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Washington D.C. Ethics Opinion

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District of Columbia Ethics Opinion


1. A lawyer may obtain a loan from a lending company to fund litigation expenses, provided that the terms of the loan are fair, the client has an opportunity to consult with another attorney on the issue, and that the client consents in writing to the loan.

Washington Ethics Opinion

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State of Washington

The inquirer asks if it is ethical for a lawyer, in a contingency fee case, to charge interest on costs and expenses of litigation advanced on behalf of the client. The committee opined that a lawyer may, in representing a client on a contingency fee matter, provide in the written fee agreement at the commencement of the representation that costs advanced by the lawyer will accrue interest after a stated period from the date of advancement. The interest rate charged must be reasonable (RPC 1.5) and non-usurious.

Utah Ethics Opinion

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State of Utah

Utah Ethics Advisory Opinion Committee
Opinion No. 02-01
Issued February 11, 2002

Issue: Do the Utah Rules of Professional Conduct preclude a Utah lawyer from financing litigation costs through a loan from a third-party lending institution, if (a) the lawyer is obligated to repay the loan and (b) the client, by separate agreement with the lawyer, is obligated to reimburse the lawyer for such costs?

Texas Ethics Opinion

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State of Texas


1. It is ethical for an attorney to take a loan from a third party funding company cover litigation expenses, or to fund his law practice.

2. It is ethical for that attorney, if successful in the litigation, to pass on any interest and charges on any such loan to the client as an appropriate litigation expense, as to the portion of the loan which funded that client’s case.

Tennessee Ethics Opinion

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State of Tennessee

Advisory Ethics Opinion 98-A-659
Board of Professional Responsibility of the Supreme Court of Tennessee (July 9, 1989), draws a similar conclusion from similar facts described in the Utah inquiry. The Board concludes “a lawyer may advance or guarantee certain expenses” by means of “a lending company or recommending such services to clients.”

South Dakota Ethics Opinion

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State of South Dakota

Ethics Opinion 2003-6
Rules: 1.2, 1.16, 8.4
Subject: Champerty and Maintenance
Summary: Law Firm is prohibited from entering into contractual relationship with client and third party for cash advance by third party prior to conclusion of dispute.

Law Firm represents client in a dispute concerning injuries sustained from an unknown event. Brand X is an out of state company that provides cash advances on pending personal injury claims. Before such advances are made, Brand X requires that client and Law Firm execute an agreement whereby Brand X will be repaid all sums advanced in addition to “user fees” upon resolution of the claim. The engagement letter submitted by Brand X indicates that it will have a lien upon the settlement proceeds.

South Carolina Ethics Opinion

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State of South Carolina

Ethics Advisory Opinion 94-04
Upon the request of a member of the South Carolina Bar, the Ethics Advisory Committee has rendered this opinion on the ethical propriety of the inquirer’s contemplated conduct. This Committee has no disciplinary authority. Lawyer discipline is administered solely by the South Carolina Supreme Court through its Commission on Lawyer Conduct.

Rhode Island Ethics Opinion

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State of Rhode Island

June 22, 1994
The inquiring attorney states that the law firm at which he/she is employed has obtained a line of credit from a bank. The bank has requested that the law firm grant a security interest in the firm’s accounts receivable and that the firm provide the bank with a list of the accounts receivable including the names of clients, addresses and amounts owed by them. The attorney seeks Panel advice under these circumstances in light of Rule 1.6 “confidentiality of information.”

Pennsylvania Ethics Opinion

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Commonwealth of Pennsylvania Ethics Opinions


1. It is ethical for an attorney to borrow funds from a third party funding company to cover litigation expenses, or to fund his law practice. However, in this case the Ethics Opinion requires that ” ..the costs [be] repaid, plus additional fees, only if the case were successfully concluded and funds were derived by the attorney.” Moreover, “[i]f there is a recovery, the only claim by the Funding Company is against the attorney and the attorney´s bank account (after distribution of all recoveries from the attorney´s escrow account) and not against the client or the client´s recovery.” The funding company has no private right of action and no claim against the client.

Oregon Ethics Opinion

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State of Oregon

1. May Lawyer charge 18% annual interest if a client expressly agrees to it as part of the fee agreement?
2. What interest rate may Lawyer charge in the absence of an interest rate agreement?
3. If no agreement concerning a charge of 18% is reached, may Lawyer amend the fee agreement to include an 18% per annum charge by stating on a bill sent to the client that, in the future, the client must begin to pay 18% per annum if payment is not received within 30 days?

Ohio Ethics Opinion

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State of Ohio


1. A lawyer may obtain a loan from a third party lending company provided that the loan is not secured by the client´s interest in any settlement or judgment. This provision does not prohibit the lending company from securing the loan through the borrowing attorney´s fee on the case. The client should also be informed of the loan and his or her consent should be obtained by the borrowing attorney/firm.

