Thursday, December 20, 2018

DC Ethics Committee new opinion on crowdfunding

The District of Columbia Bar Legal Ethics Committee has issued a new Ethics Opinion (Number 375) on whether an attorney can finance the representation of a client through "crowdfunding."

The opinion is short and straightforward and essentially follows the reasoning of other jurisdictions that have issued opinions on the subject.  You can read the full opinion here. Its summary describes its conclusions as follows:
Lawyers are generally free to represent clients who pay for legal services through crowdfunding. The ethical implications of crowdfunding a legal representation vary depending on the lawyer's level of involvement in the crowdfunding. When the client directs the crowdfunding and the lawyer is merely aware of it, the lawyer incurs no specific ethical obligations although the lawyer should consider potential risks associated with receipt of such funds and may counsel the client on the wisdom of publicly sharing confidential information. When the lawyer directs the crowdfunding, the lawyer must comply with the Rules governing a lawyer's receipt of money from third parties. Further, a lawyer who directs the crowdfunding should be cognizant of ethical obligations regarding fee agreements, communications with donors, and the management of the funds raised. 
Again, this is equivalent to what has been decided elsewhere, but there is one point the opinion does not address, and that is that under certain circumstance crowdfunding can lead to sharing fees with a non-lawyer.  Now, if my memory is correct, DC allows sharing fees with non lawyers under certain circumstances but I don't know if crowdfunding is one of those.

I published a short article on the subject in which I discuss the issues and the few opinions available back then.  You can read it here.

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