Our latest episode of Remotely Ethical is the first installment of a three-part series on doing business with clients.
In Part 1, below, we discuss what lawyers should consider when renegotiating fee agreements with clients.
In Part 2 of this series, we will discuss how certain alternative fee arrangements, such as taking equity in exchange for legal services, may constitute business transactions with clients.
In Part 3, we will discuss other types of business transactions with clients, outside of the attorney-client relationship.
In this episode we address:
- The fact that lawyers may face pressure to renegotiate fee agreements with clients, particularly during the current health and economic crisis;
- That renegotiating a fee arrangement may constitute a business transaction with a client, subject to Rule 1.8(a) of the New York Rules of Professional Conduct;
- New York State Bar Ethics Opinion No. 910, which discusses factors that are relevant to whether a fee negotiation constitutes a business transaction with a client;
- The importance of getting advice if you're not sure whether your fee renegotiation constitutes a "business transaction";
- Complying with Rule 1.8(a) when entering into a business transaction with a client, including ensuring that:
- the transaction is "fair and reasonable" to the client;
- the terms of the transaction are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
- the client is advised in writing of the desirability of seeking, and be given a reasonable opportunity to seek, the advice of independent legal counsel on the transaction; and
- the client gives written "informed consent" to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.
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Just because it's a business transaction doesn't mean you can't do it. You just need to keep in mind what you can do and the disclosure requirements that you're going to have to make along the way.