Rule on Lawyer-Client Business Deals Applies When Stock in Client Is Offered to Pay Fees

A lawyer practicing in New York may accept an equity interest in a client or a client’s company as compensation for legal services, but only if the arrangement meets the standards on lawyer-client business transactions, avoidance of conflicts, and reasonableness of legal fees, the New York state bar’s ethics committee has decided (New York State Bar Association Committee Professional Ethics, Op. 913 (2012)).

Whether the deal is fair and reasonable and whether the fee is excessive are evaluated not in hindsight but rather in light of the circumstances that existed at the time of the transaction, according to the ...