No Good Deed Goes Unpunished: The Ethics of Gifts to Litigation Clients

I recently spoke to a lawyer who was representing a client in a litigation matter. The client had fallen on hard times and was having trouble paying basic living expenses. The lawyer had a genuine humanitarian concern for the welfare of this client and had given the client some money to help with gas, food, and utilities. He wanted to know whether it was okay to do this.

I like to think that I have a pretty good understanding of the Rules of Professional Conduct. So, I’m a little embarrassed to admit that I did not have an answer to this lawyer’s question. I knew that there were some limitations on lawyers giving gifts to clients. I just didn’t realize how strict those rules are. Since neither I nor this other lawyer knew the scope of this rule, I assume that there are many North Carolina lawyers who also don’t know this rule and have probably violated it in the past.

Rule 1.8(e) of Rules of Professional Conduct of North Carolina generally prohibits a lawyer from proving financial assistance to a client in connection with pending or contemplated litigation. The rule contains two exceptions. First, a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter. Second, a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

Note that this second exception allows a lawyer to pay court costs and expenses for an indigent client. What about modest gifts of living expenses like food, rent, transportation, medicine, other basic expenses? May a lawyer help an indigent client with these expenses? Under the current rule, the answer is no. A lawyer may only help an indigent litigation client with court costs and expenses of litigation.

Many in the legal community have complained about the restrictive nature of this rule. This was brought to the North Carolina State Bar’s attention back in 2022. At that time, a number of states had amended Rule 1.8 to allow for a “humanitarian exception” to the ban on gift giving. In 2023, the State Bar Council published an amendment to Rule 1.8(e) and sent it to the Supreme Court of North Carolina for approval. As of the date of this post, the Supreme Court has not acted on the amendment. Given that it has been over a year since the amendment was submitted to the Supreme Court, it seems unlikely that the Court is going to approve it.

The amendment that was sent to the Supreme Court would allow for a “humanitarian exception” to the rule against gifts to clients. Under this exception, a lawyer representing an indigent client pro bono, a lawyer representing a court appointed client, a lawyer representing an indigent client pro bono through a nonprofit legal service or public interest organization, and a lawyer representing an indigent client pro bono through a law school clinical or pro bono program, would be allowed to provide modest gifts to the client for food, rent, transportation, medicine, and other basic living expenses. The lawyer would be prohibited from promising such gifts as an inducement to get a new client or keep an existing client. The lawyer would also be prohibited from accepting reimbursement from the client. Additionally, the lawyer would be prohibited from advertising a willingness to offer such gifts.

Unless and until the Supreme Court approves the amendment to Rule 1.8(e), a lawyer should refrain from giving such gifts.