Opinion ID: 1679379
Heading Depth: 1
Heading Rank: 3

Heading: Advancement of Funds.

Text: The Committee charges that the respondent improperly advanced $1000 to a client in a workers' compensation case, then misrepresented to the client that the money came from a local bank. The charge is that the advancement of money for nonlitigation expenses is a violation of DR 5-103(B) and that misrepresentation to a client about the source of the loan violates DR 1-102(A)(4). The respondent's client needed money to pay medical expenses (unrelated to the workers' compensation claim), according to the respondent. The respondent loaned him $1000 and told him that it had come from a local bank. While representing a client in connection with contemplated or pending litigation, a lawyer shall not advance or guarantee financial assistance to a client, except that a lawyer may advance or guarantee the expenses of litigation, including court costs, expenses of investigation, expenses of medical examination, and costs of obtaining and presenting evidence, provided the client remains ultimately liable for such expenses. DR 5-103(B). DR 1-102(A)(4) provides that a lawyer shall not [e]ngage in conduct involving dishonesty, fraud, deceit, or misrepresentation. The complaint alleges that the misrepresentation about the source of the loan violated this rule. The respondent does not contest the Committee's finding that he loaned money to the client for nonlitigation expenses. He claims that his client was in serious financial need, and the loan was not made for the purpose of obtaining employment for the workers' compensation case. (At the time the loan was made, the respondent was already representing the client.) Disciplinary rule 5-103(B), however, makes it clear that only under very limited circumstances may a lawyer loan money to a client. In Committee on Professional Ethics & Conduct v. Bitter, 279 N.W.2d 521 (Iowa 1979), the respondent contended that [t]he act was done entirely for charitable and humanitarian reasons because the clients were in extremely dire financial need. Id. at 523. We nevertheless concluded that this conduct violated DR 5-103(A). The rule proscribing such acts . . . makes no exceptions for these factors. It provides that the rule is intended to prevent an attorney's procuring an interest in a legal matter by advancements of money or the like. The rule does not require proof of such intent or effect, only that the conditions exist where such results might. . . give rise to reasonable speculation that [the attorney] has thus [inserted] himself into the legal affairs of his potential clients. Bitter, 279 N.W.2d at 523. While this violation by the respondent by itself does not constitute a serious infraction, the evidence supports the Committee's conclusion that the rules were violated.