An attorney decided to obtain a master's degree in taxation but lacked funds. The attorney consulted one of his clients, a wealthy banker, for advice about obtaining a loan. Was the attorney's conduct proper?

• A. Yes, because a client may assist with financing education.
• B. No, because the attorney did not comply with the requirements for entering into a business transaction with a client.
• C. No, because the borrower was a banker.
• D. Yes, because the loan is a standard business matter between client and attorney.

Answer: (B)

The main idea is that a lawyer cannot enter into a business transaction with a client unless proper safeguards are in place. A loan from a client is a business transaction, and it must meet specific protections: the terms must be fair and reasonable to the client, the transaction and its terms must be fully disclosed in writing, the client must be advised to seek independent legal counsel, and the client must give informed consent in writing. In this scenario, the attorney sought loan advice from a wealthy banker who is also his client, but there’s no indication that the terms were fair, that the full disclosure happened in writing, that the client was advised to seek independent counsel, or that informed written consent was obtained. Because those safeguards appear absent, the conduct is not proper. The fact that the borrower happens to be a banker does not automatically make the arrangement permissible; the critical issue is whether the required safeguards were followed. The idea that a client may simply assist with financing education or that such loans are automatic business matters misses the necessary protective steps designed to prevent conflicts of interest and preserve the lawyer’s independent professional judgment.