Rules of Professional Conduct Related Ethical Opinions

1.8  Conflict of Interest: Current Clients: Specific Rules


08-01: Fees; Trust Accounts; Credit Cards

After the Committee on the Rules of Professional Conduct issued this opinion, the Supreme Court of Arizona amended ER 1.15 and Rule 43 to allow lawyers, under certain circumstances, to take credit cards for advance fees and costs. Click here for the link to the Supreme Court of Arizona's website.

A lawyer may accept credit-card payments only for earned fees, earned-upon-receipt retainers, or reimbursement for advanced costs. Such credit-card payments may not be deposited into the lawyer’s trust account. , A lawyer may not accept payment in advance by credit card for unearned fees or costs not yet advanced. , A lawyer may receive a single, non-cash payment from a client consisting of funds belonging partly to the client and partly to the lawyer. , Such a payment must occur by check, money order, or electronic-fund transfer, and must be deposited into the lawyer’s trust account. , After the transaction has cleared the issuing bank, the lawyer’s portion must be removed promptly from the trust account.

06-05: Conflict of Interest; Advancing Cost and Expenses; Security Bond

Because it is a court cost or expense of litigation under ER 1.8(e)(1), a lawyer may advance, contingent on the successful outcome of a case, the cost of a security bond ordered posted by the court pursuant to its authority under Rule 67(d), Ariz.R.Civ.P. Similarly, if the client is indigent, a lawyer may pay for the cost of such a bond as permitted under ER 1.8(e)(2).

06-07: Communication; Settlement Authority; Fee Agreements; Conflict of Interest

A lawyer may not ethically ask a client to authorize the lawyer to unilaterally decide whether to settle the client’s case if the client disappears or the lawyer is otherwise unable to communicate with the client. A lawyer also may not ask a client for authority to sign drafts or releases necessary to finalize a settlement obtained under such circumstances.

06-08: Ancillary Services; Conflict of Interest; Mortgage/Refinancing Services; Imputed Conflicts

A lawyer may provide mortgage/refinancing services separate from the lawyer’s law firm so long as the proper disclosures are made, including that the lawyer is not providing legal services and the customers do not have the protections of the lawyer-client relationship. Referrals of clients must meet the “heavy burden” of compliance with ERs 1.7 and 1.8(a). Lawyers from separate law firms may participate as loan officers in the separate mortgage/refinancing company without imputed conflicts of interests for their law firms’ clients. However, these lawyers must not only make proper disclosures, but each lawyer also must determine whether the lawyer’s personal interests materially limit the lawyer’s professional judgment and whether any information known by the lawyer from these professional and business relationships creates any conflict of interest such that the lawyer may not proceed in any particular circumstance. Confidentiality requirements for clients and former clients also must be strictly followed.

06-04: Disclosure; Third Parties; Prepaid Legal Services; Conflict

In the context of a prepaid legal services program, attorneys may not release confidential or privileged information to a third-party auditor without the client's informed consent.  Because billing information often contains confidential information, contractual provisions requiring an attorney to allow, without exception, third parties to review the client file and billing records violate ER 1.6(a).

An attorney may agree to represent a client under a prepaid legal services agreement that limits the presumptive compensation allowable for "basic" legal services if the attorney complies with ER 1.8(f)(2), including determining that the limit on payment does not interfere "with the lawyer's independence of professional judgment or with the client-lawyer relationship."  When agreeing to accept third-party payments, the attorney must be careful to abide by the client's "decisions concerning the objectives of representation and ... whether to settle a matter."  ER 1.2(a).  An attorney's agreement to limit compensation from a third party does not limit the attorney's duty provide a diligent and thorough representation of the client.

Provisions in a prepaid legal services contract between a client and the issuing trust do not excuse a lawyer's compliance with applicable ethical rules. An attorney may not enter into a contract that requires the attorney to violate his or her ethical duties.

06-02: Conflict of Interest; Bankruptcy; Referral Fee

A lawyer cannot accept a referral fee from an automobile dealer in return for referring “credit challenged” clients who purchase vehicles to the dealer. [1] This form of arrangement violates the dictates of ERs 1.7 and 1.8.

