Question for lawyers out there….
Can a client pay what he owes you in real property in lieu of cash?
For instance, your client owes you 10k, can he drive up and hand you the keys to his Benz, or the deed to some lakefront shack or something? Do you know where this falls in the model rules? I am assuming somewhere in 1.8. but I don’t see anything.
(Susan? She’s usually my go to person, but I don’t want to bug here since she is super busy.)
It appears you CAN for purposes of the MPRE, you just shouldn’t be doing it. (Thanks to Olga)
Category: Politics
I’d highly encourage you to contact your state bar headquarters about that.
That said, I don’t know any state that has a rule against it. Your fees have to be reasonable, so you want to establish what your in-kind stuff is worth.
In my native state, you can take an advance fee but you have to return any unearned portion. You can’t keep a retainer “just for being available” (i.e., if you didn’t end up doing actual work to earn the money, you have to return it) – if you took an advance payment in kind instead of depositing money in the client security funds, you might run into some accounting issues.
Interestingly, the Army regulation on the subject – here – includes a model-rules discussion of the issue on page 7, even though Army lawyers are all on the government payroll anyway. And this is what it says:
“A lawyer may accept property in payment for services, such as an ownership interest in an enterprise, providing this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to Rule 1.8(j). However, a fee paid in property instead of money may be subject to special scrutiny because it involves questions concerning both the value of the services and the lawyer’s special knowledge of the value of the property.”
I’ve heard of quit-claiming as a form of negotiating payments, but the Master of this question is out of the office at the moment…
TSO- Sent you an email last week..did you get it?
Defend, not sure, I just sent you an email, send again if you could.
(Sorry, been in and out of the office, state, and my mind.)
Looks like rules 1.8 A and I as well Alberich. Thank you everyone.
Also Rule 1.5, I believe.
All legal stuff aside….where can I get a Benz for 10K?
Junkyard or certain areas of NYC late at night. But, I am also not a car salesman.
It is my understanding that you can take personal property (the Benz) or real propert (the lake house…see how I differentiated property types:-) ). Of course it still has to be reasonable and must stay in escrow until earned unless it is a flat fee. You also have to worry about claims of over reaching if the value of the property is unknown.
Also, lawyers take an interest in property for payment all the time. We call it a contingency fee.
I know that back in the day (about a decade ago) Benz made us sign an agreement when we bought one, saying we wouldn’t try to sell it outside the US, and if we did try, they could legally come after us for the price difference plus $10K.
So there is that possibility.
This is no problem at all except for Susan’s admonitions. We lawyers should do more of it. Such as putting liens on houses and putting liens on vehicles. Too many clients want to just rip you off. Yeah, that’s real, real. I’m not concerned with you military guys who are refreshingly honest and real, but with the general population who often does not share your values. There’s nothing like putting five months of your life into a client’s problems and have him declare bankruptcy on you. If you were that client’s employee you would have a priority claim in bankruptcy and get paid off the top. If you are the client’s lawyer you get zilch. And you get disbarred if you take pussy as payment.