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Board considers ethics of advance funding

first_img Senior Editor The debate over how much, if at all, lawyers should be involved in advance funding schemes for their personal injury clients has reached the Bar Board of Governors. And after a vigorous discussion, the board postponed taking action so members can review past drafts of ethics opinions on the subject. The matter was brought to the board at its October 19 meeting by the Board Review Committee on Professional Ethics, which reviewed the appeal of Proposed Advisory Opinion 00-3 from the Professional Ethics Committee. (The BRCPE also presented advertising appeals and other issues to the board.) PAO 00-3 says an attorney may tell a client about the existence of companies that offer advance funding and, with the consent of the client after consultation, may provide confidential information about the case to those companies. While an initial draft of the opinion said the attorney at the client’s request could issue a letter of protection to the funding company, the final opinion passed by the PEC said the attorney could not issue a letter of protection but could honor such a letter executed by the client on his or her own. BRCPE Chair Richard Tanner reported that his committee was recommending restoring the letter of protection section to the advisory opinion. Advance funding companies, which are apparently expanding rapidly both in Florida and nationwide, offer loans to clients secured only by expected recovery in an ongoing personal injury case. Board member David Bianchi said he looked into an advance funding company for a client and was shocked that the annual interest rate was more than 80 percent, and that with other companies it could be 100, 200, and 300 percent. “They get away with it because they tell everyone it’s not a loan, and therefore it’s not an interest rate,” he said. “They say they are buying a piece of the case and only get paid if there’s a recovery. That’s their justification. “We need to think very carefully about what we think lawyers should be able to do. We should then think about appointing a committee to look at how many funding companies are in Florida, what they have done in Florida, how many cases have they been involved in, and what’s been the experiences of the borrowers.” If there have been abuses, Bianchi said, the board might want to approach the legislature about regulating the industry. “We are not here to legislate morality,” board member Louis Kwall countered. “If these are legitimate, lawful companies, what right do we have to interfere in the relationship between one of these companies and a client?” Board member Jesse Diner added, “I personally don’t like people lending money at usurious rates. . . but I don’t think that’s for us to decide here.” Board member Chobee Ebbets said lawyers should not issue the letters of protection, arguing, “If I give a letter of protection to that company, I am buying into that.. . . I would never issue a letter of protection because I feel it is in direct conflict with a client’s best interest.” “This activity borders on the outer edge of appropriate conduct,” board member John Cardillo said. The board approved a motion by board member Kelly Overstreet Johnson to table the issue until it reviews prior drafts of PAO 00-3. On other matters, the BRCPE presented recommendations on three advertising appeals, and all were approved by the board: • The board and BRCPE said it was okay for a law firm to include in its ads the statement, “If you have been involved in an accident, you need an attorney fighting for your rights.” Bar staff and the Standing Committee on Advertising had found the “you need an attorney” phrase potentially misleading. • The board and BRCPE upheld the standing committee which said a Yellow Pages ad featuring a photograph of the advertising attorney must be submitted to the Bar for review and the $250 late review fee paid. The attorney had argued the review and fee were not needed. • The board and BRCPE upheld the standing committee that the use of a non-law firm member’s voice in an electronic ad violated Bar rules because the ad was not, as contended by the law firm, a public service ad. Tanner also reported to the board that at its November 29 meeting, the BRCPE will revise existing procedures clarifying that the board can request ethics opinions from the Professional Ethics Committee. The Bar Procedures for Ruling on Questions of Ethics were vague on that point. He noted that the proposed procedure will maintain Bar members’ ability to request opinions about their own prospective actions. The BRCPE considered further expanding who could ask questions of the PEC, but decided that “members with their fact patterns and the board raising specific questions is the best approach without throwing it wide open.” The issue arose after the board several years ago requested the PEC to look at issues surrounding insurance companies’ use of staff and outside counsel. After the PEC issued three opinions which were appealed to the board, the board declined to act because of the vagueness of the procedures. Board considers ethics of advance funding Board considers ethics of advance fundingcenter_img November 15, 2001 Gary Blankenship Senior Editor Regular Newslast_img read more

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