, or pursuing a course of action contrary to that of the surety.

CI-365, interpreting the former Michigan Code of Professional Responsibility, specifically prohibited a lawyer from becoming surety or posting a bond for a client in any civil or criminal proceeding (except for probate). No circumstances have arisen under the current ethics rules which would warrant abandoning or altering this position.

Thus, while the lawyer may utilize the funds in question to obtain a bond at the client's request, a third party must serve as the actual surety.

 
     

 

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