Legal Question in Legal Ethics in California

There is a section of the Rules of Professional Conduct regarding having business relationships with a client. The situation you described could impair the attorney's professional judgment in representing the client. At best full disclosure is required.

Business relationships with clients are governed by California Rules of Professional Conduct rule 3-300.

A member 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 each of the following requirements has been satisfied:

(A) The transaction or acquisition and its terms are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; and

(B) The client is advised in writing that the client may seek the advice of an independent lawyer of the client's choice and is given a reasonable opportunity to seek that advice; and

(C) The client thereafter consents in writing to the terms of the transaction or the terms of the acquisition.