Loans to Clients on New Mexico Personal Injury Claims Strictly Prohibited

An individual with a pending personal injury lawsuit may be facing economic hardship in several ways and due to a number of reasons.

Unfortunately, aside from very limited exceptions, the New Mexico Rules of Professional Conduct for Attorneys prohibits a lawyer from making any loans or advancing any expenses to one of their clients.

A personal injury suit can take months and even years to settle or go to court. During this time, an injured party may be facing rising medical and rehabilitative expenses aside from regular living expenses.

Injured persons may have significant claims for damages, on occasion reaching into the millions, but cannot pay their rent, utility, and other bills while litigation is pending.

To make things worse, many civil lawsuits involve serious injuries. Personal injury victims often find themselves with mounting medical bills due to their injuries while other expenses mount due to a loss of income associated with those injuries. And despite their legitimate claims, they cannot pay these bills while their case is still pending.

No matter how much an attorney may want to help, and they do, it is against the New Mexico Rules of Professional Conduct for an attorney to offer or provide financial assistance to a client. Sometimes the situation may be quite tragic. For instance, a client may have an extremely strong case but in the meantime may be facing eviction, foreclosure, or repossession of their automobile and belongings.

However, an attorney is only allowed to pay certain court costs and filing fees on behalf of a client. It is improper for an attorney representing a party to loan that party money for living, medical, or any other expenses connected to the litigation. The New Mexico Rules of Professional Conduct for Attorneys expressly prohibits an attorney from advancing a client any type of loan or providing any kind of financial assistance in connection with pending or contemplated litigation.

Under NMRA §16-108, the only advance that an attorney can give to a client in connection with litigation is paying court and litigation costs up front. The repayment of court and litigation costs can be contingent on the outcome of the case. In other words, the client will only have to pay the attorney back if the client receives a settlement or favorable judgment at trial. Any other loan, payment, or advance in connection with litigation, however, is expressly forbidden by the New Mexico Rules.

Even though an attorney may not advance any of his own or the law firm‘s money to help a client pay their day to day expenses and medical bills, they can help their client identify other sources of cash and alternative solutions, like MedPay insurance coverage, pre-settlement funding (rarely a good idea), treatment letters of protection, and bank or other loans. An experienced injury attorney will be able to help you to explore your options under the law.


Related Reading:
Paying Your Bills While a Personal Injury Lawsuit is Pending in New Mexico
Paying Medical Bills Pending A Car Accident Settlement
Personal Injury Lawsuit Loans are Very Costly

Collins & Collins, P.C.
Albuquerque Attorneys

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