Business Transactions & Gifts (MPRE)

There are quite a few general rules about conflicts of interest that are required for the MPRE. With those general rules, there are also some specific conflicts that repeatedly show up on the exam. Two conflicts that could arise deal with a lawyer entering into a business transaction with a client and a lawyer accepting a gift from a client.

Business Transactions:

The general rule is that a lawyer must not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or money interest that is adverse to a client. Just like on the MBE, though, the examiners are as likely (or more likely) to test the exceptions rather than the rule. These business transactions between lawyer and client are allowable if the following conditions are satisfied:

--The terms of the transaction are fair to the client.

--The terms are fully disclosed in writing and in a manner that the client will understand.

--The client is advised in writing to get the advise of an independent lawyer about the transaction.

--The client gives informed consent in a signed writing.

Important to note that a general fee agreement between the lawyer and the client will not trigger this rule. Nor will a transaction in which the lawyer purchases from the client goods or services routinely marketed by the client. These business transactions are entirely fine.

A slightly different topic but worth noting is that a lawyer must not acquire literary or media rights to a story based in substantial part on the lawyer's representation of a client. A lawyer may, however, acquire those rights after the client's legal matter is entirely completed (and that would include all appeals).

Gifts:

A lawyer must not solicit a substantial gift from a client unless the client is a relative of the lawyer. This rule is specific to the solicitation of a gift, and so it's perfectly allowable for a lawyer to accept a small gift from a client such as a holiday gift. It's even allowable for a lawyer to accept (but not solicit) a substantial gift from a client, although undue influence should be considered in those circumstances. 

Further, a lawyer must not prepare a legal instrument (such as a will) in which the client gives the lawyer or the lawyer's relatives a substantial gift unless the client is a relative of the lawyer. A lawyer, on the other hand, is not prohibited from seeking to have himself or a partner/associate named as executor of the estate of a client. That doesn't necessarily mean that doing so is allowable; rather, it should be analyzed under general conflict of interest analysis since it's not explicitly prohibited.