Ethics Opinion 133NEW YORK STATE BAR ASSOCIATION Professional Ethics Committee Opinion
Opinion #133 – 04/09/1970 (12-70)
Topic: Financing litigation; Loans to clients; Endorsing client’s notes.
Digest: Improper to loan or advance funds to client; exceptions thereo.
Code: DR 5-103 (B) EC 5-8
May an attorney representing a claimant in a negligence case assist the client financially during the pendency of the litigation by either personal loans or endorsing or guaranteeing the note of the client at a lending institution?
EC 5-8 provides as follows:”A financial interest in the outcome of litigation also results if monetary advances are made by the lawyer to his client. Although this assistance generally is not encouraged, there are instances when it is not improper to make loans to a client. For example, the advancing or guaranteeing of payment of the costs and expenses of litigation by a lawyer may be the only way a client can enforce his cause of action, but the ultimate liability for such costs and expenses must be that of the client.”DR 5-103 (B) provides:”While representing a client in connection with contemplated OI pending litigation, a lawyer shall not advance or guarantee financial assistance to his client, except that a lawyer may advance or guarantee the expenses of litigation, including court cost, expenses of investigation, expenses of medical examination, and costs of obtaining and presenting evidence, provided the client remains ultimately liable for such expenses.”It is the opinion of this Committee that a lawyer may neither loan money or guarantee the notes of a negligence client except for those purposes specifically authorized by DR 5-103 (B).