North Carolina Ethics Opinion

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State of North Carolina

2006 Formal Ethics Opinion 12
October 20, 2006
Obtaining a Loan to Fund Litigation Costs

Opinion explores the circumstances under which a lawyer may obtain litigation funding from a financing company.

Inquiry #1:

ABC Litigation Funding (hereinafter “ABC”) is a company that offers non-recourse loans to personal injury lawyers who need to borrow funds for expenses advanced in contingency cases. Lawyer is interested in obtaining financing for a large personal injury case for which he has already advanced some of the expenses. Lawyer will be unable to complete the matter unless he receives help with the costs.

New York Ethics Opinion

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State of New York

ETHICS OPINION 754-2/25/02

1. It is ethical for an attorney to borrow funds from a third party lender to cover litigation expenses, or to fund his law practice.

2. The interest charged by the lender to a lawyer on the funds borrowed by the lawyer to fund litigation expenses may be passed on to the client as a legitimate litigation expense if certain conditions are met:

New Jersey Ethics Opinion

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State of New Jersey


1. It is ethical for an attorney to borrow funds from a third party lending company to cover litigation expenses, or to fund his law practice.

2. It is ethical for that attorney to pass on to the client, as an appropriate litigation expense, any interest and charges on any such loan, to the extent of that portion of the loan which funded that client´s case.

New Jersey Ethics Opinion 603 is copied in its entirety below:

New Hampshire Ethics Opinion

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State of New Hampshire


The New Hampshire Bar authorities do not officially address the ethics of an attorney borrowing funds from a third party funding company. However, Practical Ethics Article: May 21, 1987 (“Law Firm Use of Outside Services Providers”) acknowledges and supports opinions that have condoned attorney borrowing from financial companies to fund litigation.

Nevada Ethics Opinion

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State of Nevada

Formal Opinion No. 36
January 7, 2007


1.  Do the Nevada Rules of Professional Conduct preclude an attorney from financing litigation costs through a loan obtained from a third-party lending institution in which the attorney is obligated to repay the loan and the client is in turn obligated to reimburse the attorney for litigation costs?

Nebraska Ethics Opinion

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State of Nebraska

Nebraska Ethics Advisory Opinion for Lawyers No. 00-2
An opinion of the advisory committee has been requested as to whether it is ethical for a lawyer to refer a client to a business which advances money to the client for litigation or living or living expense purposes in exchange for an equity position in the client’s case. The lender will expect a lien on the proceeds of the lawsuit or the settled claim and above-market interest plus service fees.

Missouri Ethics Opinion

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State of Missouri

Maintaining the Integrity of the Profession Misconduct

Opinion Number: 20030022 – Rule Number: 8.4
QUESTION: Attorney’s firm proposes to borrow money from a non-lawyer for the purpose of funding expenses in mass tort litigation. The loan will be on a non-recourse basis. The firm’s duty to repay would be based on successful prosecution of the cases as a whole, but not on the recovery of any individual case. ANSWER: Generally, it is permissible for the law firm toborrow money from a third party to fund litigation. However, it is not permissible for the repayment of the loan to be based on the outcome of the lawsuit.

Minnesota Ethics Opinion

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State of Minnesota

Vol. 61, No. 5 | May/June 2004
Presettlement Funding Agreements:
Benefit or Burden
By Kenneth L. Jorgensen

Generally, lawyers are prohibited from providing financial assistance to clients. See Rule 1.8(e), Minnesota Rules of Professional Conduct. An exception to this rule permits lawyers to advance the costs and expenses of litigation and make the repayment contingent upon the outcome of the client’s case.

Michigan Ethics Opinion

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State of Michigan

October 7, 2005

The Michigan Rules of Professional Conduct do not preclude a lawyer from financing litigation costs through a loan from a third-party lending institution provided the lawyer discloses to the client the terms and conditions of the loan and the client consents in a written contingent fee agreement, upon conclusion the client receives a written statement reflecting interest advanced by the lawyer and charged to the client as an expense in the matter, and the lawyer, but not the client, is obligor on the loan.

Arizona Ethics Opinion

Matthew McCormick | Creative Director


State of Arizona


The Arizona ethics committee in various opinions has rendered guidance to attorneys that litigation funding is both proper and ethical where client confidences and attorney independent judgment are maintained. They also advise that interest charges can be passed to a client upon full disclosure and written consent.

Massachusetts Ethics Opinion

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Commonwealth of Massachusetts


1. It is ethical for an attorney to borrow funds from a third party lending company to cover litigation expenses, or to fund his law practice

Excerpts from Massachusetts Ethics Opinion 83-7:

Facts: The committee has received two inquiries. In the first, an attorney who represents the plaintiff in a personal injury case inquires if he may borrow funds from a chartered lending company to help defray the costs and expenses of the litigation, supporting his application for the loan by describing the lawsuit to the prospective lender. The debt would be unsecured and the due date of the loan would not in any way depend upon the outcome of the litigation.

