Court Opinion

ID: 6316603
Source: CourtListenerOpinion
Date Created: 2022-02-23 01:07:27.631091+00
Date Added: 2024-06-11T09:01:44.678175
License: Public Domain

ORIGINAL                                       02/22/2022

            IN THE SUPREME COURT OF THE STATE OF MONTANA                               Case Number: AF 09-0688

                                      AF 09-0688
                                                                            FEB 2 2 2022
                                                                          Bowen Greenwood
                                                                        Clerk of Supreme Court
                                                                           State of Montana,
IN RE THE RULES OF PROFESSIONAL
                                                                 ORDER
CONDUCT

      This Court has received a request from the Montana Legal Services Association
(MLSA) to consider an exception to M. R. Pro. Cond. 1.8(e) that would allow non-profit
legal assistance organizations to provide humanitarian aid to low-income Montanans at
risk of housing instability, homelessness, and eviction.    MLSA, which operates the
Montana Eviction Intervention Program under a contract with the Montana Department of
Commerce to assist clients facing eviction, seeks to expand the program to include direct
administration of rental assistance funds as authorized by U.S. Treasury Regulations and
to establish an eviction diversion program working with the Montana Court system.
      IT IS HEREBY ORDERED that the Clerk of this Court file MLSA's letter of
request in this Court's above-referenced public docket for matters concerning the Rules of
Professional Conduct.
      IT IS FURTHER ORDERED that the Court will consider MLSA's request at its
next scheduled public meeting on March 8, 2022, at I :00 p.m.
      The Clerk is directed to provide copies of this Order to MLSA, to the State Bar of
Montana, and to the Chair of the State Bar's Ethics Committee, Peter F. Habein.
      DATED this "a 7.--Flay of Februaty, 2022.

                                                For the Court,

                                                                Chief Justice
Montana Legal Services Association                                                      MLSA
Novae. protect and enhance access to justice                                      91.1111111111111

                                               Februan. 15. 101')

Hon. Mike McGrath, ChiefJustice
Hon. James Jeremiah Shea
Hon. Laurie McKinnon
Hon. Beth Baker
Hon. Dirk Sandefur
Hon. James A. Rice
Hon. Ingrid Gustafson
Montana Supremc Court
P.O. Box 203001
Helena, MT 59620-3001

          Re:   Request for approval to allow non-profit lcgal assistance organizations to
          provide humanitarian aid to lon-income Montanans

Dear Chief Justice N1cGrath and Justices:

We are writing to request your consideration of an exception to Montana Rule of Professional
Conduct 1.8 (e) that would allow non-profit legal assistance organizations to provide
humanitarian aid to low inconle Montanans at risk of housing instability, homelessness and
eviction.

The Situation:
The Montana Legal Services Association ("MLSA") has entered into a Contract with the
Montana Department of Commerce to continue and expand the Montana Eviction [ntervention
Program ("MEIP"). Starting in October of 2020 through August 1 of 2021, Montana Legal
Services Association ("MLSA") partnered with the state Department of Commerce to
successfully provide legal advice and counsel to over 349 clients facing eviction in Montana
through the Montana Eviction Intervention Program (MEIP). This benefited 349 households and
a total of 849 Montanans. Due to the success of the program and a large increase in anticipated
evictions. MLSA and the Department of Commerce have entered into a contract with the
Department to expand the program. to better meet the needs of clients, courts, and landlords in
Montana.

MLSA will continue MEIP to provide services including: intake and case handling services for
tenants facing eviction: contracting with private attorneys to provide advice and full
representation for clients; and. advice and representation provided by MLSA attorneys. MLSA
would like to expand these services to include direct administration of rental assistance funds as
authorized by U.S. Treasury Regulations, and the establishment of an eviction diversion program
working with the Montana Court system.

Eviction Diversion Program: MLSA has been in contact with the Montana Supreme Court
Administrator's oftice and a number of judges of limited jurisdiction courts reuarding the
Justices, Montana Supreme Court
February 15, 2022
Page 2 of 4

establishment of an eviction diversion program. These stakeholders are supportive of the
establishment of thc program and have agreed to work with MLSA to ensure that this new
portion of the program is designed to serve renters, landlords, and courts as best as possible.
Under the program. courts would refer eviction cases upon filing to MLSA for assignment of
counsel for tenants and/or a mediator for the parties. This will enable MLSA staff to reach out
and work with clients immediately, initiate eviction diversion, disperse funds to landlords, and
keep Montanans housed. It also will assist with the hacklog of court cases caused by the
continuing pandemic. Courts will be asked to promote and refer renters and landlords to this
program as a means to expedite services and settle issucs outside of court. which is advantageous
to both parties. MLSA is currently working to put together a detailed plan for how this would
operate to discuss with the Courts.

Rental Assistance: The Department of Commerce is also going to contract with MLSA to
directly administer rental assistance funding for cases facing eviction in court. This will help
expedite rental assistance funding to landlords. Right now, this ftinding can take several months
to reach the intended parties. Eligibility determination will be done by MLSA staff using
financial eligibility criteria established by the Department of Commerce under the federal
Treasury Regulations governing the program. MLSA is uniquely positioncd to administer these
funds because MLSA is already screening clients for eligibility for its own federal funding.
MLSA is working with the Department of Commerce to dcvelop a program that does not
duplicate current services, and assists with getting rental assistance funds to eligible parties as
expeditiously as possible. Significantly. the financial assistance component of our program will
have the important added community benetit of financially helping landlords, who like our client
population, have also suffered greatly as a result of the pandemic.

