LEO: Acquiring an Interest in Litigation  LE Op. 1133


Acquiring an Interest in Litigation - Confidentiality - Duty to Report:

Knowledge that Attorney Advanced Monies to a Client.


September 2, 1988


You have stated that you represented an attorney who was the plaintiff in

an action against his former law partners. The action involved a

disagreement over fees and costs due under the terms of an agreement

executed between the parties when they dissolved their former law

corporation. Prior to commencement of discovery, the court signed a

protective order requiring that information produced during discovery is

to be kept in confidence and regarded as privileged, prohibiting its

becoming part of the public record without the consent of the parties and

their counsel. During discovery it was established through the deposition

of a former client of the defendant that the defendant advanced the former

client money against the client's anticipated settlement.


You wish to know whether these payments are ethical; if not, whether you

are under an ethical obligation to make these transactions known to the

State Bar; and what effect, if any, the protective order has on any

ethical responsibilities you have.


Disciplinary Rule 5-103(B) states that "while representing a client in

connection with contemplated or pending litigation, a lawyer shall not

advance or guarantee financial assistance to his client." This prohibition

stands unless the advance/guarantee is for the expenses of litigation, and

the client remains ultimately liable for such expenses. According to your

letter, the advanced funds were repaid from the settlement, so one may

assume the client remained ultimately liable for repayment of the money.

However, your letter states that the money was sent to the client, so one

may assume it was not to cover litigation expenses. The litigation

expenses contemplated by the Rule run to third parties (e.g., court

reporters) not to the client. Therefore, the action you are concerned with

appears to have violated DR:5-103(B).


You have information indicating that another lawyer has committed a

violation of the Disciplinary Rules. Therefore, you must report it if (1)

the information is not privileged ( LE Op. 217), and (2) it raises a "

substantial question as to the lawyer's fitness to practice law in other

respects." ( DR:1-103.) Because the information came to light in

discovery depositions and it did not concern your client, the information

is not privileged under DR:4-101.


The next question, therefore, is whether the lawyer's violation raises a "

substantial question as to the lawyer's fitness to practice law in other

respects." EC:1-4 exhorts that:


The integrity of the profession can be maintained only if conduct of

lawyers in violation of the Disciplinary Rules is brought to the attention

of the proper officials. A lawyer should reveal voluntarily to those

officials all unprivileged knowledge of conduct of lawyers which he

believes clearly to be in violation of the Disciplinary Rules.


With this as the underlying rationale for Rule 1-103, it is the

Committee's opinion that the "substantial" language is to provide

exception for a violation which was clearly perpetrated in the heat of the

moment (e.g., an outburst against a judge) or so technical as to mean

nothing other than that a simple mistake was made. A violation of DR:5-

103(B), in the context which you set forth, does not appear to come within

the exception excusing the duty to report. Therefore, it is your ethical

duty to report it.


The final question you raise is the effect of the Protective Order on

this duty to report. Presently, it would appear that the Protective Order

might prohibit your reporting the violation. Ultimately, however, this is

a question of law which is not within the purview of the Committee. It is

the Committee's opinion that, in this situation, you have a duty to seek

an order from the court permitting you to disclose this violation to the

State Bar. This will enable you to fulfill your ethical responsibilities

without violating any law or court order.


Committee Opinion September 2, 1988