                                   2018 IL App (1st) 171277

                                         No. 1-17-1277

                                  Opinion filed March 13, 2018

                                                                                   Second Division
_____________________________________________________________________________



                                              IN THE

                               APPELLATE COURT OF ILLINOIS

                                        FIRST DISTRICT

______________________________________________________________________________
                                                              )   Appeal from the
PROSPECT FUNDING HOLDINGS, LLC,                               )   Circuit Court of
                                                              )   Cook County.
        Plaintiff-Appellant,                                  )
                                                              )
     v. 	                                                     )   No. 16 L 3848
                                                              )
KEENAN J. SAULTER and SAULTER TARVER PC,                      )
                                                              )   Honorable
        Defendants-Appellees. 	                               )   Patrick J. Sherlock,
                                                              )   Judge, presiding.




        JUSTICE HYMAN delivered the judgment of the court, with opinion. 

        Presiding Justice Neville concurred in the judgment and opinion. 

        Justice Mason specially concurred, with opinion. 


                                            OPINION

¶1      This case raises issues of first impression concerning an attorney’s liability to a business

that loans a client money to be repaid, plus fees and interest, from any settlement or judgment.

Attorney Keenan J. Saulter arranged for his client, Angela Wright-Housen, the plaintiff in a

wrongful death lawsuit, to borrow $25,000 from Prospect Funding Holdings, LLC, under a

purchase agreement. The agreement provided that any disputes were to be heard in Hennepin
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County, Minnesota, and to be governed by Minnesota law. Wright-Housen also signed an

irrecovable letter of direction instructing Saulter to hold settlement money in his client trust

account and to pay Prospect before disbursing settlement money to her. Saulter signed an

attorney acknowledgement agreeing to abide by Wright-Housen’s instructions.

¶2     When the wrongful death case settled and Wright-Housen failed to repay Prospect,

Prospect sued her and Saulter in Minnesota. The Minnesota court dismissed Saulter on

jurisdictional grounds, finding Saulter not a party to the purchase agreement so the forum

selection clause did not apply to him. Wright-Housen did not appear, and the court entered a

default judgment against her. When Wright-Housen failed to satisfy the default judgment,

Prospect sued Saulter in Illinois for breach of contract and professional negligence. Prospect

argued that Saulter breached his agreement to abide by his client’s letter of direction and his

fiduciary and professional duties by failing to maintain the settlement funds in his trust account

and to repay Prospect. The trial court granted Saulter’s motion to dismiss, finding Prospect’s

agreement with Wright-Housen was a contract for champerty, which Minnesota law prohibits.

¶3     Prospect argues the trial court should not have dismissed the case because (i) when the

Minnesota court entered a default judgment against Wright-Housen, it found the purchase

agreement valid and an Illinois court must give full faith and credit to that judgment, (ii) the

Minnesota choice of law provision does not apply to the letter of direction and, even if

Minnesota law does apply, Saulter cannot raise champerty as a defense as he was not a party to

the purchase agreement, and (iii) the Illinois Rules of Professional Conduct obligated Saulter to

hold the settlement money in his trust account until the dispute was resolved.




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¶4     Saulter argues the trial court properly dismissed the complaint as he did not have a

contract with Prospect and, alternatively, if there was a contract, it was void as champertous

under Minnesota law.

¶5     We affirm the dismissal. The trial court was not obligated to give full faith and credit to a

Minnesota default judgment that was not on the merits and was not directed against Saulter. The

purchase agreement and letter of direction were interdependent, and because the purchase

agreement is unenforceable under controlling Minnesota law, the letter of direction was also not

enforceable. Lastly, an alleged violation of the Illinois Rules of Professional Conduct does not

give rise to a private cause of action as our supreme court has given the Illinois Attorney

Registration and Disciplinary Commission (ARDC) exclusive power to discipline attorneys for

violations. We direct, however, the clerk of the court to forward a copy of this opinion to the

ARDC for further investigation.

¶6                                      BACKGROUND

¶7     Saulter and his law firm, Saulter Tarver PC, represented Wright-Housen in a wrongful

death lawsuit. (Wright-Housen is not a party to this case.) Saulter contacted Prospect, a litigation

financing firm, to inquire about selling a portion of Wright-Housen’s lawsuit in exchange for a

nonrecourse interest in any proceeds from the suit. Prospect agreed to loan Wright-Housen

$25,000 (plus a $4500 fee) in exchange for a return of the loan plus 4% interest compounded

monthly from any judgment or settlement. If Wright-Housen did not obtain a judgment or

settlement, she did not have to repay Prospect.

