Gifts as Personal-Interest Conflicts

Client Gifts and Drafting

Gifts as Personal-Interest Conflicts

Rule 1.7(a)(2) already declares a conflict of interest whenever a lawyer's representation of a client would be materially limited by a personal interest of the lawyer.¹ A lawyer who stands to inherit from the client she is advising has exactly that kind of interest. Why, then, does Rule 1.8(c) exist? The commentary gives a two-part answer. Rule 1.8 reminds lawyers of the situations in which a personal-interest conflict is likely to arise, and it sometimes sets disclosure or consentability requirements that differ from those of the general rule.²

The gift provision shows both functions. It forbids a lawyer to solicit any substantial gift from a client, including a testamentary gift, and to prepare for a client an instrument that gives the lawyer or a person related to the lawyer any substantial gift, unless the lawyer or other recipient is related to the client.³ Because the rule names the conduct, a lawyer can tell in advance what is off limits. The stated concern is overreaching and imposition on clients, which is why a lawyer may not even suggest that a substantial gift be made to the lawyer or for the lawyer's benefit, except where the lawyer is related to the client.⁴

Consent marks the sharpest difference between this rule and others in Rule 1.8. A lawyer who wants to enter a business transaction with a client may proceed if she gives extensive disclosure under Rule 1.8(a) and obtains the client's informed consent, in a writing signed by the client, to the terms of the transaction and the lawyer's role in it.⁵ Rule 1.8(c) belongs instead to the group of non-consentable conflicts, along with the rules on media rights in the client's story, on financial assistance to a client in litigation, and on acquiring a proprietary interest in the subject of the representation.⁶ The text of Rule 1.8(c) contains no consent exception.⁷ Any consent would have to come from the same client whose judgment the lawyer's interest threatens to cloud.

Property law reaches the same conduct by a different route. The commentary notes that a client may offer a substantial gift that Rule 1.8(c) does not itself bar the lawyer from accepting. Even then, the gift may be voidable under the doctrine of undue influence, which treats client gifts as presumptively fraudulent.⁸ The professional rules also feed into that doctrine, because courts have cited them in undue-influence cases to show that a lawyer's conduct was “undue.”⁹ California went further for drafters. Model Rule 1.8(c) was the model for a Probate Code provision that invalidates a donative transfer in an instrument to the person who drafted it, with exceptions, and that provision is not limited to lawyers.¹⁰ The sections that follow take the two prohibitions in turn, then the relative exception, the gifts the rule permits, and the consequences of a violation.