[1] The issue presented to the Committee on the Rules of Professional Conduct only involved “credit challenged” customers. This opinion should not be read to suggest that referral fees in transactions involving “non-credit challenged” customers are permissible.

05-07: Non-client spouse; Indemnity; Conflict; Joint Representation

An attorney representing a client in settlement of a lawsuit may not give the client’s spouse legal advice about waiving any right in a release unless the client and spouse both agree to joint representation and waive the potential conflict. Absent joint representation, the attorney may not provide legal advice to the spouse, even if the release requires the spouse’s signature and the spouse’s rights are affected by the release. If the spouse is unaware of the lawsuit or the settlement and release, the lawyer must take care to avoid any implied false statement by the client to the spouse, as well as any failure by the client to disclose material facts to the spouse.

05-01: Dual Practice; Business Activities; Referral Fees; Advertising; Conflict (W/Dissent)

Under ER 5.7, adopted in December 2003, a lawyer who operates a separate investment advisory business may refer non-clients to an investment advisory firm that pays a referral fee to the lawyer, so long as the lawyer takes reasonable steps to assure that the non-clients understand they are not receiving legal services and they do not have the protections of a lawyer-client relationship.  A lawyer who provides such services to former clients must also comply with the confidentiality requirements and other obligations under ER 1.9, and should take particular care to assure that the former clients understand they do not have a lawyer-client relationship with respect to the investment transactions.  A lawyer may not refer a current client to such a program, however, unless the lawyer meets the "heavy burden" of showing compliance with ER 1.7 and 1.8(a).  Also, a lawyer who provides investment advisory services must satisfy ERs 7.1 through 7.3 and maintain separation between the law practice and the lawyer's investment advisory business so that they do not appear to be related. 

To the extent previous Arizona ethics opinion 98-09 is inconsistent with ER 5.7 and the analysis in this opinion, the earlier opinion is no longer effective.

A dissenting opinion issued contemporaneously by the committee, recommends a per se ban against lawyers accepting money from third-party professionals in exchange for referring law clients to those third-party payors.  However, like the majority, we agree that a lawyer can accept a fee from a third-party professional for referring non-clients to the third-party's firm, provided that the lawyer complies with Rule 5.7.

03-05: Conflicts of Interest; Settlements; Creditors of Client; Indemnify Releasee; Liens

A claimant's attorney may not ethically enter into any settlement agreement that would require the attorney to indemnify or hold the Releasee harmless from any lien claims against the settlement proceeds.

01-10: Conflict of Interest; Disqualification; Imputed Disqualification; Confidentiality; Social Relationships; Prosecutors; Public Defenders

This Opinion discusses the conflict of interest guidelines for personal relationships between members of a Prosecutor's Office and members of the Legal Defender's Office. [ERs 1.7(b), 1.8(i), 1.10]

01-07: Advancing Funds to Clients; Loans; Costs and Expenses of Litigation; Financial Institutions; Interest; Confidentiality

If a lawyer obtains client consent and certain other conditions are met, a lawyer may set up a line of credit with a third-party lender to advance a client’s court costs and litigation expenses and pass on the line of credit’s interest charges to the client as a client cost. [ER 1.8(e)]

01-06: Conflicts of Interest; Criminal Representation; Court-Appointed

A lawyer should not enter into a criminal defense contract to provide legal services paid by a third party if the contract might induce the lawyer improperly to curtail services or to perform them in a way contrary to the client's interests because of insufficient funding and that requires authorizations from non-lawyer third parties. [ERs 1.7(b), 1.8(f), 5.4(c)]

01-01: Restrictive Covenants; Criminal Representation; Court-Appointed Lawyers; Public Defenders

Attorneys should not enter into county indigent criminal defense contracts that prohibit representation of those contract clients in related civil matters adverse to the county. [ERs 1.8(f), 5.6]

99-12: Conflicts of Interest; Division of Fees with Nonlawyers; Independent Professional Judgment; Lawyer Referral Service

