Okla. Stat. tit. 5, Rule 1.8

Conflict of Interest: Current Clients: Specific Rules

Effective Jul 1, 1988Adopted effective July 1, 1988; amended by order of the Supreme Court dated October 14, 1993 and filed October 15, 1993. Comment amended September 28, 1993. Code Comparison amended by order of the Supreme Court dated October 14, 1993 and filed October 15, 1993. Oklahoma Modification amended September 28, 1993; amended by order of the Supreme Court dated October 14, 1993 and filed October 15, 1993. Comments Transactions Between Client and Lawyer. As a general principle, all transactions between client and lawyer should be fair and reasonable to the client. In such transactions a review by independent counsel on behalf of the client is often advisable. Furthermore, a lawyer may not exploit information relating to the representation to the client's disadvantage. For example, a lawyer who has learned that the client is investing in specific real estate may not, without the client's consent, seek to acquire nearby property where doing so would adversely affect the client's plan for investment. Paragraph (a) does not, however, apply to standard commercial transactions between the lawyer and the client for products and services that the client generally markets to others, for example, banking or brokerage services, medical services, products manufactured or distributed by the client, and utilities services. In such transactions, the lawyer has no advantage in dealing with the client, and the restrictions in paragraph (a) are unnecessary and impracticable. A lawyer may accept a gift from a client, if the transaction meets general standards of fairness. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted. If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance, however, the client should have the detached advice that another lawyer can provide. Paragraph (c) recognizes an exception where the client is a relative of the donee or the gift is not substantial. Literary Rights. An agreement by which a lawyer acquires literary or media rights concerning the conduct of the representation creates a conflict between the interests of the client and the personal interests of the lawyer. Measures suitable in the representation of the client may detract from the publication value of an account of the representation. Paragraph (d) does not prohibit a lawyer representing a client in a transaction concerning literary property from agreeing that the lawyer's fee shall consist of a share in ownership in the property, if the arrangement conforms to Rule 1.5 and paragraph (j). Person Paying for Lawyer's Services. Rule 1.8 (f) requires disclosure of the fact that the lawyer's services are being paid for by a third party. Such an arrangement must also conform to the requirements of Rule 1.6 concerning confidentiality and Rule 1.7 concerning conflict of interest. Where the client is a class, consent may be obtained on behalf of the class by court-supervised procedure. Limitation of Liability. Rule 1.8 (h) is not intended to apply to customary qualification and limitations in legal opinions and memoranda. Family Relationships Between Lawyers. Rule 1.8 (i) applies to related lawyers who are in different firms. Related lawyers in the same firm are governed by Rules 1.7, 1.9, and 1.10. Acquisition of Interest in Litigation. Paragraph (j) states the traditional general rule that lawyers are prohibited from acquiring a proprietary interest in litigation. This general rule, which has its basis in common law champerty and maintenance, is subject to specific exceptions developed in decisional law and continued in these Rules, such as the exception for reasonable contingent fees set forth in Rule 1.5, and the exception for certain advances of the costs of litigation set forth in paragraph (e). Code Comparison This Rule deals with certain transactions that per se involve conflict of interest. With regard to Rule 1.8 (a), DR 5-104 (A) provides that "A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure." EC 5-3 states that "A lawyer should not seek to persuade his client to permit him to invest in an undertaking of his client nor make improper use of his professional relationship to influence his client to invest in an enterprise in which the lawyer is interested." With regard to Rule 1.8 (b), DR 4-101 (B)(3) provides that a lawyer shall not "use a confidence or secret of his client for the advantage of himself, or of a third person, unless the client consents after full disclosure." There is no counterpart to Rule 1.8 (c) in the Disciplinary Rules of the Code. EC 5-5 states that "A lawyer should not suggest to his client that a gift be made to himself or for his benefit. If a lawyer accepts a gift from his client, he is peculiarly susceptible to the charge that he unduly influenced or overreached the client. If a client voluntarily offers to make a gift to his lawyer, the lawyer may accept the gift, but before doing so, he should urge that the client secure disinterested advice from an independent, competent person who is cognizant of all the circumstances. Other than in exceptional circumstances, a lawyer should insist that an instrument in which his client desires to name him beneficially be prepared by another lawyer selected by the client." Rule 1.8 (d) is substantially similar to DR 5-104 (B), but refers to "literary or media" rights, a more generally inclusive term than "publication" rights. Rule 1.8 (e) is similar to DR 5-103 (B), but eliminates the requirement that "the client remains ultimately liable for such expenses." Rule 1.8 (f) is substantially identical to DR 5-107 (A)(1). Rule 1.8 (g) is substantially identical to DR 5-106. The first clause of Rule 1.8 (h) deals with the same subject as DR 6-102 (A). There is no counterpart in the Code to the second clause of Rule 1.8 (h). Rule 1.8 (i) has no counterpart in the Code. Oklahoma Modification The Rules of Professional Conduct Committee recommended after extensive study and consideration, and the Board of Governors concurred, that it should be permissible for the repayment of court costs and litigation expenses to be made contingent upon recovery in contingent fee matters. This represented the original ABA position. The Committee believed (by a majority of 12 to 1) that as a practical matter, few if any lawyers seek recovery of such costs and expenses from their contingent fee clients when litigation is unsuccessful, because of such clients' financial circumstances. A substantial minority of the Committee (7 out of 17) also supported a minority report which proposed an amendment which would allow lawyers to make or guarantee loans to clients "for reasonably necessary medical and living expenses," but the amendment was rejected by both the Committee (10-7) and the Board of Governors. Rule 1.8 (h) as adopted by the ABA was changed to totally ban a lawyer from making an agreement prospectively to limit the lawyer's liability to the client for the lawyer's personal malpractice. Rule 1.8 as adopted by the ABA was changed to provide for liens created by contract as well as by law. The last sentence of the ABA version of the Comment under the heading "Family Relationships Between Lawyers" which reads, "The disqualification stated in Rule 1.8 (i) is personal and is not imputed to members of firms with whom the lawyers are associated," has been deleted to conform to the Oklahoma version of Rule 1.10 (a). Oklahoma Rule 1.10)(a) requires disqualification of a Firm if any lawyer associated therewith would be disqualified under Rule 1.8, unless client consent is obtained.

