Rapper Dr. Dre recently made headlines when he gifted each member of his legal team a holiday “bonus,” in sums of $10,000 and up. While undoubtedly very generous, is such a grand gesture from a client to an attorney ethically permissible? It depends.
Model Rule 1.8(c) permits an attorney to accept a gift from a client, if the gift “meets general standards of fairness.” Simple gifts, like a fruit basket at a holiday or a bottle of champagne as a thank you, are permitted. If the client offers an attorney a gift that is more “substantial”, defined by the Model Rules as denoting “a material matter of clear and weighty importance”, the attorney is not precluded from accepting it. However, be wary. The Comment to Rule 1.8 cautions that extravagant gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent.
Further, a gift can be subsequently held by a court to be a portion of the client’s fee for services. If the gift is construed as a fee, it must comply with Model Rule 1.5, which prohibits an attorney from charging unreasonable fees. In determining if a fee was reasonable, the factors to be weighed include the time and work required, the complexity of the matters handled, market rates in the locality for similar services, the results obtained, the nature and length of the attorney-client relationship and the experience and reputation of the attorney.
If giving the gift requires preparation of a legal instrument, such as a will, your client should consult another lawyer for unbiased advice, unless the client is your relative. For purposes of the rule, a “relative” includes a spouse, child, grandchild, parent, grandparent or other relative or individual with whom the lawyer or the client maintains a close, familial relationship. You can be named in a client’s will, but you may not draft the will. Courts have suspended and disbarred attorneys for violating this rule. Under no circumstances should a lawyer solicit substantial gifts for herself from a client, unless the lawyer or other gift recipient is related to the client. This portion of the rule seeks to protect clients from attorney overreaching and imposition.
To successfully navigate the gift-giving waters, check your state’s rules and remember these tips:
Size up the swag. Is it a token, or something more “substantial”? The Rules do not specify whether the “weight” and “importance” of the gift is determined from the perspective of the client or the attorney. If the gift seems extravagant, you may accept it, subject to the cautions above. You are also entitled to politely decline, citing the Rules.
Grinch-y or greedy. There is a middle ground between a firm “no gifts” policy and running afoul of the Rules. Accepting token gifts is fine, especially around the holidays. But don’t imply that you want a gift or the client should give you a gift; that falls into the realm of soliciting a gift, which is expressly prohibited.
Put pricey presents on paper. If you receive a substantial gift from a client, document it and all circumstances that surround that gift to show that it was freely given and not a fee for services. If the gift came with a note or any correspondence, keep that too.
Consider your colleagues. Gift restrictions are imputed to other members of your firm. If you are being named in a client’s will, your partner should not draft the will. Rule 1.8(k) cautions that while attorneys are associated in a firm, all gift restrictions that apply to any one of them shall apply to all of them.