A lawyer employed by an architectural firm may not provide legal services to the firm's clients, where the firm pays the attorney a salary but charges the clients an hourly rate for the lawyer's services, because of possible conflicts of interest and impermissible fee-sharing with non-lawyers. [ER 1.7, 1.8(f), 5.4, 7.1]

99-08: Confidentiality; Conflict of Interest; Insurance Representation; Audits; Independent Professional Judgment

Insurance defense lawyers ethically cannot participate in an audit review program by an insurance carrier's outside auditor where the program requires: 1) disclosure of confidential information about the client/insured (without the client's informed consent); 2) restricts the lawyer's independent professional judgment by limiting the services the lawyer may perform; and 3) grants the auditor permission to review client files. [ER 1.6(a), 1.7(b), 1.8(f), 5.4(c)]

99-09: Conflicts of Interest; Business Tranactions with Client; Business Activities; Financial Planning

A lawyer may offer securities and insurance services to his legal clients if he stringently complies with all of the requirements in ER 1.7(b) and 1.8(a) in assuring that: 1) the legal representation will not be adversely affected by the ancillary services; 2) the terms in the ancillary business transaction are “fair and reasonable” to the client; 3) the terms are fully disclosed in writing to the client; and 4) the client gives informed consent in writing. [ER 1.7(b), 1.8(a)]

98-09: Conflicts of Interest; Referral Fees; Financial Planning (Partially overruled by Opinion 05-01)

A lawyer ethically cannot accept a fee from an investment adviser for referring clients of the lawyer to the adviser. Such a referral arrangement would present a conflict of interest for the lawyer, in violation of ER 1.7(b). [ER 1.6, 1.7, 1.8]

98-05: Confidentiality; Billing; Collection of Legal Fees; Client Files

This opinion discusses a lawyer's ethical obligations when he/she desires to sell his client accounts receivable to a factor with the consent of each client after consultation. [ERs 1.6, 1.7, 1.8, 5.4]

97-09: Conflicts of Interest; Imputed Disqualification; Temporary Lawyers; Former Clients

An attorney who works on a contract basis for more than one law firm will be considered an associate of each firm for conflicts and confidentiality purposes unless:  (1) there is a written agreement that limits the scope of the contract attorney's work to a particular client for a particular project (specifying that the relationship will terminate at the end of the project or at a particular time or upon the occurrence of a particular event); and (2) the contract attorney will not have general access. [ERs 1.6, 1.7, 1.8, 1.9, 1.10]

97-08: Business Activities; Accountants; Sharing Office Space

A lawyer who is also an accountant may indicate both professional titles on his legal stationery, but: (1) the business must remain separate (financially and for advertising purposes although they may "reside" in the same physical location); (2) the non-legal business may not be used as a "feeder" for the law firm (i.e. clients of the non-legal business should not be solicited for legal work); (3) clients who are referred to the non-legal business must be advised of the lawyer's interest in the accounting firm and that the attorney-client privilege does not extend to the accounting work; (4) appropriate safeguards must be in place to assure against breaches of confidentiality and conflicts for the legal practice; and (5) the lawyer should not indicate that he is a lawyer in his accounting advertisements unless he complies with the Ethical Rules on advertising. [ERs 1.6, 1.7, 1.8, 5.4, 7.1, 7.5]

97-07: Witness Compensation; Fairness to Opposing Party

A lawyer may pay a fact witness reasonable compensation for time spent preparing for testimony as long as the compensation is not based upon the outcome of the litigation.  The client is ultimately responsible for such costs and the reasonableness of the fee must be determined on a case-by-case basis.  [ERs 1.8, 3.4]

97-01: Insurance Representation; Corporate Representation; Firm Name

Lawyers employed full-time as salaried in-house insurance company lawyers should not hold themselves out as a separate law firm under one or more of their surnames because to do so misrepresents their insurance company affiliation in violation of ER 7.5, as well as presenting other possible ethical problems. [ERs 1.7, 1.8, 2.1, 7.5)

