Ethics Question of the Week: Can I take a security interest in a client's property to guarantee a fee?
Q. Can I take a security interest in property my client owns (but not involved in the representation) to guarantee my fee?
A. IRPC 1.8(i) provides that a lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation a lawyer is conducting for his client. See Supreme Court Rule 1.8. Comment [16] to that Rule provides additional guidance on acquiring security interests from clients. That Comment says: “When a lawyer acquires by contract a security interest in property other than that recovered through the lawyer’s efforts in the litigation, such acquisition is a business or financial transaction with a client and is governed by the requirements of paragraph (a)” of RPC 1.8 (which requires: objectively fair and reasonable terms; written disclosure of the terms; written notice that the client should seek review by another lawyer; and informed client consent in writing).
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Disclaimer. These questions are representative of calls received on the ISBA’s ethics hotline. The information provided below is meant as an educational tool to highlight potentially applicable Illinois RPC or other ethics resources that might help the lawyer answer the question posed. The information provided isn’t legal advice. Because every situation is different, often complex, and the law is constantly evolving, you shouldn’t rely upon this general information without conducting your own research
Member Comments (2)
To simply answer the question: Yes, as long as it does not involve the any relevance to the case, you have it in writing signed by both parties and it is fair and reasonable.
I would hesitate to take a client if I thought that I would need to foreclose a security interest to collect my fee.