Rule 4-1.8 — Conflict of Interest; Prohibited and Other Transactions

Comment (verbatim from The Florida Bar)

Business transactions between client and lawyer
A lawyer’s legal skill and training, together with the
relationship of trust and confidence between lawyer and client,
create the possibility of overreaching when the lawyer participates
in a business, property, or financial transaction with a client. The
requirements of subdivision (a) must be met even when the
transaction is not closely related to the subject matter of the
representation. The rule applies to lawyers engaged in the sale of
goods or services related to the practice of law. See rule 4-5.7. It
does not apply to ordinary fee arrangements between client and
lawyer, which are governed by rule 4-1.5, although its requirements
must be met when the lawyer accepts an interest in the client’s

business or other nonmonetary property as payment for all or part
of a fee. In addition, the rule does not apply to standard
commercial transactions between the lawyer and the client for
products or services that the client generally markets to others, for
example, banking or brokerage services, medical services, products
manufactured or distributed by the client, and utilities services. In
these types of transactions the lawyer has no advantage in dealing
with the client, and the restrictions in subdivision (a) are
unnecessary and impracticable. Likewise, subdivision (a) does not
prohibit a lawyer from acquiring or asserting a lien granted by law
to secure the lawyer’s fee or expenses.
Subdivision (a)(1) requires that the transaction itself be fair to
the client and that its essential terms be communicated to the
client, in writing, in a manner that can be reasonably understood.
Subdivision (a)(2) requires that the client also be advised, in writing,
of the desirability of seeking the advice of independent legal
counsel. It also requires that the client be given a reasonable
opportunity to obtain advice. Subdivision (a)(3) requires that the
lawyer obtain the client’s informed consent, in a writing signed by
the client, both to the essential terms of the transaction and to the
lawyer’s role. When necessary, the lawyer should discuss both the
material risks of the proposed transaction, including any risk
presented by the lawyer’s involvement, and the existence of
reasonably available alternatives and should explain why the advice
of independent legal counsel is desirable. See terminology
(definition of informed consent).
The risk to a client is greatest when the client expects the
lawyer to represent the client in the transaction itself or when the
lawyer’s financial interest otherwise poses a significant risk that the
lawyer’s representation of the client will be materially limited by the
lawyer’s financial interest in the transaction. Here the lawyer’s role
requires that the lawyer must comply, not only with the
requirements of subdivision (a), but also with the requirements of
rule 4-1.7. Under that rule, the lawyer must disclose the risks
associated with the lawyer’s dual role as both legal adviser and
participant in the transaction, such as the risk that the lawyer will
structure the transaction or give legal advice in a way that favors

the lawyer’s interests at the expense of the client. The lawyer also
must obtain the client’s informed consent. In some cases, rule 4-
1.7 will preclude the lawyer from seeking the client’s consent to the
transaction because of the lawyer’s interest.
If the client is independently represented in the transaction,
subdivision (a)(2) of this rule is inapplicable, and the subdivision
(a)(1) requirement for full disclosure is satisfied either by a written
disclosure by the lawyer involved in the transaction or by the
client’s independent counsel. The fact that the client was
independently represented in the transaction is relevant in
determining whether the agreement was fair and reasonable to the
client as subdivision (a)(1) further requires.
Gifts to lawyers
A lawyer may accept a gift from a client, if the transaction
meets general standards of fairness and if the lawyer does not
prepare the instrument bestowing the gift. For example, a simple
gift such as a present given at a holiday or as a token of
appreciation is permitted. If a client offers the lawyer a more
substantial gift, subdivision (c) does not prohibit the lawyer from
accepting it, although the gift may be voidable by the client under
the doctrine of undue influence, which treats client gifts as
presumptively fraudulent. In any event, due to concerns about
overreaching and imposition on clients, a lawyer may not suggest
that a gift be made to the lawyer or for the lawyer’s benefit, except
where the lawyer is related to the client as set forth in subdivision
(c). If effectuation of a gift requires preparing a legal instrument
such as a will or conveyance, however, the client should have the
detached advice that another lawyer can provide and the lawyer
should advise the client to seek advice of independent counsel.
Subdivision (c) recognizes an exception where the client is related
by blood or marriage to the donee.
This rule does not prohibit a lawyer or a partner or associate
of the lawyer from serving as personal representative of the client’s
estate or in another potentially lucrative fiduciary position in
connection with a client’s estate planning. A lawyer may prepare a
document that appoints the lawyer or a person related to the lawyer

