These summaries were prepared by McGuireWoods LLP lawyer Thomas E. Spahn. They are based on the letter opinions issued by the Virginia State Bar. Any editorial comments reflect Mr. Spahn's current personal views, and not the opinions of the Virginia State Bar, McGuireWoods or its clients. 
 
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  Topic: 6 - Lawyers Paid by Third Party
LEO NumTopicsSummaryDate
1645

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6-Lawyers Paid by Third Party

8-Bills and Fees

35-Threatening Criminal and Disciplinary Action

[WITHDRAWN] A lawyer represented a bank in collecting a loan. Under the terms of the loan, the borrower was obligated to pay the lawyer's fees, and asked for an itemized accounting. The Bar held that the lawyer had no duty to itemize fees to a non-client, even if the non-client is paying the fees (although other provisions of the Code apply whether or not the lawyer is acting in a professional capacity for those with whom the lawyer deals).9/8/1995
1151

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6-Lawyers Paid by Third Party

58-Real Estate Lawyers

A bank may insist that a specific law firm handle a real estate transaction as a condition for approval of a mortgage loan. 11/22/1988
1661

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3-Multiple Representations on the Same Matter

6-Lawyers Paid by Third Party

9-Government Lawyer Conflicts

54-Insurance Defense Lawyers

A City Attorney may represent a police officer in a case in which both compensatory damages and punitive damages are sought, even though the city would not be responsible for the payment of any punitive award. The city and the officer agree on the basic underlying facts and believe that they will advance consistent defenses. Still, the City Attorney must advise the officer in writing that the officer has the right to seek independent counsel to defend the punitive damage claim, and that the lawyer "would be required to withdraw from representation if discovery reveals the appropriateness of antagonistic defenses or that the officer acted contrary to City policy or outside the scope of his employment." The Bar analogized the situation to a lawyer hired by an insurance company representing an insured -- "although paid by the insurer, the lawyer must represent the insured with undivided loyalty;" may not disclose or use confidences or secrets "which may create a policy defense for the insurance company;" and must withdraw if the insured and insurer disagree about whether to settle the case. 2/28/1996
1631

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6-Lawyers Paid by Third Party

17-Fraud on the Tribunal

31-Protecting and Disclosing Confidences and Secrets

36-Withdrawal from Representations

73-Family Law Lawyers

A lawyer being paid by a serviceman's parents to represent him in a divorce matter nevertheless owes a duty to the serviceman instead of the parents. When the serviceman filed a bankruptcy petition that seems inconsistent with the lawyer's understanding of who is paying the lawyer's bill, the lawyer must attempt to communicate directly with the serviceman or his bankruptcy counsel to obtain the true facts. The lawyer need not withdraw yet, but depending on what the lawyer discovers may be obligated to withdraw from representing the client. If so, the lawyer must take reasonable steps "for the continued protection of client's interests." 2/7/1995
1276

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6-Lawyers Paid by Third Party

A lawyer employed by a student legal services organization may not let the organization decide what level of legal services the lawyer's clients will receive, but rather must make that decision himself or herself. Any guidelines about limitations on such legal services must be explained to potential clients before the representation begins. 10/3/1989
0546

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6-Lawyers Paid by Third Party

A lawyer for an industrial authority may be paid by the applicant for reviewing the application. 3/1/1984
0335

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6-Lawyers Paid by Third Party

A lawyer may accept a fee from an unincorporated association to represent an association member. 9/18/1979
0912

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6-Lawyers Paid by Third Party

A lawyer may charge a noteholder an amount in excess of the 5% trustee's fees to handle a foreclosure as long as the debtor's payment is limited to the amount specified in the deed of trust. 6/11/1987
0229

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6-Lawyers Paid by Third Party

A lawyer may not accept payment to represent a class representative proceeding in forma pauperis unless the client and the court consent. 9/20/1973
ABA-355

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6-Lawyers Paid by Third Party

13-Marketing - Miscellaneous

A lawyer may participate in a for-profit prepaid legal services plan as long as the lawyer remains completely loyal to the client, maintains client confidences, avoids conflicts and assures that the plan does not violate the advertising or solicitation rules. 12/14/1987
1557

