Fiduciary Obligations of Lawyers To Client
Fiduciary Obligations of Lawyers To Client
Rule 16.01 - A lawyer shall account for all money or property collected or
received for or from the client.
- Holds money or property held in trust & under an obligation to make a prompt
accounting thereof
- Even money received from a person not his client
- Atty’s lien for his fees does not relieve him from obligation to make a prompt
accounting
- Act of collecting unreasonable fees; retention of client’s funds – professional
indiscretion or misconduct
- Question is not necessarily whether the rights of the clients have been
prejudiced but whether the lawyer has adhered to the ethical standards of the
bar.
Rule 16.02 - A lawyer shall keep the funds of each client separate and apart from
his own and those of others kept by him.
Rule 16.04 - A lawyer shall not borrow money from his client unless the client's
interest are fully protected by the nature of the case or by independent advice.
Neither shall a lawyer lend money to a client except, when in the interest of
justice, he has to advance necessary expenses in a legal matter he is handling
for the client.
- May not lend money to client except when he has to advance necessary
expenses in a legal matter he is handling for the client –to assure lawyer’s
independent and professional judgment
- May not accept, w/o full knowledge of client, any fee, reward, costs,
commission, interest, rebate or forwarding allowance or compensation related to
his professional employment from anyone other than the client – to secure
attorney’s wholehearted fidelity to the client’s cause
- Characterized with utmost honesty and good faith-much higher standard than in
business dealings
- Even if the transaction between lawyer & client is not prohibited-burden of
proof on the lawyer to show that it was fair, equitable and just; no undue
influence; lawyer not taking advantage of client
- Lawyer shall not borrow money from client – to prevent lawyer from taking
advantage of his client
- Four elements :
o Attorney-client relationship
o Property/interest in litigation
o Attorney as counsel in the case
o Attorney by himself or another purchases such property or interest
during the litigation
o Except if unreasonable
- The fact that a person happens to be a lawyer does not deprive him of the
privilege to engage in business activities as enjoyed by any other person, but his
being a lawyer in the practice of law enjoins him from doing any such act as
may bring dishonor to the profession and violate any of its ethical rules
concerning advertising or solicitation of business.
o No atty-client relationship
o Article 1450 presupposes a situation where a person, using his own
funds, purchases a certain piece of land in behalf of another who, in the
meantime, may not have sufficient funds to purchase the land. The
property is then transferred in the name of the trustee, the person who
paid for the land, until he is reimbursed by the beneficiary, the person
for whom the land is purchased. It is only after the beneficiary
reimburses the trustee of the purchase price that the former can compel
conveyance of the purchased property from the latter.c
o Such loan was actually secured by the late Nakpil by merely using
Valdes’ name
o Constructive trust under Art. 1450 of the New Civil Code existed
between the parties.
- Atty’s lien is for his fees but does not relieve him from his obligation to make a
prompt accounting
- Act of collecting unreasonable fees – retention of client’s funds – professional
indiscretion or misconduct
- Question is not necessarily whether the rights of the clients have been
prejudiced; but whether the lawyer has adhered to the ethical standards of the
bar.
Rule 16.02 - A lawyer shall keep the funds of each client separate
and apart from his own and those of others kept by him.
Rule 16.03 - A lawyer shall deliver the funds and property of his
client when due or upon demand. However, he shall have a lien over
the funds and may apply so much thereof as may be necessary to
satisfy his lawful fees and disbursements, giving notice promptly
thereafter to his client. He shall also have a lien to the same
extent on all judgments and executions he has secured for his client
as provided for in the Rules of Court.
- Lien – the right to keep another person’s property until a debt owed in respect of
it (such as repairing it) is paid
- Disagreement on lawyer’s fees – lawyer should not arbitrarily apply the funds in
his possession to the payment of his fees – file the necessary action to fix and
recover the fees
Rule 16.04 - A lawyer shall not borrow money from his client unless
the client's interest are fully protected by the nature of the case
or by independent advice. Neither shall a lawyer lend money to a
client except, when in the interest of justice, he has to advance
necessary expenses in a legal matter he is handling for the client.