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Ethics Overblown: Should Grads Disclose Student Loan Debt to Clients?

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By William Peacock, Esq. on August 09, 2013 10:58 AM

This one irritates me greatly.

Many who are recent graduates, are saddled with more than a hundred thousand dollars in debt due to our education. Ah, ye olde albatross of student loan debt. Not only do you sap our discretionary income (is it discretionary if it all goes to the banks and feds?), but now, you may be sapping our reputation with clients and other attorneys.

Ethics Alarms, a typically brilliant blog about lawyer ethics, cites a legal ethics specialist that recently opined, to the D.C. Bar, that recent grads, immersed in student loan debts, may have irresolvable conflicts with their clients due to their financial pressures.

Jack Marshall, the author of the blog, cites Rule 1.7 (b) (Conflicts of Interest) of D.C.'s Rules of Professional Conduct, a rule he notes is shared by every other state except my dear California, which states:

A lawyer shall not represent a client with respect to a matter if:
(4) The lawyer's professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer's responsibilities to or interests in a third party or the lawyer's own financial, business, property, or personal interests.

The short version of the argument is this: recent grads are so stressed out by their non-dischargeable student loan debt that they may be tempted to compromise their clients' cases, or to pressure them to accept a lesser settlement, in order to handle their own bills. Therefore, there may be either an irresolvable conflict or there may be a need for informed consent from a client.

What now?

What about a lawyer with a mortgage, two kids in college, and maxed out credit cards from taking his mistress on trips to Maui? Does he have to disclose his financial obligations in detail to clients, just because he's hurting financially? What percentage of lawyers do you suppose were suffering during this recent recession?

An overly-literal reading of the rule may support the notion that recent grads can't, or shouldn't, take cases, or should obtain informed consent. How many clients are going to hire a lawyer who provides them with a document that says, "I'm broke. I may be tempted to compromise your case based on my own needs. But still hire me, o.k.?"

Yeah. We can't find jobs, and now we can't take cases. Moving to Djibouti never looked so good.

The "woe is we" whining by recent grads aside, what makes anyone think that they, as opposed to lawyers in general, can't set aside their own financial pressures in order to do what is best for their clients?

The spirit of the rule seems to be that lawyers shouldn't take cases where they have actual conflicts, such as suing a company, on behalf of a client, while holding stock in that company. If we expand the rule from those financial interests to financial pressures in general, well, it looks like thousands of recent grads are going to be scrambling for alternative client-free careers.

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