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Oklahoma Rules of Professional Conduct
Chapter 1, App. 3-A
Client-Lawyer Relationship

(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and
(3) the client consents in writing thereto.
(b) A lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client consents after consultation, except as permitted or required by Rule 1.6 or Rule 3.3.
(c) A lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling, or spouse any substantial gift from a client, including a testamentary gift, except where the client is related to the donee.
(d) Prior to the conclusion of representation of a client, a lawyer shall not make or negotiate an agreement giving the lawyer literary or media rights to a portrayal or account based in substantial part on information relating to the representation.
(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter.
(f) A lawyer shall not accept compensation for representing a client from one other than the client unless:
(1) the client consents after consultation;
(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and
(3) information relating to representation of a client is protected as required by Rule 1.6.
(g) A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement as to guilty or nolo contendere pleas, unless each client consents after consultation, including disclosure of the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.
(h) A lawyer shall not make an agreement prospectively limiting the lawyer's liability to a client for the lawyer's personal malpractice, or settle a claim for such liability with an unrepresented client or former client without first advising that person in writing that independent representation is appropriate in connection therewith.
(i) A lawyer related to another lawyer as parent, child, sibling or spouse shall not represent a client in a representation directly adverse to a person who the lawyer knows is represented by the other lawyer except upon consent by the client after consultation regarding the relationship.
(j) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:
(1) acquire a lien granted by law or contract to secure the lawyer's fee or expenses; and
(2) contract with a client for a reasonable contingent fee in a civil case.

Rule 1.8. Conflict of Interest: Prohibited Transactions

Adopted effective July 1, 1988; amended by order of the Supreme Court dated October 14, 1993 and filed October 15, 1993.
Comment amended September 28, 1993.
Code Comparison amended by order of the Supreme Court dated October 14, 1993 and filed October 15, 1993.
Oklahoma Modification amended September 28, 1993; amended by order of the Supreme Court dated October 14, 1993 and filed October 15, 1993.

Comments

Transactions Between Client and Lawyer. As a general principle, all transactions between client and lawyer should be fair and reasonable to the client. In such transactions a review by independent counsel on behalf of the client is often advisable. Furthermore, a lawyer may not exploit information relating to the representation to the client's disadvantage. For example, a lawyer who has learned that the client is investing in specific real estate may not, without the client's consent, seek to acquire nearby property where doing so would adversely affect the client's plan for investment. Paragraph (a) does not, however, apply to standard commercial transactions between the lawyer and the client for products and services that the client generally markets to others, for example, banking or brokerage services, medical services, products manufactured or distributed by the client, and utilities services. In such transactions, the lawyer has no advantage in dealing with the client, and the restrictions in paragraph (a) are unnecessary and impracticable.

A lawyer may accept a gift from a client, if the transaction meets general standards of fairness. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted. If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance, however, the client should have the detached advice that another lawyer can provide. Paragraph (c) recognizes an exception where the client is a relative of the donee or the gift is not substantial.

