The decline in lawyer independence: Lawyer equity investments in clients

This Article challenges the tacit approval that the organized bar has given the modern arrangements in which lawyers invest in their clients. Even in situations in which the exceptions and requirements set forth in these ethics opinions are met, the current practice of allowing equity investments in clients continues to severely undercut many time-honored ideals of the legal profession. In today's climate of legal malpractice and expansion of lawyers' fiduciary duties, equity investments expose lawyers to potentially serious liability if the parties suffer harm by reason of a lawyer's judgment colored by an equity investment. This Article provides a critical examination of the practice of lawyers accepting equity investments in clients to whom the lawyers are providing legal services. Section II examines the current practices of lawyers who accept equity interests in clients and presents the arguments for allowing such practices to continue in the legal profession.