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Ethics Opinion by Florida Bar allows Attorneys to Advance Cost of Premium for PFS Insurance

Hundreds of Florida attorneys have purchased Proposal for Settlement Insurance from LegalFeeGuard. Since many of their clients do not have the financial resources to pay the premium for this valuable coverage, the vast majority of policies are purchased by the attorneys on behalf of their clients. 

The premium for the LegalFeeGuard policy has been deemed in Florida Bar Staff Opinion 28705 (Revised) to be a permissible cost of litigation that may be advanced by the attorney on behalf of the client.  The attorney recoups the cost of such premium as a contingency of the attorney making a recovery on behalf of the client.

The text of the opinion reads as follows:

Florida Bar Staff Opinion 28705 (Revised)

January 5, 2010

[The original opinion was withdrawn by the Professional Ethics Committee at its September 11, 2009 meeting. Florida Bar Staff Opinion 28705 (Revised) was written at the direction of the Professional Ethics Committee after that meeting.]

Florida Bar ethics counsel are authorized by the Board of Governors of The Florida Bar to issue informal advisory ethics opinions to Florida Bar members who inquire regarding their own contemplated conduct. Advisory opinions necessarily are based on the facts as provided by the inquiring attorney. Opinions are not rendered regarding past conduct, questions of law, hypothetical questions or the conduct of an attorney other than the inquirer. Advisory opinions are intended to provide guidance to the inquiring attorney; the advisory opinion process is not designed to be a substitute for a judge’s decision or the decision of a grievance committee. The Florida Bar Procedures for Ruling on Questions of Ethics can be found on the bar’s website at

A member of The Florida Bar has requested an advisory ethics opinion asking if an attorney may advance as a cost (to be reimbursed by the client at the close of litigation) a premium for an insurance policy that would cover the eventuality of a judgment for adverse attorney fees secured pursuant to a proposal for settlement filed under Florida Statues §768.79 and Rule 1.442. The premium would for a specified amount of coverage and require a single premium. The premium would be issued by an insurance carrier approved to do business in the state of Florida. The inquirer indicates that obtaining the insurance policy for the client “enhances the client’s likelihood of negotiating a more advantageous settlement, one on the merits.” The inquirer believes that such insurance will level the litigation playing field to permit clients to make decisions based on the facts and circumstances of the clients’ cases rather than the concern that the clients will be forced to pay the opposing party’s attorney fees if the clients fail to obtain a verdict of a minimum specified amount under the statute.

The prohibition against providing financial assistance to a client is rooted in the common law doctrines of champerty and maintenance. Rule 4-1.8(e), Rules Regulating The Florida Bar, provides:

Financial Assistance to Client. A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

(1)  A lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and

(2)  A lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

Lawyers may ethically loan or advance costs that are directly related to litigation such as filing fees or investigative expenses. Indirect costs of litigation such as litigation-related transportation and medical diagnostic costs may also be advanced. See, Florida Ethics Opinion 72-27 (copy enclosed). However, Florida Ethics Opinion 96-1 (copy enclosed) provides that if a client obtains recovery in a suit, that client must repay the costs and expenses advanced by his or her on obtaining a recovery in a case. However, it is equally clear that lawyers may not advance money to clients to be used for general living expenses and/or for medical treatment. See, The Florida Bar v. Wooten, 452 So. 2d 547 (Fla.1984); Kopplow & Flynn, P.A. v. Trudell, 445 So. 2d 1065 (Fla. 3d DCA 1984); but see, The Florida bar v. Taylor, 648 So. 2d 1190 (Fla. 1994). Such advances may serve as an inducement to retain or continue employment of lawyers who make such advances.
Florida Ethics Opinion 96-3 provides that a lawyer may not pay attorneys fees or costs that a client has been ordered to pay under Florida Statues §768.79. The opinion concludes that to do so “would defeat the purpose” of the statute.
The cost of a premium for an insurance policy that would cover a judgment for attorney’s fees and costs of the opposing party under a proposal of settlement filed under Florida Statutes §768.79 is a cost of litigation that may be advanced and made contingent on the lawyer making a recovery on behalf of the client under Rule 4-1.8 (e). No opinion is offered on whether the insurance product is legal or otherwise in compliance with the Rules of Professional Conduct.
Index: 4-1.8(e)

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