Can a lawyer be paid for legal work by receiving stock in the client corporation?
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This page answers the general question as of 1988. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
The inquiry concerned a proposed fee agreement in which the lawyer would be compensated by being given stock in the client's corporation. The subject line ties the question to RPC 1.7(b) and RPC 1.8(a), the rules on conflicts and business transactions with a client.
The committee was of the opinion that an article by committee member Dale Ramerman, which appeared in the Bar News in August 1987 and with which the inquirer was familiar, answered this question, and the committee endorsed that advice. The committee did not restate the article's analysis in the opinion itself.
Currency note
This opinion was issued in 1988, before the 2006 revisions to the Washington Rules of Professional Conduct. The rules then numbered RPC 1.7(b) (conflicts) and RPC 1.8(a) (business transactions with a client) correspond to Model Rules 1.7 and 1.8 and have since been amended. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.
Common questions
Q: Did the committee say a lawyer can be paid in client stock?
A: The committee did not write its own answer. It was of the opinion that a published Bar News article (August 1987, by committee member Dale Ramerman) answered the question, and it endorsed that advice.
Q: Which rules does the opinion connect to a fee paid in client stock?
A: The opinion's subject line ties the question to RPC 1.7(b) and RPC 1.8(a), the rules on conflicts of interest and on business transactions with a client.
Background and rules framework
The opinion is tied by its subject line to the rules then numbered Washington RPC 1.7(b) and RPC 1.8(a), corresponding to Model Rules 1.7 and 1.8, which govern conflicts of interest and a lawyer's business transactions with a client. Rather than apply those rules in its own text, the committee endorsed the analysis in a referenced Bar News article.
Citations and references
Rules of Professional Conduct:
- Washington RPC 1.7(b) (conflict of interest; general rule), corresponding to Model Rule 1.7.
- Washington RPC 1.8(a) (business transactions with a client), corresponding to Model Rule 1.8.
Other references:
- Dale Ramerman, article in the Washington State Bar News, August 1987 (endorsed by the committee as answering the question).
See also
- ABA Formal Op. 00-418: acquiring stock or another ownership interest in a client
- WSBA Ethics Op. 1045: taking part of corporate-counsel pay in company stock
- ABA Formal Op. 02-427: taking a security interest in a client's property to secure a fee
Source
- Landing page: https://ao.wsba.org/print.aspx?ID=271
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
Advisory Opinion: 1191
Year Issued: 1988
RPC(s): RPC 1.7(b); 1.8(a)
Subject: Fee agreement; business transaction with client.
The Committee reviewed your inquiry concerning a proposed fee agreement in which you would be compensated by being given stock in your client's corporation. The Committee was of the opinion that the article by Committee member Dale Ramerman which appeared in the Bar News, August 1987, with which you are familiar does answer this question and the Committee endorsed that advice .
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