Yes, in certain circumstances, a Louisiana personal injury attorney can loan a client money. Advancing clients money in contingency fee accident cases, like car accident matters, is regulated by the Louisiana Rules of Professional Conduct, which are ethical rules that Louisiana lawyers must follow.
A client must request an advance in writing. See Rule 1.8(e)(5)(v). The loan must be for basic necessities like rent, food, utility bills, school supplies, etc. See Rule 1.8(e)(4)(i), (iii) and (iv). The loan can also be for the client’s spouse’s or dependents’ necessities of living. For example, an attorney can loan money to a client so that the client can buy school uniforms for the client’s minor children. But the loan cannot be excessive in relation to the need. Thus, an attorney cannot loan $1,000.00 to a client to pay a $150.00 water bill.
The loan must be repaid using settlement proceeds. However, repayment of the loan can be contingent upon the outcome of the matter. In other words, an attorney can condition repayment of the loan on the successful resolution of the matter, so that if the attorney does not obtain a settlement in the case, the client will not have the repay the attorney for the loan. These conditions regarding repayment should be explained to the client in writing in the beginning of the case.
An attorney cannot offer client advances as an inducement to hire the attorney. An attorney cannot charge interest on advances if the money advanced comes directly from the attorney as opposed to from the attorney’s line of credit. See Rule 1.8(e)(5)(i).
Personal injury clients should be careful not to borrow too much money from their attorneys because the clients will be disappointed when they see much of the proceeds from settlements or judgements going to their attorneys to repay loans. Attorneys should not allow their clients to loan too much money. Finally, an attorney should give their personal injury clients copies of Rules 1.4 and 1.8 at the beginning and end of their cases. See Rule 1.8(e)(5)(vi).
If you have questions about client advances or other questions about personal injury matters, contact the Law Office of Donald D’Aunoy today for a free case evaluation.