CBA_April 13Report - page 7

April 2013 CBA REPORT
cover article
Prof. Cond. R. 2.3 addresses the at-
torney’s duty to provide an evaluation of
a client’s case to a third person.
The Lawyer’s Statutory Duties
R.C. 1349.55 further requires that the
loan agreement contain an acknowledg-
ment–signed by the lawyer for the loan
(a) The attorney representing the consum-
er in the civil action or claim has reviewed
the contract and all costs and fees have
been disclosed including the annualized
rate of return applied to calculate the
amount to be paid by the consumer.
(b) The attorney representing the con-
sumer in the civil action or claim is being
paid on a contingency basis per a written
fee agreement.
(c) All proceeds of the civil litigation will
be disbursed via the trust account of the
attorney representing the consumer in
the civil action or claim or a settlement
fund established to receive the proceeds of
the civil litigation from the defendant on
behalf of the consumer.
(d) The attorney representing the consum-
er in the civil action or claim is following
the written instructions of the consumer
with regard to the non-recourse civil liti-
gation advance.
The BCGD opinion also explored
the possibility that the Supreme Court
might strike down R.C. 1349.55–thereby
invalidating the opinion–but concluded
that the ethical guidelines were appropri-
ate, given that
had “stated that
non-recourse civil litigation advances
could be legalized by “legislative enact-
ment.” (BCGD Opinion 2012-3, p. 6.)
What I Think
Cynics (I am one) would say that the
legislature has been persuaded to permit
lawsuit loans in the guise of “regulating”
them. There is no cap on the interest rate
that can be charged, and most people
who would seriously consider high
interest loans are so desperate that all
the bold type, warnings from lawyers,
and waiting periods in the world would
not keep them from selling their souls to
gain $500.
Most members of the plaintiffs’
bar cringe at the practical problems
presented by these arrangements. The
“case evaluations” requested by lend-
ers may force attorneys to walk a very
thin line between advocating a client’s
creditworthiness to the lender and being
sufficiently honest to avoid liability for
misevaluating the case. The availability
of “fast money” without consequence
incentivizes client dishonesty. And the
disproportionate share of the recovery
represented by the payoff can only make
already difficult cases harder to settle.
The plaintiff attorney’s nightmare
is a case where the chances of getting a
recovery substantially greater than the
insurance offer are minimal, but the
client will not accept the offer because
of unrealistic expectations–or because
he has nothing to lose. “Lawsuit loans”
increase the probability of this happen-
ing dramatically.
What is the argument for lawsuit
loans, besides the assertion that they are
just another form of business enterprise?
One argument is that the people who
want lawsuit loans are going to get the
money from somewhere and that the
increase in the payoff occasioned by the
interest and finance charges isn’t going
to create that many more “messes” than
will happen playing by the rules of the
last millennium. And that the old rules
are nothing but what Bernard Shaw
would call an extension of
Middle Class
–rules that work just fine for the
middle and upper classes, but not for the
poor. “What is middle class morality?
Just an excuse for never giving me any-
thing.” Jimmy Doolittle,
What do I think? I don’t like lawsuit
loans. I discourage clients from taking
them. And I may not take a case if I think
a client is about to apply for one. But,
I don’t think they’re going away.
Strubbe is a member of the Cincinnati Bar Association,
and a former Chair of the CBA Ethics Committee.
The opinions expressed are those of the author, and not
those of the CBA Ethics Committee.
1 R.C. 1349.55 uses the words “company,”
course civil litigation advances”, and “consumers.” This
article uses in place of such terms the words “Lender,”
“loan,” and “borrower” or “client” respectively because
they are easier to use, and most people think of the
participants this way.
L e a v e a l e ga c y o f
s e c u r e a b r i g h t
f uture
Encourage your clients to bring hope where there is despair,
love where there is loneliness and faith where there is emptiness.
To learn more about legacy gift opportunities with
The Society of St. Vincent de Paul contact Kate Farinacci,
Relationship Manager, at 513-562-8841 ext. 259.
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