to a fiduciary office if the client is properly informed, the
appointment does not violate rule 4-1.7, the appointment is not the
product of undue influence or improper solicitation by the lawyer,
and the client gives informed consent, confirmed in writing. In
obtaining the client’s informed consent to the conflict, the lawyer
should advise the client in writing concerning who is eligible to
serve as a fiduciary, that a person who serves as a fiduciary is
entitled to compensation, and that the lawyer may be eligible to
receive compensation for serving as a fiduciary in addition to any
attorney’s fees that the lawyer or the lawyer’s firm may earn for
serving as a lawyer for the fiduciary.
Literary rights
An agreement by which a lawyer acquires literary or media
rights concerning the conduct of the representation creates a
conflict between the interests of the client and the personal
interests of the lawyer. Measures suitable in the representation of
the client may detract from the publication value of an account of
the representation. Subdivision (d) does not prohibit a lawyer
representing a client in a transaction concerning literary property
from agreeing that the lawyer’s fee will consist of a share in
ownership in the property if the arrangement conforms to rule 4-1.5
and subdivision (a) and (i).
Financial assistance
Lawyers may not subsidize lawsuits or administrative
proceedings brought on behalf of their clients, including making or
guaranteeing loans to their clients for living expenses, because to
do so would encourage clients to pursue lawsuits that might not
otherwise be brought and because financial assistance gives
lawyers too great a financial stake in the litigation. These dangers
do not warrant a prohibition on a lawyer advancing a client court
costs and litigation expenses, including the expenses of diagnostic
medical examination used for litigation purposes and the
reasonable costs of obtaining and presenting evidence, because
these advances are virtually indistinguishable from contingent fees
and help ensure access to the courts. Similarly, an exception
allowing lawyers representing indigent clients to pay court costs

and litigation expenses regardless of whether these funds will be
repaid is warranted.
Person paying for lawyer’s services
Lawyers are frequently asked to represent a client under
circumstances in which a third person will compensate the lawyer,
in whole or in part. The third person might be a relative or friend,
an indemnitor (such as a liability insurance company), or a co-
client (such as a corporation sued along with one or more of its
employees). Because third-party payers frequently have interests
that differ from those of the client, including interests in minimizing
the amount spent on the representation and in learning how the
representation is progressing, lawyers are prohibited from accepting
or continuing these representations unless the lawyer determines
that there will be no interference with the lawyer’s independent
professional judgment and there is informed consent from the
client. See also rule 4-5.4(d) (prohibiting interference with a
lawyer’s professional judgment by one who recommends, employs
or pays the lawyer to render legal services for another).
Sometimes, it will be sufficient for the lawyer to obtain the
client’s informed consent regarding the fact of the payment and the
identity of the third-party payer. If, however, the fee arrangement
creates a conflict of interest for the lawyer, then the lawyer must
comply with rule 4-1.7. The lawyer must also conform to the
requirements of rule 4-1.6 concerning confidentiality. Under rule 4-
1.7(a), a conflict of interest exists if there is significant risk that the
lawyer’s representation of the client will be materially limited by the
lawyer’s own interest in the fee arrangement or by the lawyer’s
responsibilities to the third-party payer (for example, when the
third-party payer is a co-client). Under rule 4-1.7(b), the lawyer
may accept or continue the representation with the informed
consent of each affected client, unless the conflict is
nonconsentable under that subdivision. Under rule 4-1.7(b), the
informed consent must be confirmed in writing or clearly stated on
the record at a hearing.

