BC Ethics Committee Clarifies Duties for Law Firms That Lend Clients Money

When advancing a personal injury lawsuit it is common for BC lawfirms to fund the lawsuit related expenses on behalf of clients (disbursements such as court filing fees, the cost associated with ordering medical records and expert reports).  Today the BC Law Society’s Ethics Committee provided an opinion that this practice is acceptable with certain conditions, however, if a lawfirm funds expenses beyond disbursements (ie clients medical costs, client out of pocket expenses etc) they must do so on an interest free basis unless they send the clients for independent legal advice first.  Below the full Ethics Opinion  can be found on page 12 of this link .
For Disbursement funding with interest charges to be Ethical the lawyer must
1. disclose the charge in writing in a timely fashion
2. ensure the charge is fair and reasonable
3. ensure the client consents to the charge
If the funds advanced are for anything other than disbursements and interest is charged the requirements are greater and are as follows:
1. disclose the charge in writing in a timely fashion
2. ensure the charge is fair and reasonable
3. ensure the client consents to the charge after receiving independent legal advice
4. be in compliance with the BC Code rule 3.4-26.1, which prevents a lawyer from advancing funds to a client if there is a substantial risk that the lawyer’s loyalty to or representation of the client would be materially and adversely affected by te lawyer’s relationship with the client or interests in the client or the subject matter of the legal services.