Permit Lawyers to Provide Financial Assistance to Litigation Clients; Create Humanitarian Exception

In a letter to New York State’s Chief Judge and the Presiding Justices of the Appellate Divisions of New York State’s Supreme Court, the New York City Bar Association urges adoption of a proposed amendment to the New York Rules of Professional Conduct, which currently prohibits lawyers from providing financial assistance to litigation clients.

The proposed amendment to Rule 1.8(e) of the New York Rules of Professional Conduct, which is already before the Courts for consideration, would create a “humanitarian exception” to the current rule.

“As the Court is well aware, New Yorkers are experiencing severe financial consequences as a result of the COVID-19 pandemic,” the letter states. “In addition, lawyers throughout the State have answered the call to provide pro bono assistance to those dealing with the repercussions of the pandemic. But these same lawyers, who may wish to provide basic financial assistance to indigent clients – such as money for groceries, clothes or medical supplies – would be prohibited from doing so under the current ethics rules. The proposed humanitarian exception to Rule 1.8(e) would allow lawyers to provide much needed financial assistance to those in need during this unprecedented time.”

The current version of Rule 1.8(e) states that a lawyer who is representing a client in connection with a “contemplated or pending litigation . . . shall not advance or guarantee financial assistance to the client” except that the lawyer may advance court costs and expenses of litigation and, if the lawyer is representing an indigent or pro bono client, the lawyer may agree to pay court costs and expenses of litigation. The current rule does not permit lawyers, law firms or legal service organizations from providing any other forms of financial support to indigent clients.

In March 2018, the City Bar issued a report by its Professional Responsibility Committee, which proposed amending Rule 1.8(e) to permit lawyers representing indigent clients on a pro bono basis, as well as lawyers working for legal service providers, public interest offices, and law school clinics, to provide financial assistance to indigent clients under limited circumstances. Examples of permitted activities under the humanitarian exception to Rule 1.8(e) include: a pro bono lawyer helping a client pay for groceries or essential living supplies; a non-profit law office establishing a client assistance fund to allocate resources based on need; and a law school clinic leveraging its resources to provide assistance to a client who may be struggling to meet basic living expenses. The City Bar Report reasoned that “New York’s bar should be taking the lead in enhancing access to justice and facilitating the charitable impulses and public service tradition of its lawyers. The proposed Rules change, with its narrow focus and careful safeguards, will increase the scope of the charity New York bar members can offer without sacrificing other important goals of the Rules of Professional Conduct.”

After its release, the New York State Bar Association (NYSBA) Committee on Standards of Attorney Conduct (COSAC) studied the City Bar Report and voiced its strong support for the proposed humanitarian exception to Rule 1.8(e), and at the January 31, 2020, meeting of the NYSBA House of Delegates, the NYSBA approved the humanitarian exception to Rule 1.8(e) and transmitted its recommendation to the Administrative Board of the Courts for consideration. 

Almost immediately after the COVID-19 pandemic hit, the City Bar’s members began receiving calls from lawyers and non-profit organizations wanting to provide small amounts of financial assistance to indigent clients. For example, one inquiry involved a lawyer who represented a community restaurant in a low-income area with limited options for affordable food. The restaurant was providing food to the community for free, but could not do so without assistance. The lawyer wanted to contribute to enable the restaurant to continue feeding the community, but under the current version of the ethics rules, a lawyer or law office could face disciplinary action for providing such assistance.

If the Courts are not prepared to adopt the amendment at this time, the letter suggests that as an alternative, “the Courts should consider taking immediate short-term action, such as issuing a temporary order adopting the humanitarian exception until such a time as New York is no longer in a state of emergency.  Alternatively, the Courts could issue an interim order that would expressly permit lawyers to provide financial assistance to indigent clients they are representing pro bono if the client has been financially impacted by the COVID-19 pandemic.”

The letter is addressed to Hon. Janet DiFiore, Chief Judge, New York State Court of Appeals; Hon. Rolando T. Acosta, Presiding Justice, Supreme Court of New York, Appellate Division, First Department; Hon. Alan D. Scheinkman, Presiding Justice, Supreme Court of New York, Appellate Division, Second Department; Hon. Elizabeth A. Garry, Presiding Justice,  Supreme Court of New York, Appellate Division, Third Department; and Hon. Gerald J. Whalen, Presiding Justice, Supreme Court of New York, Appellate Division, Fourth Department. It is signed by Roger Juan Maldonado, President of the City Bar; Wally Larson, Jr., Chair of the City Bar’s Professional Responsibility Committee; and Tyler Maulsby, Chair of the City Bar’s Professional Ethics Committee.

The letter can be read here: https://bit.ly/2Y0Reay