The Department of Commerce established the Emergency Rental Assistance Program (ERAP) to
support Montanans who have expericnced financial hardships directly or indirectly due to the
COVID-19 pandemic and are at risk of housing instability. ERAP is funded through the federal
Consolidated Appropriations Act (ERA1) and the American Rescue Plan Act (ERA2), as
appropriated to the Montana Housing division of the Department of Commerce by the 67th
Montana Legislature via HB 3, HB 630, and HB 632. A series of FAQs issued by the U.S.
Department of the Treasury provide guidance regarding the proaram.1 There are strict guidelines
re2arding who is eligible to receive funding, what expenses qualify for assistance payments. and

'See https://home.treasurv.gov/policy-issueskoronavirusiassistance-for-state-local-and-tribal-
governments/emergencv-rental-assistance-program/faqs and hups://housing.mt.gov/Rental-
Housing/Montana-Emergencv-Rental-Assistance-Program. In Treasury FAQ 36, the Treasury
Department strongly encourages grantees of ARPA funds to take steps to prevent evictions for
nonpayment of rent. Recommended steps include
(1) providing information to judges, magistrates, court clerks, and other relevant court officials about the
availability of assistance under ERA programs and housing stability services: (2) working with eviction
courts to provide information about assistance under ERA programs to tenants and landlords as earl in
the adjudication process as possible: and (3) engaging providers of legal services and othcr housing
stability services to assist households against which an eviction action for nonpayment of rent has been
filed.
Justices, Montana Supreme Court
February 15, 2022
Page 3 of 4

how eligibility is documented. Funding will only be disbursed in support of households that meet
these requirements.

The Challenge:
Montana Rule of Professional Conduct 1.8(e) bars a lawyer from providing "financial assistance
to a client in connection with pending or contemplated litigation." Under an exception set out in
subsection 1.8(e)(2), a lawyer representing an indigent client may pay court costs and expenses
of litigation on behalf of the client. It may be argued that the provision of rental assistance to
persons facing housing security and possible eviction would constitute litigation expenses under
Rule 1.8(e)(2). However, the scope of the exception has not been defined by the Court.2 Without
fiirther guidance from this court, any lawyer who provides services for clients who have received
financial assistance through this program risks being found to have violated MRPC 1.8.

The rationale for the general rule against lawyers providing financial assistance to clients is
based on the common-law prohibitions against champerty and maintenance. See, Utah State Bar
Ethics Advisory Opinion 11-02, ¶ 6, citing Geoffrey Haanrd and W. William Hodes, The Law of
Lawyering § 12.2 (3"I ed., 2011). "Champerty was prohibited to prevent attorneys from stining
up litigation or from becoming involved in a lawsuit solely for personal economic benefit."
Green v. Gremaux, 285 Mont. 31, 38, 945 P.2d 903, 907 (1997). The common law prohibition
of champerty is codified at § 37-61-408, MCA. This section "is designed to prevent attorneys
from bringing or becoming involved in litigation for their personal economic benefit." Gremaux,
285 Mont. at 39, 945 P.2d at 908.

These concems are explained in Comment 10 to Rule 1.8 of the Model Rules:

       Lawyers may not subsidize lawsuits or administrative proceedings brought on behalf of
       their clients, including making or guaranteeing loans to their clients for living expenses,
       because to do so would encourage clients to pursue lawsuits that rnight not otherwise be
       brought and because such assistance gives lawyers too great a financial stake in the
       litigation.

Model Rules of Professional Conduct, R. 1.8, comment 10 (2020).

The program, as described above, will not stir up litigation. The cases already exist. The
coronavirus pandemic has created a crisis of economic and housing insecurity for low-income
Montanans. MLSA's lawyers will not have a financial stake in the outcome of a case, nor will
any lawyer become involved for personal economic benefit. The lawyers' independent
judgement will not be impacted by the provision of financial assistance. A lawyer will not face
the conflicting roles of lawyer and creditor.

The Request:

2 Rule 1.8 was amended by the Court to its current form in 1996. In re Rule 1.8. 1996 Mont. LEXIS 150,
53 Mont. St. Rep. 707.
Justices. Montana Supremc Court
February 15, 2022
Page 4 of 4

The Court has a constitutional rnandate to fashion and interpret the Rules of Professional
Conduct. Mont. Const. art. VII. sect. 2, cl. 3: In re Rides of Profl Conduct, 2000 MT 110. 9,
299 Mont. 321, 2 I'.3d 806.

MLSA requests that the Court consider entering a special Order interpreting Rule 1.8(e) to
clarify that when a non-profit organization providing free legal aid to indigent clients has
received donations or other funding to provide humanitarian aid to persons in need. such as
financial assistance to pay for housing, food. clothing. shelter or transportation, the
organization's use of such donations or other funding to provide humanitarian aid to its clients or
thc clients' families shall not be decmed a violation of Rulc 1.8(e).3

'I'hank you for your consideration of this request. We are available in the event you have
questions.

Sincerely.

                                                                 (4-t_
   on Paul                                            ‘Iliam F. Hoo s
Executive Director                                    Director of Advocacy
Montana Legal Services Association                    Montana Legal Services Association

Cc: Beth McLaughlin, Supreme Court Administrator

'Such orders have been issued by the Tennessee Supreme Court, In re Tenn. Sup. Ct. R. 8, RPC 1.8(e).
humanitarian Aid Provided bv Non-Profit Lem! Assistance Ores., 2021 Tenn. LEXIS 73 and the
Massachusetts Supreme Judicial Court, https://www.mass.gov/docforder-conccrning-humanitarian-aid-
bv-non-pro fit-organ izations-and -mass-r-prof-c- 8e/download (June 10, 2020).