Literary Rights. An agreement by which a lawyer acquires literary or media rights concerning the conduct of the representation creates a conflict between the interests of the client and the personal interests of the lawyer. Measures suitable in the representation of the client may detract from the publication value of an account of the representation. Paragraph (d) does not prohibit a lawyer representing a client in a transaction concerning literary property from agreeing that the lawyer's fee shall consist of a share in ownership in the property, if the arrangement conforms to Rule 1.5 and paragraph (j).

Person Paying for Lawyer's Services. Rule 1.8 (f) requires disclosure of the fact that the lawyer's services are being paid for by a third party. Such an arrangement must also conform to the requirements of Rule 1.6 concerning confidentiality and Rule 1.7 concerning conflict of interest. Where the client is a class, consent may be obtained on behalf of the class by court-supervised procedure.

Limitation of Liability. Rule 1.8 (h) is not intended to apply to customary qualification and limitations in legal opinions and memoranda.

Family Relationships Between Lawyers. Rule 1.8 (i) applies to related lawyers who are in different firms. Related lawyers in the same firm are governed by Rules 1.7, 1.9, and 1.10.

Acquisition of Interest in Litigation. Paragraph (j) states the traditional general rule that lawyers are prohibited from acquiring a proprietary interest in litigation. This general rule, which has its basis in common law champerty and maintenance, is subject to specific exceptions developed in decisional law and continued in these Rules, such as the exception for reasonable contingent fees set forth in Rule 1.5, and the exception for certain advances of the costs of litigation set forth in paragraph (e).

Code Comparison

This Rule deals with certain transactions that per se involve conflict of interest.

With regard to Rule 1.8 (a), DR 5-104 (A) provides that "A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure." EC 5-3 states that "A lawyer should not seek to persuade his client to permit him to invest in an undertaking of his client nor make improper use of his professional relationship to influence his client to invest in an enterprise in which the lawyer is interested."

With regard to Rule 1.8 (b), DR 4-101 (B)(3) provides that a lawyer shall not "use a confidence or secret of his client for the advantage of himself, or of a third person, unless the client consents after full disclosure."

There is no counterpart to Rule 1.8 (c) in the Disciplinary Rules of the Code. EC 5-5 states that "A lawyer should not suggest to his client that a gift be made to himself or for his benefit. If a lawyer accepts a gift from his client, he is peculiarly susceptible to the charge that he unduly influenced or overreached the client. If a client voluntarily offers to make a gift to his lawyer, the lawyer may accept the gift, but before doing so, he should urge that the client secure disinterested advice from an independent, competent person who is cognizant of all the circumstances. Other than in exceptional circumstances, a lawyer should insist that an instrument in which his client desires to name him beneficially be prepared by another lawyer selected by the client."

Rule 1.8 (d) is substantially similar to DR 5-104 (B), but refers to "literary or media" rights, a more generally inclusive term than "publication" rights.

Rule 1.8 (e) is similar to DR 5-103 (B), but eliminates the requirement that "the client remains ultimately liable for such expenses."

Rule 1.8 (f) is substantially identical to DR 5-107 (A)(1).

Rule 1.8 (g) is substantially identical to DR 5-106.

The first clause of Rule 1.8 (h) deals with the same subject as DR 6-102 (A). There is no counterpart in the Code to the second clause of Rule 1.8 (h).

Rule 1.8 (i) has no counterpart in the Code.

Oklahoma Modification

The Rules of Professional Conduct Committee recommended after extensive study and consideration, and the Board of Governors concurred, that it should be permissible for the repayment of court costs and litigation expenses to be made contingent upon recovery in contingent fee matters. This represented the original ABA position. The Committee believed (by a majority of 12 to 1) that as a practical matter, few if any lawyers seek recovery of such costs and expenses from their contingent fee clients when litigation is unsuccessful, because of such clients' financial circumstances. A substantial minority of the Committee (7 out of 17) also supported a minority report which proposed an amendment which would allow lawyers to make or guarantee loans to clients "for reasonably necessary medical and living expenses," but the amendment was rejected by both the Committee (10-7) and the Board of Governors.

Rule 1.8 (h) as adopted by the ABA was changed to totally ban a lawyer from making an agreement prospectively to limit the lawyer's liability to the client for the lawyer's personal malpractice.

Rule 1.8 as adopted by the ABA was changed to provide for liens created by contract as well as by law.

The last sentence of the ABA version of the Comment under the heading "Family Relationships Between Lawyers" which reads, "The disqualification stated in Rule 1.8 (i) is personal and is not imputed to members of firms with whom the lawyers are associated," has been deleted to conform to the Oklahoma version of Rule 1.10 (a). Oklahoma Rule 1.10)(a) requires disqualification of a Firm if any lawyer associated therewith would be disqualified under Rule 1.8, unless client consent is obtained.