Certified Legal Professional (CLP) Practice Exam

In client representation, can an attorney engage in a business transaction with the client?

1. Yes, as long as it is disclosed

2. No, this is prohibited under all circumstances

3. Yes, if the transaction is necessary

4. No, clients must be kept at arm's length

The correct answer is: No, this is prohibited under all circumstances

In the realm of client representation, an attorney is often governed by strict ethical standards designed to maintain the integrity of the attorney-client relationship. While the assertion that engaging in a business transaction with a client is outright prohibited under all circumstances may seem inflexible, it emphasizes a core principle of legal ethics: the necessity to avoid conflicts of interest that could compromise the attorney’s loyalty to the client. The primary concern is that such transactions can blur the lines of the attorney-client relationship, potentially leading to exploitation or a lack of objectivity. The fiduciary duty attorneys owe to their clients requires them to act in the best interest of the client, and entering into business dealings may present a significant risk of conflicting interests. Allowing business transactions could create significant ethical dilemmas and issues of trust, as clients might be unsure whether the attorney’s advice is based on their best interests or their own profit motives. Therefore, while there might be exceptions under certain ethical rules—like full disclosure, informed consent, and fairness—the foundational principle is that attorneys should avoid such engagements to maintain professionalism and fidelity to their clients. In contrast, choices that suggest transactions can occur under certain conditions might mislead about the seriousness of the ethical concerns at stake, creating misunderstandings regarding acceptable practices in