Crowdfunding for attorney fees? Yes, but no.

So, since about early December of last year I’ve been trying to find a way to write about a really good, quite practical (albeit practical about a very niche situation) D.C. ethics from November 2018. The D.C. Opinion, Ethics Opinion 375, addresses the idea of using crowdfunding platforms as an ethical way for a client to afford otherwise unaffordable attorney fees.

It is easy to get in the right mindset to elaborate on why an ethics opinion is bad. I have had a hard time getting into writing about Opinion 375 because, truth be told, it is hard to write something that feels useful and interesting about a well-done ethics opinion.

But I’m writing about it today because, thankfully, along came a West Virginia disciplinary case with a development that makes this so much easier to discuss.

First, let’s get you up to speed on the D.C. opinion — “Ethical Considerations of Crowdfunding.” Now, of the various mechanisms that exist online for crowdfunding, the D.C. opinion focuses only on donation-based crowdfunding platforms — things like Go Fund Me rather than other kinds of platforms that bring large groups together to fund things in exchange for an equity stake or something similar.

The summary that starts out the opinion is largely all you really need to know about it:

Lawyers are generally free to represent clients who pay for legal services through crowdfunding. The ethical implications of crowdfunding a legal representation vary depending on the lawyer’s level of involvement in the crowdfunding. When the client directs the crowdfunding and the lawyer is merely aware of it, the lawyer incurs no specific ethical obligations although the lawyer should consider the potential risks associated with receipt of such funds and may counsel the client on the wisdom of publicly sharing confidential information. When the lawyer directs the crowdfunding, the lawyer must comply with the Rules governing a lawyer’s receipt of money from third parties. Further, a lawyer who directs the crowdfunding should be cognizant of ethical obligations regarding fee agreements, communications with donors, and the management of the funds raised.

Now, if you want to troll the depths (the D.C. Bar managed to list off 11 different ethical rules that were applicable to the situation), there is more than five pages of analysis to be had in the full opinion.

All in all, it’s well done and practical advice to address what is a particularly modern variation on the question of third parties paying a client’s fees.

So, crowdfunding is a viable option for clients to pay a lawyer … but … there are certain ways it can’t. be. used. For one thing, it can’t be used by a lawyer to get clients in the first place.

And that point brings us to West Virginia. Were I more of a delusional sort, I’d think this story was fabricated into existence Truman Show style just for my benefit. In terms of trying to appeal to me, this story has everything … (and you have to say this next part in the voice of Bill Hader’s “Stefon” character from SNL): it has a lawyer with the same name as a lawyer at a prominent firm in Memphis; the West Virginia lawyer started practicing law essentially exactly when I did [1999]; the West Virginia lawyer was serving as a treasurer [I’m the treasurer for two organizations at the moment] for a local soccer organization [ask me about soccer, I dare you, I won’t stop talking], and West Virginia’s Chief Disciplinary Counsel actually recused from the case because they are a soccer official.

Now, this West Virginia lawyer’s story isn’t really a story about Go Fund Me. Where the lawyer really went afoul of his ethical obligations was something he did long before he tried to use Go Fund Me in exactly the wrong sort of way, but that piece was the headline grabber for at least one West Virginia media outlet that wrote: “Charleston attorney suspended for 3.5 years after offering legal advice for Go Fund Me money.”

This lawyer’s original – and much more significant — transgression was that the lawyer embezzled about $12,000 from the soccer organization’s account by transferring those funds to his personal checking account. After he was confronted about his theft, he resigned from the treasurer position and repaid the money in three installment payments.

He self-reported his violation [which would have been, at minimum, a violation of West Virginia’s RPC 8.4(c) and probably (b)) and then was fired from his employment when his employer learned about the theft from the soccer organization.

After that, he tried setting up a Go Fund Me page to raise money to help him transition from being a lawyer employed at a firm to being a sole practitioner. What he offered, however, was that those who donated to the Go Fund Me would receive free legal services in exchange.

The West Virginia bar cited that conduct as being a violation of the rules against soliciting clients. The lawyer denied ever receiving any funds as a result of the Go Fund Me account in question and contended that he did not realize he had actually made it publicly-viewable.

An article in The ABA Journal online also emphasizes some of the aspects in which the Go Fund Me appeal itself was supported with false and misleading statements:

The fundraising appeal said the move was based on a decision to help children.
“After nearly 20 years of practicing law, I have finally found what I was meant to be doing,” the appeal said. “I have transitioned from an insurance defense practice to becoming a sole practitioner representing individuals and families. My primary focus is helping children who have been abused and/or neglected.”
Glover went on to say that his employer asked him to leave immediately after learning of his plans to go solo. “Given the short notice, I was not able to build up my savings, and I am now struggling to meet my personal expenses,” he wrote.
“It is my intention to return any gifts once my income become steady, and I will be happy to offer free legal advice (if I can) to my benefactors as well.”

That piece of this story is a very good reminder that, no matter the platform, rules patterned after ABA Model Rule 7.1 make it a disciplinary infraction for a lawyer to make statements about themselves or their services that are false or misleading.

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