Legal Question in Civil Litigation in California

Can an Attorney lend money ($1,000-3,000) to a client as part of a fee-agreement (or in a separate written contract) retainment, at the start of litigation, and then the attorney can deduct that amount from client's earnings later on in a favorable monetary settlement/verdict?

Because sometimes, a plaintiff would rather settle for a low nuisance settlement ($1,000-2000) with defendants because Plaintiff is in need of money, but if the Plaintiff can receive a loan from the attorney or law firm, and it makes litigation business sense to further negotiate a better settlement that would take 1-4 months to achieve, it would be in the best interest of Plaintiff and Plaintiff's attorney to wait longer.

I know that attorneys that take case on contingency basis, have to put the costs for filing fees, deposition costs, trial fees, all of which costs about $10,000, but are they allowed to loan money to client upfront?

Is there a rule from the State Bar, CCP, CRC, case laws, etc. that forbids this type of loans?


Asked on 5/04/14, 2:26 pm

2 Answers from Attorneys
Charles Perry Law Offices of Charles R. Perry

As a strict matter of ethics, a loan from attorney to client is permissible in some cases, provided the terms of Rule 3-00 of the California Rules of Professional Conduct are met. California is almost unique in this respect. Having said that, lawyers are not banks. I, for one, would not loan money to a client, in order to prevent any possible conflict of interest.

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Answered on 5/05/14, 3:28 am
Anthony Roach Law Office of Anthony A. Roach

I agree with Mr. Perry. You can read the terms of Rule 3-300 here: http://rules.calbar.ca.gov/Rules/RulesofProfessionalConduct/CurrentRules/Rule3300.aspx

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Answered on 5/05/14, 7:31 am


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