Lending
Lawyers or limited licensees must not lend money to a client unless, before making the loan, the lawyer or limited licensee:
- tells the client about the conflict of interest;
- requires that the client receive:
- independent legal representation; or
- independent legal advice if they are ‘related’, as defined by section 251 of the Income Tax Act (Canada); and
- obtains the client’s consent.
It is best practice for a lawyer or limited licensee to avoid paying in advance for expenses in a legal matter that the lawyer or limited licensee is handling for the client. Instead, the client should pay in advance for expenses, such as expert opinion reports.
If the lawyer or limited licensee has inappropriately lent money, submit a complaint.
Common Questions
When a lawyer or limited licensee lends money to a client, they become a creditor. This means their interest in getting the money back could conflict with their duty to act in the client’s best interest.
Related persons are people connected by:
- blood;
- marriage;
- common-law partnership; or
- adoption.
There are also definitions for related corporations; see section 251(2)(b) and (c) of the Income Tax Act (Canada) for more information.
Independent legal advice means meeting with a lawyer or limited licensee who is not connected to your first lawyer or limited licensee, or the transaction. They explain the legal parts of the transaction to you. This often only requires one meeting. See section 3.4-27 of the Law Society of Saskatchewan Code of Professional Conduct for Lawyers or the Law Society of Saskatchewan Code of Professional Conduct for Limited Licensees for more information.
Independent legal representation means getting ongoing help from a lawyer or limited licensee who is not connected to your first lawyer or limited licensee, and who is not involved in the transaction. See section 3.4-27 of the Law Society of Saskatchewan Code of Professional Conduct for Lawyers or the Law Society of Saskatchewan Code of Professional Conduct for Limited Licensees for more information.