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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Arkansas Legal Ethics

1.8   Rule 1.8 Conflict of Interest: Prohibited Transactions

1.8:100   Comparative Analysis of Arkansas Rule

1.8:101      Model Rule Comparison

The Arkansas Rule is the same as the Model Rule.

1.8:102      Model Code Comparison

The comparison accepted by the Arkansas Supreme Court is identical to the comparison in the Model Rules.

1.8:200   Lawyer's Personal Interest Affecting Relationship

EC 5-6 stated that "a lawyer should not consciously influence a client to name him as executor, trustee or lawyer in an instrument." As a matter of probate law, an attorney who drafts a will and is a beneficiary under it has the burden of establishing, beyond a reasonable doubt, that the will was not the result of undue influence and that the testator had the requisite mental capacity. Park v. George, 282 Ark. 155, 667 S.W.2d 644 (1984). However, the stricter rule of Rule 1.8(c) applies to testamentary documents drafted after the January 1, 1986 effective date of these Rules, and any bequest or devise to the lawyer would be voidable.

1.8:210      Sexual Relations with Clients

See 1.7:500.

1.8:220      Business Transactions with Clients

In a transaction between a lawyer and a client, the lawyer has the burden of establishing that he provided all the information necessary to allow the client to act knowingly and that he did not take advantage of the client. Fletcher v. Long, 271 Ark. 942, 611 S.W.2d 799 (Ark. App. 1981). When property is conveyed to an attorney during the attorney-client relationship, "the burden is upon the attorney of proving the fairness and equity of the transaction and the adequacy of the consideration, and upon his failure to make such proof, a court of equity will treat the case as one of constructive fraud." Bond v. Marlin, 199 Ark. 806, 136 S.W.2d 460 (1940).

The client expects the attorney to place the client's interest above that of the attorney and to safeguard the client's interests with extraordinary diligence. The transaction must be as beneficial to the client as it would be if the client were dealing with a third party instead of the attorney. Full disclosure by the attorney requires that the client be given all the information necessary to make an intelligent and informed decision. See Howard W. Brill, Business Transactions with Clients: Ethical or Ill-Advised, ARKANSAS LAWYER (Winter 1995) 28.

An attorney who entered into a highly speculative business transaction with his client without making full disclosure was suspended from the practice of law for one year. Sexton v. Ark. Sup. Ct. Comm. on Prof. Conduct, 299 Ark. 439, 774 S.W.2d 114 (1989).

1.8:300   Lawyer's Use of Client Information

Arkansas has no case law or authority on this topic.

1.8:400   Client Gifts to Lawyer

Arkansas has no case law or authority on this topic.

1.8:500   Literary or Media Rights Relating to Representation

In accord with Rule 1.8(d), the Court has refused to conclude that ineffective assistance of counsel, and a resulting reversal of conviction, automatically occurs whenever a contract with an accused criminal defendant gives the attorney publication or literary rights. Dumond v. State, 294 Ark. 379, 743 S.W.2d 779 (1988).

1.8:600   Financing Litigation

1.8:610      Litigation Expenses

AR Rule 1.8(e) changes prior law and adheres to the reality of the practice of law by permitting the attorney to make the repayment of advanced court costs contingent on the outcome of the case.

1.8:620      Living and Medical Expenses

Rule 1.8(e) retains the prohibition against the attorney paying living expenses of the client during the pending action.

1.8:700   Payment of Lawyer's Fee by Third Person

1.8:710      Compensation and Direction by Third Person

Arkansas has no case law or authority on this topic.

1.8:720      Insured-Insurer Conflicts [see also 1.7:315]

Rule 1.8(f) does not change the ethical standards applicable to attorneys who are retained by insurance companies to defend the insured. When a liability insurance carrier retains a lawyer to defend an insured, the attorney-client relationship is between the lawyer and the insured, even though the carrier pays the attorney. First Am. Carriers, Inc. v. Kroger Co., 302 Ark. 86, 787 S.W.2d 669 (1990). In some instances the language of the policy and the surrounding circumstances may require that the insured be permitted to select its own attorney, with the fees to be paid by the carrier. Northland Ins. Co. v. Heck's Service Co., Inc., 620 F.Supp. 107 (E.D. Ark. 1985).