Maryland Ethics Opinion

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State of Maryland

Ethics Docket 98-23

Charging Client for the Cost of Bank Loan for Advances and/or Charging Interest on Advances for Use of Attorney’s Funds. In your letter you state that your standard contingent fee agreement provides that the client assumes a non-contingent responsibility for the court costs and expenses of litigation incurred on the client’s behalf. Such costs and expenses are advanced by you, and they are funded by utilizing your bank line of credit or from your own funds. You ask the following questions:

Maine Ethics Opinion

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State of Maine


1. It is ethical for an attorney to borrow funds from a third party lending company to cover litigation expenses, or to fund his law practice

The costs, fees and interest from the litigation loan may be passed on to the client, provided that:

Louisiana Ethics Opinion

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Commonwealth of Louisiana Ethics Opinions

CHITTENDEN V. STATE FARM MUT. AUTO. INS. CO., 788 SO. 2D 1140 ( LA.), REH. DEN., 2001 LEXIS 2154 ( LA. 2001)

1. It is ethical for an attorney to borrow funds from a third party lending company to cover litigation expenses, or to fund his law practice.

Kentucky Ethics Opinion

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State of Kentucky

KBA E-420
Subject: Lawyer Borrowing Litigation Costs and Granting Lender a Security Interest in Lawyer’s Contingent Fee

Question 1: May a lawyer who represents a client under a contingent fee contract borrow funds from a lending institution to cover litigation expenses?
Answer: Yes, subject to the cautions set forth below.

Kansas Ethics Opinion

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State of Kansas

OPINION No. 94-08; August 16, 1994
Topic: Assignment of lawyer’s accounts receivable Digest: The proposal to assign client accounts to a bank in return for a discounted loan may be permissible but amounts to self-dealing for the attorney and is not permissible under the Model Rules unless there is consent, after full disclosure, by the client, which under Kansas case law may require independent advice of counsel. We feel such an assignment, if undertaken, should be restricted to clients for whom the legal work is complete, the fee is reasonable, the attorney has a right to 

Illinois Ethics Opinion

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State of Illinois

Illinois State Bar Association

ISBA Advisory Opinion on Professional Conduct
Opinion No. 94-06

July, 1994

ISBA Advisory Opinions on Professional Conduct are prepared as an educational service to members of the ISBA. While the Opinions express the ISBA interpretation of the Illinois Rules of Professional Conduct and other relevant materials in response to a specific hypothesized fact situation, they do not have the weight of law and should not be relied upon as a substitute for individual legal advice.

Hawaii Ethics Opinion

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State of Hawaii


An arrangement whereby an attorney refers a client to a bank or other lending institution to obtain a loan for legal fees and costs is generally regarded as consistent with the attorney’s duty to make legal services available, thus preserving the integrity and independence of the legal profession. In making such a referral, an attorney need not determine that the credit arrangements are fair to the client or otherwise become involved in such arrangements.

Georgia Ethics Opinion

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State of Georgia


The Georgia ethics committee in various opinions has rendered guidance to attorneys that litigation funding is ethical where client confidences and attorney independent judgment are maintained. They also advise that interest charges can be passed to a client upon full disclosure and written consent.

Florida Ethics Opinion

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State of Florida


For purposes of this inquiry, the Committee assumes that the professional services have been completed and the fee fixed and agreed upon.

The assignment of a receivable representing a fee for professional services immediately raises concern about the confidential relationship between lawyer and client, including such confidential matters as the client’s need for legal services and amount of the fee owed for such services.

Connecticut Ethics Opinion

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State of Connecticut

Informal Opinion 99-42
September 17, 1999
Connecticut Bar Association Committee on Professional Ethics. Advance Of Funds To Client By Third Party: The requester has asked for the opinion of this committee concerning whether it would be unethical for his office to participate in or to encourage his clients to participate in a program in which a Florida corporation has offered to advance money to personal injury claimants secured by the claimant’s potential recovery in the personal injury claim. The committee has reviewed information received from both the requester and from the Florida corporation, which we shall call, for purposes of this Opinion, “XYZ, Inc.” The requester received an unsolicited mailing from XYZ, Inc. The mailing included an introductory letter which read, in toto, as follows:

Colorado Ethics Opinion

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State of Colorado


It is the opinion of the Colorado Bar Association Ethics Committee that the Code of Professional Responsibility prohibits the unilateral charging of interest by an attorney on a delinquent account for legal services, unless there has been a prior agreement between the attorney and the client which specifically states both the amount of interest and the time periods under which interest would be imposed. This opinion is a logical extension of Formal Opinion 338 of the American Bar Association Committee on Ethics and Professional Responsibility, adopted November 16, 1974, and our previous Informal Opinion Y.

California Ethics Opinion

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State of California


The Committee interprets the inquiry to ask not about the ethicality of charging interest on costs advanced when they have already been billed to the client and become past due, but, rather, about the ethicality of charging interest from the time they are paid by the lawyer until the time they are billed. As to the former query, the Committee has previously stated that it is not improper for a lawyer, with the prior agreement of the client, to impose a reasonable interest charge on delinquent balances of fees and costs.