Board warns about advance funding.

After an Ohio appellate court found an advance funding arrangement was both a loan and usurious, a Bar Board of Governors committee wants more time to study a proposed ethics opinion on advance funding in personal injury cases.

But both the board and the Board Review Committee on Professional Ethics took action to let lawyers know about the Ohio case if Bar members become involved in third-party loans to their clients.

Board members, at their November 30 meeting, discussed whether they should advise Bar members to avoid any participation in such loans. But they finally voted to accept the BROPE recommendation to allow it to continue studying the issue -- in light of the Ohio decision -- until the board's February 1 meeting.

In the meantime, the committee recommended telling inquiring lawyers about the Ohio case as well as the pending Proposed Advisory Opinion 00-3, already adopted by the Professional Ethics Committee and pending on appeal at the board.

That opinion says lawyers may tell clients about advanced funding companies, which offer loans to personal injury clients in return for part of the hoped-for winnings in the case. It also says lawyers may tell clients the names of specific companies, but may not issue a letter of protection to the advance funding company, although they can honor such a letter executed by the client.

The BRCPE had recommended approving the opinion, with a change allowing lawyers to issue letters of protection. The board considered the issue at its October meeting, but tabled the issue to do more research, and in the meantime the Ohio court acted.

"I think it ought to give us some pause before we go any further," said BRCPE Chair Richard Tanner of the Ohio ruling. "What your committee is suggesting to you is that we sit tight, temporarily."

In the meantime, he said, the Bar's ethics staff will tell inquiring lawyers "there is now an Ohio appellate court opinion finding these advance funding loans improper and we're not in a position to offer advice at the moment."

Bar Ethics Counsel Elizabeth Tarbert said she planned to tell inquiring lawyers "about the Ohio case and tell them we can't tell them if this is a legal transaction. If this is a grey area, which it now appears to be, we would tell them they could be at risk [if they participated in the loan)."

She said lawyers would also be told about the PAO and its prohibition against issuing a letter of protection, and also that the opinion is still pending before...