¶8     Prospect and Wright-Housen entered into a purchase agreement detailing the terms of the

loan. The parties agreed that “all disputes, claims, or controversies arising out of or relating to



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this Agreement or the relationships that result from this Agreement shall be governed, construed

and enforced in accordance with the law of the State of Minnesota.” The agreement also

provided that “all actions or proceedings in any way, manner or respect, arising out of or related

to this agreement” would be litigated in Hennepin County, Minnesota. The purchase agreement

included a “Certification of Seller’s Attorney,” which Saulter signed, certifying that “[a]ll

proceeds of the legal claim will be disbursed via the attorneys [sic] trust account” and that he

would abide by written instructions from his client with regard to the purchase agreement.

¶9     Wright-Housen also executed an irrevocable letter of direction instructing Saulter to

disburse all proceeds of the lawsuit through an attorney’s trust account. Under the letter of

direction, the settlement funds would not be released to Wright-Housen until after Saulter’s legal

fees and costs were paid and Prospect was paid in full. Saulter signed an “Attorney

Acknowledgement” to honor the letter of direction.

¶ 10   The wrongful death case settled in July 2014. Prospect contacted Saulter about repayment

on its loan. Saulter told Prospect he was not holding client funds from the settlement in his trust

account and advised Prospect to contact Wright-Housen directly for repayment.

¶ 11   After being unable to collect from Wright-Housen, Prospect sued her and Saulter in

Hennepin County, Minnesota. The Minnesota court found that Saulter was not subject to

personal jurisdiction in Minnesota because he was a Chicago lawyer, who was not licensed to

practice in Minnesota, and had not been in the state for eight years. The court also found that the

Minnesota forum selection clause in the purchase agreement did not apply to Saulter, rejecting

Prospect’s argument that the “Certification of Seller’s Attorney” to the purchase agreement or

the “Attorney Acknowledgment” to the letter of direction bound Saulter to the terms of the

purchase agreement. The court stated, “By agreeing to certain obligations that may be contained

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in, or derivative of, terms of the Purchase Agreement, Saulter is not adopting the entire Purchase

Agreement nor signifying any intent to be bound by provisions that are not included in the forms

he signed.” The court found that because Saulter was not bound by the forum selection clause,

the court did not have personal jurisdiction over him and dismissed the case against him, without

prejudice.

¶ 12    After dismissing Saulter, the Minnesota court entered a default judgment against Wright-

Housen. As to the legality of the purchase agreement in light of Minnesota’s common law

against agreements of champerty, that is, third-party financing of lawsuits, the court said, “on the

facts of this case, it is unclear whether the doctrine of champerty, assuming it’s still viable in

Minnesota, would bar this action.” The court also noted that illegality of contract is an

affirmative defense that could only be asserted by Wright-Housen, who did not appear and thus

could not raise it.

¶ 13    After collection efforts on the default judgment failed, Prospect sued Saulter and his law

firm in Illinois. Prospect’s amended complaint alleged breach of contract (count I), breach of

fiduciary duty (count II), professional negligence (count III), promissory estoppel (count IV),

and conversion (count V). Prospect alleged that by signing the attorney acknowledgement to the

letter of direction, Saulter promised to repay Prospect’s priority lien from the settlement proceeds

and breached that promise by failing to pay or to hold the money in dispute in his trust account

until the dispute was settled. Prospect also alleged it had a right to rely on Saulter’s compliance

with the Illinois Rules of Professional Conduct and his fiduciary obligations and that Saulter

violated those rules by (i) aiding and abetting Wright-Housen to breach her agreement with

Prospect and commit fraud, (ii) making false statements of material fact to Prospect, (iii)

violating the rules for safekeeping property and the proper use of client trust accounts, (iv)

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failing to notify Prospect that the settlement proceeds were in their client trust account, (v)


failing to provide an accounting of the settlement proceeds, and (vi) failing to maintain the


settlement proceeds in the trust account until the dispute could be resolved.


