In most jurisdictions, attorneys are prohibited from providing reasonably necessary financial assistance to their clients in connection with litigation, with the exception of advancing the court costs and the expenses of the litigation itself. The District of Columbia has a unique professional rule, which allows the advance of reasonably necessary financial assistance to a client and only requires repayment out of successful case proceeds. This is covered in Rule 1.8(d) of the District of Columbia Rules of Professional Conduct which is attached here as Exhibit A.
D.C.’s Rule 1.8(d) begins with the traditional restrictions on promising clients a successful outcome to their case: a lawyer cannot “advance or guarantee reasonably necessary financial assistance to the client”. D.C. Rule 1.8(d) then provides broad exceptions to the traditional rule of making the clients pay all expenses. The exceptions are that a lawyer can pay the expenses of litigation (including court costs) the expenses of the investigation, the costs of obtaining and presenting evidence, and also other financial assistance (including client expenses), which are reasonably necessary to permit the client to institute or to maintain the litigation.
The exceptions in D.C.’s Rule 1.8 that allow a lawyer to pay ‘client expenses’— namely payments for the medical and living expenses of the client to the extent necessary to permit the client to institute or maintain the litigation can be extremely helpful to a FCA whistleblower involved in a Protectus case. The purpose of permitting such payments is to avoid situations in which the client is forced by exigent financial hardship to settle his or her claims on unfavorable terms in order to receive the immediate payment from a settlement. Advance payments made to a client pursuant to Rule 1.8(d) do not require repayment to the lawyer if the case fails, but do not require repayment if there is a successful resolution.
Protectus Members understand the very real financial trials and the tribulations that FCA relators face over the sometimes long periods of time that it takes for a significant case to be completed.
Accordingly, the Firm is in the process of establishing a credit facility with regards to clients who file FCA cases within the District of Columbia, which allows them to apply for reasonably necessary financial advances for living and other reasonable expenses. The Firm will carefully review each such request, but may not necessarily grant such requests.
The Firm depending upon the circumstance, may either advance funds directly, obtain third party financing to allow the Firm to advance funds or refer the client to a third party company that advances to fund litigation in return for a portion of the clients recovery, which is permitted under the D.C. Ethics Rules (See D.C. Ethics Opinion 106 (1989) as long as the case seal, and confidentiality are maintained.
In all such circumstance the Firm shall evaluate the terms of such advances for their fairness and reasonableness, avoid any appearance of a conflict of interest and make sure that the client has the advice of an independent lawyer and clearly understands the terms of the advance before entering into a formal agreement that is fair and reasonable.
The Firm will attempt to assist clients with their financial challenge but will not let those financial arrangements interfere with our lawyer’s independent professional legal judgment, the confidentiality of the case or interfere with our relationship with our clients.
*Reasonably necessary financial assistance