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3-Multiple Representations on the Same Matter

6-Lawyers Paid by Third Party

A lawyer may represent a minor in an action brought through a "next friend" even if the minor's interests may diverge from the next friend's interests, because there is no attorney-client relationship between the lawyer and the next friend (the lawyer must not allow the lawyer's duty to the minor to be compromised by directions from the next friend). 10/20/1993
0873

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1-Adversity to Current Clients

6-Lawyers Paid by Third Party

54-Insurance Defense Lawyers

A lawyer who "from time to time" represents the same insureds may be adverse to one of the insureds if all parties consent (a lawyer representing an insured owes his "sole allegiance" to the insured). Although the Bar has "suggested" that "it may be improper" for a lawyer to represent a client while at the same time suing it, the Bar approved such an arrangement as long as: the clients consent after full disclosure; the matters are not "substantially related"; the lawyer has "learned nothing in one capacity which would help you in another"; and the lawyer's "independent ability to represent your client" is in "no way affected." 2/2/1987
0248

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6-Lawyers Paid by Third Party

8-Bills and Fees

A lawyer who receives double payment from a client and a third party must disclose the double payment. 9/18/1974
1762

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2-Adversity to Former Clients

6-Lawyers Paid by Third Party

18-Consent and Prospective Waivers

39-Miscellaneous

A mother who had an automobile accident in which her infant child was injured may not hire the same lawyer who represented her in a tort action against the other driver to also represent the child in the tort action, if there is a "non-frivolous claim" that could be filed against the mother in connection with the accident. Consent could cure this conflict, but the minor child cannot grant the consent, and the ability of the mother to grant the consent is a legal question beyond the Bar's purview. If there is no possible claim against the mother, then the mother can hire her lawyer to also represent the child, but must not direct or regulate the lawyer's professional judgment.2/4/2002
1177

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6-Lawyers Paid by Third Party

13-Marketing - Miscellaneous

58-Real Estate Lawyers

A real estate purchaser's lawyer may arrange in advance for the seller to pay part of the lawyer's fee, but may not impose such a fee without the seller's prior consent. The lawyer must be careful not to use the communication to steer clients to the lawyer's firm. 12/9/1988
0598

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6-Lawyers Paid by Third Party

15-Representing Other Entities - Miscellaneous

31-Protecting and Disclosing Confidences and Secrets

54-Insurance Defense Lawyers

57-In-House Lawyers

An in-house lawyer for an insurance company may represent an insured, but must remember that the insured is the client. Among other things, the insured's lawyer may not reveal information acquired from the insured that would allow the carrier to deny coverage. [Approved by the Supreme Court 3/8/85, effective 6/1/85.]6/1/1985
0563

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6-Lawyers Paid by Third Party

32-Lawyers Acting in Other Roles (Miscellaneous)

As long as the client consents, a lawyer acting as a financial adviser may receive a fee from the third party who markets the investments. 4/10/1984
0607

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6-Lawyers Paid by Third Party

67-Lawyers Acting as Guardians Ad Litem"

As long as the client consents, a lawyer may be paid by an inmate's wife to act as the inmate's guardian ad litem. 9/18/1984
0747

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6-Lawyers Paid by Third Party

25-Dealing with Unrepresented People

58-Real Estate Lawyers

In a real estate transaction, the seller's lawyer must advise the buyer that the lawyer represents only seller, even if the seller pays the buyer's closing costs. 12/4/1985
1831

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6-Lawyers Paid by Third Party

67-Lawyers Acting as Guardians Ad Litem"

Just as the court appoints a guardian ad litem, so the court must approve payment of the guardian ad litem's fee by a third party such as an insurance carrier (neither the minor nor the guardian can consent to such payment by a third party). Any lawyer paid by a third party must "maintain professional independence from that third party payor" and fulfill the ethical duty of confidentiality to the client.9/6/2006
1120

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6-Lawyers Paid by Third Party

58-Real Estate Lawyers

The Bar declines to determine whether a bank may properly select a lawyer for the borrower. 9/9/1988

Copyright 2000, Thomas E. Spahn