This document discusses ethical guidelines for lawyers being paid by third parties rather than clients directly. It states that a lawyer may accept third party payments if the client provides informed consent, the third party does not interfere with the lawyer's judgment or client relationship, and client confidentiality is protected. The lawyer must ensure the client understands any limitations on third party payments and documents the client's informed consent. The lawyer also cannot allow third parties to dictate the representation or fire the lawyer, and should address refunds of unearned fees in their fee agreement to avoid disputes between the client and third party.

1. OREGON LAW PRACTICE MANAGEMENT
Being Paid By Someone Other Than Your Client?
May a client’s family member, friend, employer, legal services plan, or insurance company foot your
bill? The answer is yes, so long as:
 The client gives informed consent;
 The third party does not interfere with the lawyer’s “independence of professional judgment or with the
client-lawyer relationship;” and
 The client’s confidential information is protected (or the client consents to disclosure of information
after informed consent). ORPC 1.8(f).
“Informed” Means More than Consent to the Mere Fact that Someone Else is Paying the Fee
Clearly, the lawyer who is considering accepting payment from someone other than the client must
ensure that the client makes an informed choice. This means inquiring about and understanding any
limitations on the third-person’s ability or willingness to pay and then communicating the information
to the client. While RPC 1.8(f) does not require the client’s consent to be confirmed in writing,
documenting the basis upon which the client’s informed consent was given will go a long way to
resolving any subsequent concerns. From Sylvia E. Stevens, “Avoid Serving Two Masters,” Oregon State
Bar Bulletin (July 2009).
Preventing Third Party Interference
At the very least … (explain) to the third party that paying fees doesn’t make one a client and that the
lawyer cannot permit the third party payor to dictate the objectives of the representation or the
strategy or tactics for achieving those objectives. And of course, the lawyer must be watchful
throughout the representation for pressure from the payor, particularly in the face of explicit or
implicit threats to cease funding the case if the lawyer won’t do as the payor desires.
Similarly, a third party cannot be allowed to interfere with the client-lawyer relationship itself, such as
by firing the lawyer unilaterally. If the payment stream stops, the lawyer may well wish to withdraw
from the representation, but the lawyer can be fired only by the client. From Sylvia E. Stevens, “Avoid
Serving Two Masters,” Oregon State Bar Bulletin (July 2009).
Protecting Confidentiality and Attorney-Client Privilege When Billing
Many of the issues relating to confidentiality and attorney-client privilege arise in the context of billing.
The best practice is to send detailed bills to the client and redacted bills to the third party paying your
fee. However, if your client gives informed consent to disclosure of confidential information, it is
ethically permissible to provide a detailed billing to the third party. See OSB Formal Ethics Op. No.
2005-157.

2. Craft Your Fee Agreement to Address the Issue of Unearned Fees
If your representation is concluded and unearned fees remain, to whom will you issue the refund?
ORPC 1.15-1(d) requires lawyers to deliver funds requested by a client which the client is entitled to
receive. (Emphasis supplied.) “If the client is not entitled to the funds, the lawyer may be civilly liable
to the payor for conversion or otherwise.” Sylvia E. Stevens, “Ethics Issues Arising in Fee Agreements,”
Fee Agreement Compendium (OSB BarBooks 20o7).
Ethically and legally the path seems clear - refund the money to the party who paid your fee – but
nonetheless, this is an issue best addressed in your written fee agreement. Otherwise, you may find
yourself in the middle of a dispute between your client and the third party. Read more about third
party payment dilemmas here.
Originally published April 23, 2012 at http://oregonlawpracticemanagement.com/2012/04/23/being-paid-by-
someone-other-than-your-client/.