Aggregate settlements
Differences in willingness to make or accept an offer of
settlement are among the risks of common representation of
multiple clients by a single lawyer. Under rule 4-1.7, this is one of
the risks that should be discussed before undertaking the
representation, as part of the process of obtaining the clients’
informed consent. In addition, rule 4-1.2(a) protects each client’s
right to have the final say in deciding whether to accept or reject an
offer of settlement and in deciding whether to enter a guilty or nolo
contendere plea in a criminal case. The rule stated in this
subdivision is a corollary of both these rules and provides that,
before any settlement offer or plea bargain is made or accepted on
behalf of multiple clients, the lawyer must inform each of them
about all the material terms of the settlement, including what the
other clients will receive or pay if the settlement or plea offer is
accepted. See also terminology (definition of informed consent).
Lawyers representing a class of plaintiffs or defendants, or those
proceeding derivatively, must comply with applicable rules
regulating notification of class members and other procedural
requirements designed to ensure adequate protection of the entire
class.
Acquisition of interest in litigation
Subdivision (i) states the traditional general rule that lawyers
are prohibited from acquiring a proprietary interest in litigation.
This general rule, which has its basis in common law champerty
and maintenance, is subject to specific exceptions developed in
decisional law and continued in these rules, such as the exception
for reasonable contingent fees set forth in rule 4-1.5 and the
exception for certain advances of the costs of litigation set forth in
subdivision (e).
This rule is not intended to apply to customary qualification
and limitations in legal opinions and memoranda.
Representation of insureds
As with any representation of a client when another person or
client is paying for the representation, the representation of an

insured client at the request of the insurer creates a special need
for the lawyer to be cognizant of the potential for ethical risks. The
nature of the relationship between a lawyer and a client can lead to
the insured or the insurer having expectations inconsistent with the
duty of the lawyer to maintain confidences, avoid conflicts of
interest, and otherwise comply with professional standards. When
a lawyer undertakes the representation of an insured client at the
expense of the insurer, the lawyer should ascertain whether the
lawyer will be representing both the insured and the insurer, or
only the insured. Communication with both the insured and the
insurer promotes their mutual understanding of the role of the
lawyer in the particular representation. The Statement of Insured
Client’s Rights has been developed to facilitate the lawyer’s
performance of ethical responsibilities. The highly variable nature
of insurance and the responsiveness of the insurance industry in
developing new types of coverages for risks arising in the dynamic
American economy render it impractical to establish a statement of
rights applicable to all forms of insurance. The Statement of
Insured Client’s Rights is intended to apply to personal injury and
property damage tort cases. It is not intended to apply to workers’
compensation cases. Even in that relatively narrow area of
insurance coverage, there is variability among policies. For that
reason, the statement is necessarily broad. It is the responsibility
of the lawyer to explain the statement to the insured. In particular
cases, the lawyer may need to provide additional information to the
insured.
Because the purpose of the statement is to assist laypersons
in understanding their basic rights as clients, it is necessarily
abbreviated. Although brevity promotes the purpose for which the
statement was developed, it also necessitates incompleteness. For
these reasons, it is specifically provided that the statement does not
establish any legal rights or duties, nor create any presumption
that an existing legal or ethical duty has been breached. As a
result, the statement and its contents should not be invoked by
opposing parties as grounds for disqualification of a lawyer or for
procedural purposes. The purpose of the statement would be
subverted if it could be used in such a manner.

The statement is to be signed by the lawyer to establish that it
was timely provided to the insured, but the insured client is not
required to sign it. It is in the best interests of the lawyer to have
the insured client sign the statement to avoid future questions, but
it is considered impractical to require the lawyer to obtain the
insured client’s signature in all instances.
Establishment of the statement and the duty to provide it to
an insured in tort cases involving personal injury or property
damage should not be construed as lessening the duty of the lawyer
to inform clients of their rights in other circumstances. When other
types of insurance are involved, when there are other third-party
payors of fees, or when multiple clients are represented, similar
needs for fully informing clients exist, as recognized in rules 4-1.7(c)
and 4-1.8(f).
Imputation of prohibitions
Under subdivision (k), a prohibition on conduct by an
individual lawyer in subdivisions (a) through (i) also applies to all
lawyers associated in a firm with the personally prohibited lawyer.
For example, 1 lawyer in a firm may not enter into a business
transaction with a client of another member of the firm without
complying with subdivision (a), even if the first lawyer is not
personally involved in the representation of the client.
Amended July 23, 1992, effective January 1, 1993 (605 So.2d 252);
amended April 25, 2002 (820 So.2d 210); amended May 20, 2004 (875
So.2d 448); amended March 23, 2006, effective, May 22, 2006 (933 So.2d
417); amended November 19, 2009, effective February 1, 2010 (24 So.3d
63); amended November 9, 2017, effective February 1, 2018 (234 So. 3d
577).