96-11: Non Lawyer Referral Business; Lawyer Employed by Non Lawyer Business

A lawyer may not have legal fees paid for a client through a referring business and the lawyer may not be employed part-time, by the nonlawyer referring business to provide legal services to clients of the business.  [ERs 1.8, 5.4, 7.1]

96-07: Conflict of Interest; Lawyer as Trustee; Wills; Estates

An attorney may draft a revocable living trust with a pour-over will for a client and be named as trustee and/or personal representative. Such an arrangement does not constitute a gift under ER 1.8, but the lawyer may not recover trustee fees in addition to legal fees for the same work.  The lawyer must be able to exercise independent professional judgment when acting as both trustee and counsel to the estate. [ERs 1.8, 2.1]

96-01: Mediation; Divorce

This opinion addresses three issues with respect to attorneys who function as mediators for non-client parties as follows:  (1) ER 2.2 does not apply to the attorney-mediator who acts exclusively as a neutral for non-clients during the mediation process; (2) ER 2.2 does not apply to the attorney-mediator who drafts a non-binding memorandum of understanding if full disclosure is made to the participants; and (3) the Ethics Committee could not reach a consensus as to whether or not attorney-mediators may prepare pleadings for the mediation participants. [ERs 1.2, 1.7, 1.8, 2.2, 3.1, 3.3, 8.4]

96-04: Conflicts of Interest; Multiple Representation; Automobile Accident; Fee Sharing Among Lawyers

This opinion discusses the conflict of interest issues and fee issues when a law firm initially represents both a driver and passenger in a personal injury case against another driver and eventually the firm refers out the passenger for separate representation.  There is a non-waivable conflict if the firm continues to represent the driver, yet has an interest in recovering a portion of the fees retrieved by the passenger.  [ERs 1.5, 1.7, 1.8, 1.9, 1.16]

96-05: COnflicts; Business Transactions; Chiropractic Referrals; Business Activities; Personal Injury; Referrals

There are significant potential conflicts in an attorney referring a legal client to a chiropractic clinic in which the lawyer owns an interest such that the Committee discourages such arrangements. [ERs 1.7, 1.8, 5.4]

95-08: Plea Agreements; Waiver; Malpractice; Ineffective Assistance; Conflict of Interest; Criminal Representation (w/Dissent)

Prosecutor and defense counsel may enter into a plea agreement waiving future claim of ineffective assistance without prospectively limiting defense counsel's malpractice liability.  [ER 1.8]

95-09: Fees; Gifts; Conflicts of Interest; Personal Injury

An attorney may make a gift of all or a portion of the fees where the motive is charitable unless a medical provider specifically agreed to a reduced amount conditioned on the client not receiving any money.  [ERs 1.8, 4.1]

95-05: Gift; Personal Injury Representation

An attorney in a personal injury case, who has received his full fee, may accept the client's portion of the personal injury settlement, as a gift from the client, if:  (1) the attorney complies with the requirements set forth in ER 1.8 regarding business transactions with clients; (2) the attorney does not attempt to prepare a legal instrument to perfect the gift; and (3) the client is competent to make an informed decision.  These requirements do not apply to token gifts from clients.  [ERs 1.5, 1.8, 1.14)

95-01: Living Expenses; Cost Advance to Client; Automobile Accidents; Court Costs and Expenses of Litigation

A lawyer cannot advance rental car or car repair costs or pay an insurance deductible  to or for a client in connection with pending or contemplated litigation.  Such living expenses are not "court costs and expenses of litigation" that may be advanced pursuant to ER 1.8.  [ER 1.8]

94-15: Contingent Fees; Patent Assignments

An attorney may take a contingent fee in the form of a partial patent registration assignment for prosecution of a patent application at the U.S. Patent and Trademark Offices as long as the attorney complies with the requirements of ER 1.8 with respect to entering into a business transaction with a client.

94-11: Client Confidences; Collection Agencies

An attorney must have the prior consent of a client before disclosing client confidences to a credit reporting agency or a collection agency that uses a credit reporting agency. An attorney is responsible for assuring that a collection agency exercises the same ethical integrity that the lawyers must.

