Opinion #117. Mortgaging Marital Residence to Attorney After Property Division and Divorce Judgment

Issued by the Professional Ethics Commission

Date Issued: June 7, 1991

In Opinion No. 97, issued on May 3, 1989, the Commission opined that the acquisition by an attorney of a proprietary interest (in the form of a mortgage) on his client’s marital home to secure his attorney’s fees in connection with his client’s divorce proceedings would constitute a violation of Bar Rule 3.7(c). The Commission has now been asked whether an attorney’s acquisition of such a mortgage after the divorce court has divided the property in the divorce proceedings similarly violates the rule.

Opinion

Rule 3.7(c) provides as follows:

Interest in Litigation. A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:
(1) Assert a lien granted by law against the proceeds of such action or litigation to secure the lawyer’s fee or expenses. This paragraph does not authorize an attorney to assert a lien on a client’s file in order to secure payment of a fee. The assertion of such a lien (if any exists) is improper; and
(2) Contract with a client for a reasonable contingent fee as provided in Rule 8.

The primary concern of Rule 3.7(c) is to prohibit an attorney’s personal interests from being interjected into the subject matter of the litigation because of the risk that the attorney’s professional judgment will be affected by his acquisition of an interest in the property in litigation. The Commission is of the opinion that after the divorce judgment becomes final, the litigation is at an end, and the prohibition contained in Rule 3.7(c) is generally inapplicable. However, attorneys should recognize that the general expectation of the finality of marital property litigation in divorce proceedings is not always justified. Residual issues of possession, sale or other disposition, continued residence of the former spouse or minor children, or collateral security for continuing obligations may return to haunt the parties. The infinite variety of factual circumstance surrounding many divorce‑inspired property dispositions both prevent this Commission from articulating any simplistic rule, and counsel the practitioner to carefully consider the risk, if any, that such residual disputes may make the taking of a mortgage inappropriate under Rule 3.7(c).


Enduring Ethics Opinion