Be Careful Allowing Client to “Work Off” a Legal Bill

A recent complaint filed by disciplinary counsel in Illinois is a cautionary tale for lawyers who offer their clients the ability to “work off” an unpaid bill for fees. See In re Bernhard Olson II, No. 2105640 (filed Jan. 27, 2017).

In Olson, the respondent-lawyer told his client that “he had lost his cleaning service” and that she could “work off” her legal bill by cleaning his house. The client agreed, and the respondent gave her credit toward the outstanding bill “at the rate of 25 per hour for her services.” She thereafter “spent approximately 160 hours cleaning Respondent’s house, and earned $4,000.” However, the lawyer allegedly failed to comply with the rules of professional conduct in entering into this arrangement.

Louisiana Rule 1.8(a) and the corresponding rule in Illinois require a lawyer who seeks to enter into a business transaction with a client to satisfy certain prerequisites before doing so. More particularly, the lawyer must:

  1. assure that the transaction and its terms are substantively “fair and reasonable to the client”;
  2. fully disclose and transmit the terms of the transaction to the client in plain-language, understandable writing;
  3. advise the client in writing of the desirability of seeking the advice of independent legal counsel on the transaction—and give the client a reasonable opportunity to do so; and finally,
  4. obtain the client’s informed consent in a signed writing that contains the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.