Thursday, July 14, 2011

Attorney suspended for having his wife lend money to client; Court finds loans violated rule against financial assistance to clients

In a recent case callled Toledo Bar Ass'n v. Pheils, the Ohio Supreme Court suspended a lawyer who arranged loans from his wife to a client whom the lawyer was representing in a litigation matter.  At the time of the loans, the client was having financial difficulties and wanted to sign a proposed settlement of his lawsuit, but the lawyer wanted to continue negotiating.  The lawyer arranged for his wife to lend the client a total of  $14,500 and as part of the promissory note for one of the loans, the client agreed to assign his rights in the litigation to the lawyer's wife.  The lawyer acted as lawyer for his wife during the negotiations with the client regarding the loans and later he represented his wife in a lawsuit against his former client.

Given these facts, the court concluded that the loans constituted improper financial assistance to the client even though the money came from the lawyer's wife rather than the lawyer himself and that the lawyer had violated the rules regarding conflicts of interest.

As is common in these types of cases, the court found that Even if respondent’s sole intention was to benefit Robinson, that even if the lawyer’s sole intention was to benefit the client, "intention does not excuse his conduct" and that the mere fact that an attorney provides financial assistance to a client is a problem in and of itself because it “gives the attorney too great a financial stake in the litigation.”