Gifts from Clients? Is it OK? Maybe

Dianne Jackson McLean, Goldfarb & Lipman

legal-ethics-gift-givingGifts are generally given as an act of kindness, as a token of appreciation based on relationships. As attorneys, many of us have established long standing relationships with our clients over a number of years; and in some cases have become personal friends, engaging in activities and functions that are unrelated to the attorney-client relationship.

So, what is the big deal when a client offers you a gift. For instance, a client offers to let you stay at her time share for a few days, due to the fact that your vacation time share suddenly became unavailable due to a natural disaster, i.e., a fire in Northern California. You have a great relationship with the client, she appreciates your work, but understands that you need a vacation, due to the amount of work that you have been involved with on her project. What is the big deal? Maybe nothing, however, before you say yes to the tempting offer; pause and consider the ethical issues.

Rule 4-400 of the California Rules of Professional Conduct (Rule(s)) states that “a member shall not induce a client to make a substantial gift, including a testamentary gift, to the member or the member’s parents, child, sibling, or spouse except where the client is related to the member.” The rule does not define the terms “induce” or “substantial gift.”

However, in the formal opinion issued by California’s Committee on Professional Responsibility and Conduct (COPRAC) (Formal Opinion No. 2011-180), COPRAC defined the term “induce” to mean “to persuade, influence, prevail upon,” and the term “substantial” to be determined by looking at a number of factors, such as the monetary value of the gift, the nature of the gift, the fairness of the transaction, whether it is substantial from the perspective of the client or the attorney.

So in our case, would the rule be violated if the attorney decided to take up the client’s offer to use the time share? It depends. Was the attorney lamenting about the situation and the fact that he would have to forego his vacation? If so, this could be seen as an unintentional inducement. The client thinks I can help my friend, it will benefit the attorney, ensure good will and continued good legal services. Pause! Accepting a gift may affect your client’s expectations and your judgment. (See Law 360 article by Gavin Brody – 5 Ways to Avoid the Hidden Ethical Dangers of Client Gifts)

If the attorney accepts a gift, it could create an uncomfortable situation if it is determined that the attorney’s conversation regarding his vacation was an inducement. Based on these possibilities, the attorney should find a way in the above scenario to politely decline the offer.

Attorneys should be reminded that gestures of appreciation between friends which are normal in everyday affairs, can present ethical issues when the relationship is between attorneys and clients. If a gift will in any way cause the attorney to be indebted to the client and interfere with the independent judgment of the attorney, the attorney should decline the gift.

Is it worth it to be second-guessed regarding the attorney’s duty of loyalty or competency? If the gift has value (any), find a way to politely decline the gift. The attorney-client relationship is paramount and the context of receiving a gift from a client must take priority over the personal relationship that the attorney has with the client.

About the author:

Dianne Jackson McLean is a transactional partner at the law firm of Goldfarb & Lipman in Oakland and represents housing authorities, cities and nonprofit housing developers in the areas of housing and economic development. She provides ethics advice to the members of her firm and is a member of BASF’s Ethics Committee.