Lawyers can accept gifts from clients in certain situations, but the context and value of the gift play a significant role in determining whether it is ethical. It’s probably happened to many attorneys: upon receiving a gift from a client, it crosses your mind — is this ethical to accept? On the other end of the question, is it ethical to give a gift to a client?
In the classic, beloved attorney answer to both questions — it depends.
Your firm has enough to worry about during the holidays, so use this guide to navigate your own policy on receiving gifts from clients and giving them, avoiding potential conflicts of interest while maintaining professional integrity.
Can Attorneys Accept Gifts from Clients?
ABA rule 1.8 of the Model Rules of Professional Conduct explains that “A lawyer shall not solicit any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless the lawyer or another recipient of the gift is related to the client.” It goes on to specify who counts as a related person, including spouses, children, grandchildren, parents, grandparents, and other relatives or individuals you maintain a “close, familial relationship” with.
Comment [6] adds that “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.” The overarching principle here is fairness and the absence of undue influence.
What Counts as a “Substantial Gift”?
It’s worth clarifying that “substantial” is not strictly defined in the ABA Model Rules, which is why context and fairness play a significant role. Determining whether a client’s gift is “substantial” depends on various factors, including the value of the gift, the financial situation of the client, and the context in which it was given.
For example, the New Hampshire Bar Association Ethics Committee spoke on this in their opinion titled “Limitations on Client Gifts to a Lawyer.” It emphasizes that a gift’s significance cannot be measured solely by its dollar amount. A $200 dinner and theater tickets from a wealthy, long-term client might be considered a minor token, while a $100 gift from a financially struggling client could raise ethical concerns. The financial disparity between lawyer and client is also a factor. If the lawyer’s acceptance of the gift might appear exploitative or unfair, it could be deemed improper.
To evaluate this issue on a case-by-case basis, ask yourself: “Would accepting this gift appear fair to an outside observer?” A good rule of thumb is to assess whether the gift could raise questions about undue influence or favoritism.
Are There Tax Implications With Accepting Gifts from Clients?
Large gifts may have tax implications for both you and your client. In some cases, the value of the gift may need to be reported as income, depending on the nature of the exchange. Be sure to consult with your tax professional to understand these obligations.
Can Attorneys Give Gifts to Clients?
While the ABA Model Rules of Professional Conduct do not directly prohibit attorneys from giving gifts to clients, certain ethical guidelines and practical considerations come into play. Rule 1.8(e) restricts attorneys from providing financial assistance to clients in connection with litigation, with narrow exceptions.
For instance, lawyers may advance court costs and expenses of litigation, with repayment contingent on the case outcome, or cover such costs outright when representing indigent clients. However, outside of these specific scenarios, gifting clients — whether financially or materially — requires careful judgment.
This is where attorneys should look to their state and local rules around giving clients gifts for additional guidance. Some jurisdictions take a stricter approach, while others may be more lenient.
For example, Washington Advisory Opinion 1959 says that attorneys may make bona fide gifts to clients with true donative intent, such as helping a client in a time of financial emergency, provided the gift is not tied to litigation or the attorney’s representation. Advisory Opinion 1523 offers additional guidance, stating that gifts used for promotional purposes, such as including a lawyer’s branded item in a “friendship basket” for new community members, are permissible so long as there is no direct solicitation of legal services.
However, Pennsylvania Rule 7.2 adds another layer to this discussion, explicitly barring attorneys from compensating or giving anything of value to someone for recommending their services. While this rule is aimed at referrals and advertising practices, it shows the importance of transparency and fairness in all transactions between attorneys and others, including clients. If a lawyer were to give a gift to a client, it should not be viewed as a way to encourage further legal work, nor should it appear as a quid pro quo arrangement.
Practical Guidelines for Gifting
With all that in mind, it’s best to follow these general guidelines when giving gifts to clients:
- Know Your State’s Rules Around Gift Giving: States have very different opinions and rules around giving and receiving gifts. Learn those first and foremost.
- Keep It Modest: Gifts should be low-value and aligned with general client appreciation practices, such as holiday gifts.
- Evaluate Intent: Gifts should not be tied to pending or future litigation or appear as incentives for client loyalty.
- Document Significant Gifts: If a given or received gift exceeds nominal value, maintain documentation to demonstrate its purpose and ensure transparency.
To avoid a possible awkward moment or potentially facing an ethical complaint, you should consider drawing up a policy for your firm that would help establish boundaries for gift-gifting and receiving. By adhering to these ethical guidelines, lawyers can show gratitude or goodwill without compromising their professional integrity or creating misunderstandings with clients.
