Doug Cornelius at Compliance Building writes today about borrowers paying the legal fees of lender’s counsel:

Of course there is a conflict with the law firm. That too is a conflict that has been in place for decades. The bank’s lawyers know they represent the bank. They also know the borrower is paying their bill. Until banks start paying for their own lawyers, there will be no resolution to this conflict.

Here in California, the Rules of Professional Conduct prohibit a lawyer from receiving compensation from someone who is not his or her client unless certain conditions are met:

A member shall not accept compensation for representing a client from one other than the client unless:

(1) There is no interference with the member’s independence of professional judgment or with the client-lawyer relationship; and

(2) Information relating to representation of the client is protected as required by Business and Professions Code section 6068, subdivision (e); and

(3) The member obtains the client’s informed written consent, provided that no disclosure or consent is required if:

(a) such nondisclosure is otherwise authorized by law; or
(b) the member is rendering legal services on behalf of any public agency which provides legal services to other public agencies or the public.

Rule 3-310(F).