Inside Track: Ethical Dilemma: Is it OK to Accept Gifts from Clients?:

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  • September
    19
    2018

    Ethical Dilemma:
    Is it OK to Accept Gifts from Clients?

    A very grateful client has given you an expensive gift as thanks after the successful conclusion of a hard-fought case. Is it OK to accept it?

    Timothy J. Pierce

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    Sept. 19, 2018 – When your hard work for a client ends in a successful outcome, what do you do when that client offers you an expensive gift as thanks?

    Question

    I represented an owner of a small business in bitter dispute with his now former partner.

    The matter eventually went to trial and we were successful, but we had to fight every inch of the way. The opposing side has appealed. I have a very good relationship with the client, who was very grateful about the outcome of the trial.

    A week after the trial, a client sent a package to my office addressed to me. It contained a kind note, thanking me for all my hard work. It also contained a beautiful watch. I looked up the make and model of the watch. It was quite expensive, costing several thousand dollars.

    My partner is concerned that it is improper to accept such an expensive gift from a client. Is it permissible to accept this gift?

    Need Ethics Advice?

    As a State Bar member, you have access to informal guidance and help in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys.

    Ethics Hotline: To informally discuss an ethics question, contact State Bar ethics counselors org tpierce wisbar Timothy Pierce or org akaiser wisbar Aviva Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m to 4 p.m.

    Answer

    Restrictions on gifts from clients are governed by SCR 20:1.8(c), which states:

    (c) A lawyer shall not solicit any substantial gift from a client, including a testamentary gift, nor prepare an instrument giving the lawyer or a person related to the lawyer any substantial gift from a client, including a testamentary gift, except where (1) the client is related to the donee, (2) the donee is a natural object of the bounty of the client, (3) there is no reasonable ground to anticipate a contest, or a claim of undue influence or for the public to lose confidence in the integrity of the bar, and (4) the amount of the gift or bequest is reasonable and natural under the circumstances. For purposes of this paragraph, related persons include a spouse, child, grandchild, parent, grandparent or other relative or individual with whom the lawyer or the client maintains a close, familial relationship

    This rule prohibits soliciting substantial gifts or, in most circumstances, drafting an instrument giving a substantial gift to the lawyer or lawyer’s family, but does not prohibit a lawyer from accepting a gift.

    Tim Pierceorg tpierce wisbar Tim Pierce is ethics counsel with the State Bar of Wisconsin. Reach him by org tpierce wisbar email or through the Ethics Hotline at (608) 229-2017 or (800) 254-9154.

    ABA Comment [6] explains:

    [6] A lawyer may accept a gift from a client, if the transaction meets general standards of fairness. 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, paragraph (c) does not prohibit the lawyer from accepting it, although such a 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 substantial 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 paragraph (c).

    Thus, there is no prohibition in the rules on accepting a gift from a client.

    Small vs. Substantial Gift: There’s a Difference

    But substantial gifts bring risks. For this reason, Section 127 of the Restatement (Third) of the Law Governing Lawyers takes a more restrictive view by requiring lawyers to suggest that the client receive independent advice before accepting any substantial gift from a client.1

    The comment to this section explains:

    b. Rationale. A client's valuable gift to a lawyer invites suspicion that the lawyer overreached or used undue influence. It would be difficult to reach any other conclusion when a lawyer has solicited the gift. Testamentary gifts are a subject of particular concern, both because the client is often of advanced age at the time the will is written and because it will often be difficult to establish the client's true intentions after the client's death. At the same time, the client-lawyer relationship in which a gift is made is often extended and personal. A genuine feeling of gratitude and admiration can motivate a client to confer a gift on the lawyer. The rule of this Section respects such genuine wishes while guarding against overreaching by lawyers.

    So, the lawyer in the scenario above may accept the watch without violating any rule.

    Suggestion: Make a Policy

    Notwithstanding the lack of any prohibition in the rules, I find that many of the lawyers who call me for advice are very uneasy when offered gifts by clients – many, frankly, state that they are hoping that I will tell them that they cannot accept the gift.

    This is understandable, given the risks, and I usually suggest that they develop a written policy on gifts from clients.

    There is no reason to prohibit simple expressions of gratitude or greetings – such as a fruit basket at the holidays – but a policy that either prohibits or requires approval before acceptance of any substantial gift from a client can protect the firm.

    It also allows lawyers who are uncomfortable when a client offers a gift to politely thank the client but state that they may not accept it.

    In Case You Missed It: Read Past Ethical Dilemmas

    Ethical Dilemmas appears monthly in InsideTrack. Check out these topics from recent issues:

    Endnotes

    1 Note that the Restatement is persuasive, not binding, authority. The Rules of Professional Conduct are binding authority on lawyers.




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