United States District Court
Northern District Of Illinois
LR83.51.8. Conflict of Interest: Prohibited Transactions
(a) A lawyer shall not enter into a business transaction with a client or
knowingly acquire an ownership, possessory, security or other pecuniary interest
adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair
and reasonable to the client and are fully disclosed and transmitted in writing
to the client in a manner which can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek the advice of independent
counsel in the transaction; and
(3) the client consents in writing thereto.
(b) A lawyer shall not use information relating to representation of a client to
the disadvantage of the client unless client consents after disclosure, except
as permitted or required by LR83.51.6 or LR83.53.3.
(c) A lawyer shall not prepare an instrument giving the lawyer or a person related
to the lawyer as parent, child, sibling or spouse any substantial gift from a
client, including a testamentary gift, except where the client is related to
(d) Prior to the conclusion of representation of a client, a lawyer shall not make
or negotiate an agreement giving the lawyer literary or media rights to a
portrayal or account based in substantial part on information relating to the
(e) 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.
(f) A lawyer shall not accept compensation for representing a client from one
other than the client unless:
(1) the client consents after disclosure;
(2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer
(3) information relating to representation of a client is protected as required by
(g) A lawyer who represents two or more clients shall not participate in making an
aggregate settlement of the claims of or against the clients, or in a criminal
case an aggregated agreement as to guilty or nolo contendre pleas, unless each
client consents after disclosure, including disclosure of the existence and
nature of all the claims or pleas involved and of the participation of each
person in the settlement.
(h) A lawyer shall not enter into an agreement with a client or former client
limiting or purporting to limit the right of the client or former client to file or
pursue any complaint before the Illinois Attorney Registration and
Disciplinary Commission or this Court’s Executive Committee or any other disciplinary body.
(i) A lawyer shall not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless permitted by law and the client
is independently represented in making the agreement, or settle a claim for
such liability with an unrepresented client or former client without first
advising that person in writing that independent representation is appropriate in
(j) A lawyer related to another lawyer as parent, child, sibling or spouse shall
not represent a client in a representation directly adverse to a person who the
lawyer knows is represented by the other lawyer except upon consent by the
client after disclosure regarding the relationship.
(k) A lawyer shall not acquire a proprietary interest in the cause of action or
subject matter of litigation the lawyer is conducting for the client, except that
the lawyer may:
(1) acquire a lien granted by law to secure the lawyer’s fee or expenses; and
(2) contract with a client for a reasonable contingent fee in a civil case.
Committee Comment. Transactions Between Client and Lawyer. As a general principle, all transactions between client and lawyer should be
fair and reasonable to the client. In such transactions a review by independent
counsel on behalf of the client is often advisable. Furthermore, a lawyer may
not exploit information relating to the representation to the client’s disadvantage. For example, a lawyer who has learned that the client is
investing in specific real estate may not, without the client’s consent, seek to acquire nearby property where doing so would adversely
affect the client’s plan for investment. Section (a) does not, however, apply to standard
commercial transactions between the lawyer and the client for products or services
that the client generally markets to others, for example, banking or brokerage
services, medical services, products manufactured or distributed by the client,
and utilities’ services. In such transactions, the lawyer has no advantage in dealing with
the client, and the restrictions in section (a) are unnecessary and
A lawyer may accept a gift from a client, if the transaction meets general
standards of fairness. For example, a simple gift such as a present given at a
holiday or as a token of appreciation is permitted. If effectuation of a
substantial gift requires preparing a legal instrument such as a will or conveyance,
however, the client should have the detached advice that another lawyer can
provide. Section (c) recognizes an exception where the client is a relative of the
donee or the gift is not substantial.
Literary Rights. An agreement by which a lawyer acquires literary or media rights concerning
the conduct of the representation creates a conflict between the interests of the
client and the personal interests of the lawyer. Measures suitable in the
representation of the client may detract from the publication value of an account
of the representation. Section (d) does not prohibit a lawyer representing a
client in a transaction concerning literary property from agreeing that the lawyer’s fee shall consist of a share in ownership in the property, if the
arrangement conforms to LR83.51.5 and section (k).
Persons Paying for a Lawyer’s Services. Section (f) requires disclosure of the fact that the lawyer’s services are being paid for by a third party. Such an arrangement must also
conform to the requirements of LR83.51.6 concerning confidentiality and
LR83.51.7 concerning conflict of interest. Where the client is a class, consent may be
obtained on behalf of the class by court-supervised procedure.
Limiting Liability. Section (i) is not intended to apply to customary qualifications and
limitations in legal opinions and memoranda. Section (h), however, is an unqualified
Family Relationships Between Lawyers. Section (j) applies to related lawyers who are in different firms. Related
lawyers in the same firm are governed by LR83.51.7, LR83.51.9, and LR83.51.10. The
disqualification stated in section (j) is personal and is not imputed to
members of firms with whom the lawyers are associated.
Acquisition of Interest in Litigation. Section (k) states the traditional general rule that lawyers are prohibited
from acquiring a proprietary interest in litigation. This general rule, which has
its basis in common law champerty and maintenance, is subject to specific
exceptions developed in decisional law and continued in these rules, such as the
exception for reasonable contingent fees set forth in LR83.51.5 and the exception
for certain advances of the costs of litigation set forth in section (e).