¶ 14   Saulter moved to dismiss arguing he and Prospect did not have a contract and if they did,


the contract was champertous and void under Minnesota Law, requiring dismissal. The trial court 


granted the motion to dismiss under section 2-619(a)(9) of the Code of Civil Procedure (Code)


(735 ILCS 5/2-619(a)(9) (West 2014)), finding that Minnesota law prohibits contracts for


champerty and thus, the underlying agreement was illegal and any attempts to recover on it are 


impermissible.


¶ 15                                       ANALYSIS


¶ 16                                   Full Faith and Credit


¶ 17   Prospect first contends the trial court should not have dismissed its complaint because the


court was obligated to give full faith and credit to the Minnesota default judgment against 


Wright-Housen. Specifically, Prospect asserts that by entering a default judgment, the Minnesota


court concluded the purchase agreement was enforceable and not champertous, and under the full


faith and credit clause of the United States Constitution (U.S. Const., art. IV, § 1), the Illinois


court must enforce that judgment and may not dismiss on the grounds that the agreement is


champertous, as that issue has been decided by the Minnesota court.


¶ 18   The full faith and credit clause of the United States Constitution provides that full faith


and credit must be given to the judicial proceedings of every other state. First Wisconsin


National Bank of Milwaukee v. Kramer, 202 Ill. App. 3d 1043, 1047 (1990). The Uniform


Enforcement of Foreign Judgments Act (735 ILCS 5/12-650 et seq. (West 2014)) implements the




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full faith and credit clause and facilitates the interstate enforcement of judgments in any

jurisdiction where the judgment debtor is found. Ace Metal Fabricating Co. v. Arvid C. Walberg

& Co. 135 Ill. App. 3d 452, 455 (1985). “A lawsuit which has been pursued to judgment should

be as conclusive in every other court as it is in the court where judgment was entered.” Kramer,

202 Ill. App. 3d at 1047.

¶ 19   Under the full faith and credit clause, if Prospect sought to enforce the default judgment

against Wright-Housen, an Illinois court would be obligated to enforce that judgment. Here,

though, Prospect does not seek to enforce the default judgment; instead, Prospect has filed a

separate lawsuit against Saulter, who, having been dismissed from the Minnesota case, was not a

party to the default judgment.

¶ 20   Moreover, contrary to Prospect’s assertion, the Minnesota court did not find that the

purchase agreement was enforceable and not champertous. The Minnesota court expressly noted

that champerty was an affirmative defense that could only be raised by Wright-Housen, who was

not present. The court stated, “it is unclear whether the doctrine of champerty, assuming it’s still

viable in Minnesota, would bar this action.” This does not constitute a finding on the legality of

the agreement and would not be binding on an Illinois court.

¶ 21                                    Letter of Direction

¶ 22   Prospect next contends the letter of direction must be construed under Illinois law, which

provides no basis for invalidating it as champertous on public policy grounds. Saulter argues in

response that the letter of direction was an agreement between him and Wright-Housen and there

was no privity of contract between him and Prospect because there was no offer, acceptance, or

consideration. Alternatively, Saulter asserts that the purchase agreement was champertous and



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unenforceable under Minnesota law, and any cause of action based on that agreement must be

dismissed.

¶ 23   Saulter moved to dismiss under section 2-619.1 of the Code, which permits a party to

move for dismissal under both sections 2-615 and 2-619. 735 ILCS 5/2-619.1 (West 2014). A

section 2-615 motion to dismiss attacks the legal sufficiency of a complaint. Lutkauskas v.

Ricker, 2015 IL 117090, ¶ 29. A motion brought under section 2-619 admits the sufficiency of

the complaint, and asserts affirmative matter that avoids or defeats the claim. Id. We review a

dismissal under either sections 2-615 or 2-619 de novo. Id. Accordingly, we may affirm the

judgment on any grounds found in the record, regardless of the trial court’s reasons. Dratewska-

Zator v. Rutherford, 2013 IL App (1st) 122699, ¶ 16.