94-08: Limitation on Representation; Reporting Misconduct; County Attorney Contract

Private practitioner offered a contract to represent a county commission may not agree to terms that would require the attorney to seek prior approval of the board of supervisors before proceeding beyond filing an answer. Opinion also discusses whether it is an ethical violation to offer such a contract.

94-03: Insurance; Representation

An attorney retained by an insurance company to represent an insured owes primary allegiance to the insured. That allegiance requires the client's consent before the attorney may file a motion for summary judgment in a third party matter that would benefit the insurance company but could be disadvantageous to the insured.

94-05: Retainer Agreement; Arbitration

Retainer agreement may include arbitration clause regarding malpractice claims provided: 1) the clause is fair and reasonable to the client; 2) it fully discloses the advantages and disadvantages of arbitration; 3) the attorney affords the client a reasonable opportunity to seek the advice of independent counsel; and 4) the client consents in writing.

93-05: Employment of Non-Lawyers; Trial Consultants

Lawyer may employ a non-testifying trial consultant, and pay him a prearranged bonus fee of if the case settles or is won at trial, subject to certain guidelines.

92-11: Advertising; Referrals; Solicitation

Personal injury lawyer wishes to obtain customer lists from his company/client, so he can send solicitation letters to the customers.

92-07: Conflict of Interest; Criminal Defense Practice

Committee discusses the propriety of a public defender's continued representation of a client where the Public Defender's Office is currently representing one person and formerly represented three others who have now been listed as witnesses for the State in the client's criminal case.

92-04: Confidentiality; Accounts Receivable

Law firm may not furnish to a bank a list of its accounts receivable identifying the names of the clients and the amount each client owes, except to the extent the clients consent after consultation.

91-23: Conflict of Interest; Misconduct

Attorney may not agree to settle a fee dispute with his client on condition that client agree not to file a Bar complaint against him.

91-22: Financial Assistance to Client

Lawyer may assist his personal injury client in obtaining a loan from a "personal injury loan service."

91-19: Financial Assistance to Client

Law firm's proposed guaranteeing of repayment of a loan by one of its clients to another client (who is in dire financial need) held ethically improper as violative of ER 1.8.

91-13: Conflict of Interest; Financial Assistance to Client

Attorney's offer to waive his contingent fee and reimbursement of costs advanced, if client will accept a settlement offer, is permitted whether or not client is indigent.

91-14: Conflict of Interest; Financial Assistance to Client

It is not ethically proper to make a loan or advancement to a client toward payment for her daughter's medical care. An attorney may, however, ethically make a gift of money to his client, under certain circumstances.

89-10: Confidentiality of Information; Conflict of Interest; Professional Independence of Lawyer

Guidelines for accepting credit cards for payment of legal fees and retainers.

89-03: Conflict of Interest

It is not ethically improper for a lawyer volunteering his/her services on a pro bono basis to give money to an indigent client for living expenses so long as the transfer of money or tangible items results from a purely charitable motivation and there is no expectation by the attorney of any repayment by the client at any time.

87-24: Conflicts; Firm Names and Letterheads

Multi-person law firm listed on letterhead and other communication of another law firm as "of Counsel" to that firm.

87-18: Conflicts; Communication

Advertisement that states "No Recovery, No Fee", or its equivalent is misleading if it does not disclose the clients responsibility to pay costs even when there is no recovery.

87-13: Professional Independence; Conflicts

Possible conflict or interference with professional judgment when director or public defender agency follows directions of governing body which funds the agency.

87-07: Conflicts; Solicitation; Pro Bono

Permissible to solicit pro bono employment from prospective indigent client, provided there is no motive for pecuniary gain. Attorney may pay costs of litigation, or request client to pay as much as possible, or receive payment from a third party.

87-09: Conflicts

Subject to certain conditions, it is impermissible for an attorney who has rendered legal services to a trustee to bid on trust property that was the subject of services rendered.

85-05: Conflicts; Advertising

Attorney may not sell insurance policies or publicly promote an "open panel" pre-paid legal insurance program or such activities would promote his own legal services.