Opinion #97. Mortgaging Marital Residence to Attorney to Secure Fees in Divorce Case

Issued by the Professional Ethics Commission

Date Issued: May 3, 1989

The Grievance Commission has requested an opinion of the Professional Ethics Commission based upon the following facts:

H and W are married and own a home acquired during the marriage as joint tenants. Divorce proceedings are commenced by W. H retains an attorney, but does not pay an initial fee. Instead, he offers to give his attorney a mortgage on his 1/2 interest in the marital home. W is not aware of this transaction.

Both H and W are seeking physical placement of the children. W is reluctant to agree to a sale of the marital home until there is an order from the Court for primary residence of the children. W resides in the home.

Later, H’s law firm brings an action to force the sale of the home, claiming W is committing waste and not paying for property taxes and insurance.

Questions

  1. Is it a violation of the Code of Professional Responsibility for an attorney to take a security interest in the marital residence to secure the legal fees of a client in a divorce action?

  2. If not, is it a violation of the Code of Professional Responsibility for the attorney to take legal action to force a sale of the residence or otherwise foreclose upon the security interest prior to the rendition of a divorce judgment? After rendition of a divorce judgment?

Discussion

Since the enactment of 19 M.R.S.A. § 722‑A (P.L. 1971, c. 399), virtually all property acquired by parties who are married has become marital property, subject to disposition by the divorce court. Except for property which is within narrowly defined exceptions to the marital property statute, the property of the husband and wife is clearly subject to disposition by the Court in the course of a proceeding for divorce.

Rule 3.7(c) provides:

A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation he is conducting for a client except that he may:

(i) assert a lien granted by law against the proceeds of such action or litigation to secure his fee or expenses . . .

(ii) contract with a client for a reasonable contingent fee as provided in Rule 8.

It is the opinion of the Commission that acquiring a proprietary interest in the marital home in a divorce action would constitute a violation of Rule 3.7(c).

Among the many issues in a contentious divorce, the desire to be awarded a substantial share of the marital real estate is commonly a principal motivation. For either lawyer to obtain a legally cognizable interest in the client’s marital homestead constitutes an interest in the subject matter of litigation under Rule 3.7(c). The provisions of Rule 3.7(c)(i) which authorize a lawyer to “assert a lien granted by law . . .” are to be read as permitting an attorney to assert a statutory and/or common law charging lien on the proceeds of litigation, see 14 M.R.S.A. § 5006; Stone v. Hyde, 22 Me. 318 (1843). Although we offer no opinions as to what the law is, it does appear to the Commission that such liens do not attach until a final judgment in an action, Averill v. Longfellow, 66 Me. 237 (876); Newbert v. Cunningham, 50 Me. 231 (1863). We do not read this proviso in the Rule as authorizing the consensual contractual creation of a lien between lawyer and client with respect to the marital homestead. Other states have reached varying results, (contrast Mississippi Opinion No. 152 (6/2/88) ABA/BNA Lawyer’s Manual of Professional Conduct Section 901:5108, with Georgia Opinion 86‑7, supra at Section 901:2701). Connecticut has adopted what is essentially a middle ground, holding that although the taking of a mortgage was permissible, the taking of the mortgage was nonetheless subject to the further orders of the Court with respect to the disposition of the property, and that to protect the continued jurisdiction of the Court, the attorney was prohibited from taking any action to dispose of the mortgage to a bona fide purchaser, Connecticut Opinion 87‑3, ABA/BNA Lawyer’s Manual of Professional Conduct, at § 901:2054.

In light of the breadth of the Maine marital property statute and the plain language of Rule 3.7(c), the taking of an interest in the marital property by the attorney inappropriately interjects the interests of the attorney into the issues in the divorce case, creating an unacceptable risk that the judgment of the attorney will be affected by his acquisition of the interest.

For those reasons, we answer the first question by concluding that the taking of a mortgage on the marital homestead would violate the provisions of Rule 3.7(c). In light of the foregoing opinion there appears to be no reason to answer the second question.


Enduring Ethics Opinion