¶ 24   If a contract is entered for the direct benefit of a third person, the third person may sue for

breach of the contract even though he or she is not a party to the contract. Swavely v. Freeway

Ford Truck Sales, Inc., 298 Ill. App. 3d 969, 973 (1998). Whether a party constitutes a third-

party beneficiary depends on the intent of the contracting parties and made on a case-by-case

basis. Midwest Concrete Products Co. v. La Salle National Bank, 94 Ill. App. 3d 394, 396

(1981). The terms of the contract control the rights of the third party. Id. at 397. This means the

liability of a promisor cannot be extended by the third party beyond the terms of the contract or

enlarged merely on the ground that the circumstances justify further liability. Id.

¶ 25   The letter of direction directs Saulter to pay Prospect from the proceeds of any settlement

before paying Wright-Housen and expressly states “Prospect Funding Holdings LLC has relied

on this irrevocable Letter of Direction to fund the Purchase Agreement.” Thus, Prospect is a

third-party beneficiary to the letter of direction. But, both Prospect’s rights as a third-party



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beneficiary and Saulter’s obligations under the letter of direction are dependent on the validity of

the purchase agreement. If the purchase agreement is unenforceable, Prospect cannot sue to

enforce its terms through the letter of direction.

¶ 26   The parties disagree as to whether Illinois or Minnesota law should be applied. Subject to

constitutional limitations, the forum court applies the choice of law rules of its own state.

Townsend v. Sears, Roebuck & Co., 227 Ill. 2d 147, 155 (2007). Illinois courts employ the

Restatement (Second) of Conflict of Laws to resolve choice of law questions. Bank of America

National Ass’n v. Bassman FBT, L.L.C., 2012 IL App (2d) 110729, ¶ 9. Generally, Illinois

applies the law of the state with the most significant relationship to the issue. Gregory v. Beazer

East, 384 Ill. App. 3d 178 (2008).

¶ 27   Prospect asserts that because the letter of direction contains no choice of law provision

and Illinois is the forum that has the most significant relationship to the letter of direction,

Illinois law applies. But, as noted, the enforceability of the letter of direction is dependent on the

validity of the underlying purchase agreement. And that agreement plainly states that it is

controlled by Minnesota law, so that is the law we will look to in deciding its validity.

¶ 28   Minnesota follows the common-law rule prohibiting contracts for champerty. Maslowski

v. Prospect Funding Partners LLC, 890 N.W.2d 756, 763 (Minn. Ct. App. 2017) (citing Huber v.

Johnson, 70 N.W. 806, 807 (Minn. 1897). Champerty is defined as “ ‘[a]n agreement between a

stranger to a lawsuit and a litigant by which the stranger pursues the litigant[’s] claims as

consideration for receiving part of any judgment proceeds.’ ” Johnson v. Wright, 682 N.W.2d

671, 675 (Minn. Ct. App. 2004) (quoting Black’s Law Dictionary 224 (7th ed. 1999)). Recently,

in Prospect Funding Partners, LLC v. Williams, No. 27-CV-13-8745, 2014 Minn. Dist. LEXIS 2

(Dist. Ct. Hennepin County, Minn., May 5, 2014), a trial court in Minnesota reiterated the state’s

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long-standing prohibition on champertous contracts. The court noted that “the ill effects of a

contract that gives a stranger a contingent interest in the outcome of litigation go well beyond

encouraging people to sue or direct control of the litigation.” Id. at *21. In addition to the other

“ill effects,” including creating a disincentive to settle and permitting strangers to profit from the

litigation of others, the court noted that litigation funding agreements permit the funders to lend

litigants money without the regulations that cover loans and prohibit usurious interest rates,

which was 4.5%, compounded monthly. The court noted that Minnesota caps interest on loans of

less than $100,000 at 8% per year (Minn. Stat. § 334.01 (2014)) and that the interest on the loan

would be 54%, well above that limit.

¶ 29   The exact same concerns raised by the Williams court are present in the purchase

agreement between Prospect and Wright-Housen. The agreement not only gives a third party an

interest in Wright-Housen’s case, potentially affecting whether and when she decides to settle, it

permits Prospect to make an enormous profit off of its loan by charging a usurious 4% interest

rate, compounded monthly, without being subjected to any regulations. The purchase agreement

was champertous and thus unenforceable under Minnesota law.