1.8:730      Lawyer with Fiduciary Obligation to Third Persons [see 1.13:520]

Arkansas has no case law or authority on this topic.

1.8:800   Aggregate Settlements

A lawyer has been disciplined in part because of his attempt to make an aggregate settlement of his clients' civil claims without their collective, knowing consent. Weems v. Sup. Ct. Comm. on Prof. Conduct, 257 Ark. 673, 523 S.W.2d 900 (1975).

1.8:900   Agreements Involving Lawyer's Malpractice Liability

1.8:910      Prospective Limitation of Malpractice Liability

See 5.1:500.

1.8:920      Settlement of Legal Malpractice Claim

Arkansas has no case law or authority on this topic.

1.8:1000   Opposing a Lawyer Relative

Arkansas has no case law or authority on this topic.

1.8:1100   Lawyer's Proprietary Interest in Subject Matter of Representation

1.8:1110      Acquiring an Interest in Subject Matter of Representation

Rule 1.8(j) bars a lawyer from acquiring a proprietary interest in a cause of action the attorney is conducting. However, the case law permits an attorney to enter into an agreement to take a share in real or personal property as a fee if the litigation concerning title to that property concludes successfully. See L. Scott Stafford, Where's My Percentage of the Recovery? Problems in Collecting a Contingent Legal Fee in Arkansas, ARKANSAS LAWYER (January 1992) 16. Because the purpose of the rule is to prohibit a conflict of interest between the lawyer's independent professional judgment and his personal financial stake, it clearly prohibits acquisition of a proprietary interest prior to or during litigation. The evaluation of an interest existing before the attorney's representation in the subject matter is governed by Rule 1.7(b).

1.8:1120      Contingent Fees [see also 1.5:600]

See 1.5:600.

1.8:1130      Lawyer Liens

Arkansas recognizes three categories of attorneys' liens:

a) the common law retaining lien. See Crosby v. Hurst, 149 Ark. 11, 231 S.W. 194 (1921), affirmed in 154 Ark. 300, 242 S.W. 570 (1922) (lien not supported by the allegations). An attorney who has performed legal services and has not been paid is entitled to retain any documents, chattels, books, papers, money, securities or possessions of the client that have come into the custody of the attorney pursuant to the attorney-client relationship. Under this "passive" lien, the property may not be sold, destroyed or "foreclosed" in any way; the only use the attorney can make of the property is to hold it until the client becomes desperate enough to pay fees, any costs and disbursements. The lien covers work product documents of the attorney, evidence (even if supplied by the client), and materials supplied by the client pursuant to the attorney client relationship. Although the lien may be utilized to collect any legal fees owed, the lien does not apply to items that the attorney may be holding as a special favor outside the attorney client relationship. This common law retaining lien expires when any issue of unpaid legal fees is resolved in favor of the client. Orsini v. Larry Moyer Trucking, Inc., 310 Ark. 179, 184-B, 839 S.W.2d 180 (1992). This lien is distinct from the right of the client to obtain files when the attorney has been paid, or when the attorney has been discharged and replaced by substitute counsel who has a legitimate need for the files. See 1.15:220.

b) a lien on a judgment pursuant to Ar. Code 16-65-118.

c) a lien on a cause of action pursuant to Ar. Code 16-22-304. An attorney perfects a statutory lien on a cause of action in one of two ways: (a) by filing a complaint, or (b) by serving a notice signed by the client upon the defendant by registered mail stating that the client has retained the attorney. The failure to comply with the procedural requirements of the statute negates the lien. Gary Eubanks & Associates v. Black & White Cab Co., 34 Ark. App. 235, 808 S.W.2d 796 (1991). If the defendant bypasses the attorney and settles with the client directly, the attorney may collect a reasonable fee from the defendant. Jarboe v. Hicks, 281 Ark. 21, 660 S.W.2d 930 (1983). If a suit is settled or dismissed without the consent of the plaintiff's attorney and without monetary award, the trial court has discretion whether to grant a fee to the attorney. Myers v. Muuss, 281 Ark. 188, 662 S.W.2d 805 (1984). The attorney retains the option of proceeding against the client on the contract. Lockley v. Easley, 302 Ark. 13, 786 S.W.2d 573 (1990).

1.8:1140      Retention of Files to Collect Fees

See 1.15:220.