Multistate Professional Responsibility Exam Practice Question
A small business retains a lawyer to facilitate trademark filings. The business experiences funding shortfalls, so the lawyer offers a personal loan with interest in place of standard fees. The lawyer does not supply a written explanation of the arrangement or mention the option of consulting a different lawyer. Is this approach aligned with professional responsibilities?
Yes, the arrangement is viewed the same as a typical fee agreement and does not require extra measures
Yes, an informal memo about the arrangement's terms is sufficient for compliance
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No, attorneys who engage in personal financial dealings with a client are expected to confirm fairness in writing and encourage consideration of outside counsel
Attorneys who enter personal transactions with their clients are expected to follow guidelines that ensure fair terms, document the arrangement in writing, and advise the client to consider outside counsel. Failure to take these steps conflicts with professional rules. Offering an interest-based arrangement can be permissible when the transaction is transparent, the client understands all pertinent details, and the necessary disclosures are made in writing. An informal understanding is not considered adequate, and blanket assumptions that an interest provision is treated the same as regular fees are incorrect.
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What are the professional responsibilities of lawyers when engaging in financial dealings with clients?
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Why is written documentation important in attorney-client financial arrangements?
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What are the potential consequences for a lawyer who fails to comply with these professional responsibilities?