¶ 30   Prospect argues, however, that even if the purchase agreement is champertous, Saulter is

not a party to that agreement and thus, cannot raise champerty as a defense. Relying on Illinois

and Minnesota cases, Prospect contends the defense of champerty can only be raised by a party

to the champertous contract and does not furnish any reason for refusing relief in the proceeding

to which the champertous agreement relates. See, e.g., Oil, Inc. v. Martin, 381 Ill. 11, 19 (1942);

Ness v. Gurstel Chargo, P.A., 933 F. Supp. 2d 1156, 1170-71 (D. Minn. 2013); Miller UK Ltd. v.

Caterpillar, Inc., 17 F. Supp. 3d 711, 726 (N.D. Ill. 2014). But the cases Prospect cites are

factually distinguishable because they involved strangers to the agreement seeking to use

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champerty as a defense to an underlying lawsuit or as a separate cause of action. For instance,

Miller concerned a discovery dispute between Miller UK Ltd. and Caterpillar, Inc., stemming

from a cause of action for misappropriation of trade secrets. Miller, 17 F. Supp. 3d at 717.

Caterpillar claimed that Miller’s use of contracted third-party funding in litigation violated

Illinois law prohibiting maintenance and champerty and was, therefore, a complete defense to the

underlying causes of action raised by Miller. Id. at 724. The Miller court did not agree, noting

that “the defense of champerty can only be interposed in an action between the parties to the

champertous contract, and does not furnish any reason for refusing relief in the proceeding to

which the champertous agreement relates.” (Internal quotation marks omitted.) Id. at 726.

¶ 31   In Ness, consumers filed a class action lawsuit against a debt collection business, the

business’s law firm, and attorneys who were both shareholders of the law firm and owners of the

debt collecting business alleging violations of Fair Debt Collection Practices Act (15 U.S.C.

§ 1692 et seq. (2012)). Ness, 933 F. Supp. 2d at 1161. The plaintiffs alleged, in part, that the

lawyers engaged in champerty by creating a debt collection business as a fabricated client when

the attorneys, as the business’s owners, were the true parties in interest. Id. at 1170. The trial

court disagreed, noting that the plaintiffs did not allege the existence of any contracts with the

defendants and were attempting to assert champerty as an independent cause of action, which is

not cognizable under Minnesota law. Id. at 1171.

¶ 32   Unlike Caterpillar in the Miller case, Saulter is not a complete stranger to the purchase

agreement because his obligations under the letter of direction are wholly dependent on the

enforceability of the agreement. Further, unlike the plaintiffs in Ness, Saulter is not seeking to

bring a separate cause of action alleging champerty. Instead, Saulter contends that Prospect, a

third-party beneficiary, cannot enforce a letter of direction that depends on a champertous and

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unenforceable purchase agreement. Under section 309(4) of the Restatement (Second) of

Contracts, a beneficiary’s right against the promisor is subject to any claim or defense arising

from his or her own conduct or agreement. Restatement (Second) of Contracts § 309(4) (1981);

see also Hansen v. Proctor, 74 N.W.2d 281, 284 (Minn. 1955) (holding that in suit against

promisor, third-party beneficiary to contract generally subject to same defenses as parties to

contract itself). Thus, the fact that Saulter was not a party to the purchase agreement did not

preclude him from arguing the agreement was champertous when Prospect sought to enforce the

letter of direction. Because we agree with the trial court’s finding that the purchase agreement

was unenforceable under Minnesota law, we affirm.

¶ 33                   Professional Obligation to Hold Funds in Trust Account

¶ 34   Lastly, Prospect argues the trial court should not have dismissed the amended complaint

because Saulter had a professional duty under the Illinois Rules of Professional Conduct (Ill. R.

Prof’l Conduct (2010) R. 1.15(e) (eff. July 1, 2015)), to hold the disputed funds until the

disagreement was resolved. Rule 1.15(e) provides, in part, that a lawyer

       “in possession of property in which two or more persons (one of whom may be the

       lawyer) claim interest, the property shall be kept separate by the lawyer until the dispute

       is resolved. The lawyer shall promptly distribute all portions of the property as to which

       the interests are not in dispute.” Id.

Prospect contends the trial court should have considered Saulter’s professional obligations under

Rule 1.15(e) before dismissing its complaint.

¶ 35   Our supreme court has the exclusive authority to prescribe rules governing attorney

conduct and to discipline attorneys who violate these rules. People ex rel. Brazen v. Finley, 119



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Ill. 2d 485, 494 (1988). Consistent with this authority, the supreme court has adopted the Illinois

Rules of Professional Conduct, appointed the ARDC, and “created a procedural scheme to

enhance the ARDC in performing its duties.” Id. “[T]hrough the use of its exclusive judicial

power to prescribe rules governing attorney conduct, and to discipline attorneys for violating

those rules, [our supreme court] has created a comprehensive program to regulate attorneys and

punish their misconduct.” Id. Our supreme court has stressed that rules of professional conduct

are mandatory and “[a]ttorneys who fail to understand them or follow them do so at their peril.”

In re Demuth, 126 Ill. 2d 1, 13 (1988).

¶ 36   Although the Illinois Rules of Professional Conduct are “a safe guide for professional

conduct” and attorneys may be disciplined for failing to observe them (In re Himmel, 125 Ill. 2d

531, 538 (1988)),

           “[v]iolation of a Rule should not itself give rise to a cause of action against a lawyer

       nor should it create any presumption in such a case that a legal duty has been breached.

       *** The Rules are designed to provide guidance to lawyers and to provide a structure for

       regulating conduct through disciplinary agencies. They are not designed to be a basis for

       civil liability.” Ill. R. Prof’l Conduct (2010), Preamble (eff. Jan. 1, 2010).

While violation of the professional conduct rules may be relevant to the standard of care in a

legal malpractice claim, the rules themselves do not establish a separate duty or cause of action.

Owens v. McDermott, Will & Emery, 316 Ill. App. 3d 340, 353 (2000).

¶ 37   Thus, even if Saulter had a duty under Rule 1.15 to hold the settlement funds in his trust

account, an issue we need not address, his failure to do so cannot serve as the basis of a claim by

Prospect. This does not, however, preclude the ARDC from considering Saulter’s conduct, and



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we direct the appellate court clerk to send a copy of this opinion to the ARDC for further


investigation.


¶ 38    Affirmed; opinion referred to the ARDC. 


¶ 39    JUSTICE MASON, specially concurring:


¶ 40    I concur in the majority’s decision to affirm dismissal of Prospect’s complaint. The


agreement entered into between Prospect and Wright-Housen was clearly usurious as its 4%

monthly compounded interest translated into an annual interest rate in excess of 60%. Whether

or not the agreement was, in addition, champertous, 1 it would not be enforced in any court in

Illinois or Minnesota. See 815 ILCS 205/4 (West 2016) (9% maximum annual rate of interest on

loans); Minn. Stat. Ann. § 334.01 (West 2016) (8% maximum rate). This is particularly true

given that any recovery in Wright-Housen’s wrongful death case inured not only to her but also

to her minor children’s benefit. No court in Illinois would approve a minor’s settlement of a

wrongful death claim that provided for the entirety of the recovery to go to a lawsuit lender. Ott

v. Little Co. of Mary Hospital, 273 Ill. App. 3d 563, 573 (1995) (court may only approve

settlement that is in best interest of the minor).


        1
        As the majority notes, Black’s Law Dictionary defines “champerty” as “[a]n agreement
between a stranger to a lawsuit and a litigant by which the stranger pursues the litigant[’s] claims
as consideration for receiving part of any judgment proceeds.” Black’s Law Dictionary 224 (7th
ed. 1999). Black’s defines the related practice of “maintenance” as “[a]ssistance in prosecuting
or defending a lawsuit given to a litigant by someone who has no bona fide interest in the case;
meddling in someone’s else’s litigation.” Id. at 965. Prospect loaned Wright-Housen a modest
sum of money at a usurious rate of interest, but did not otherwise assume control over or meddle
in her wrongful death lawsuit. It is therefore debatable whether the agreement is, in fact,
champertous. See Miller UK Ltd. v. Caterpillar, Inc., 17 F. Supp. 3d 711, 725 (N.D. Ill. 2014)
(applying Illinois law to conclude that third-party litigation funding did not constitute champerty
or maintenance); but see Prospect Funding Partners, LLC v. Williams, No. 27-CV-13-8745,
2014 Minn. Dist. LEXIS 2, *28-29 (Dist. Ct. Hennepin County, Minn., May 5, 2014)
(invalidating similar agreement under Minnesota law as contrary to public policy).

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¶ 41   I write specially because I am troubled by the implication that an attorney’s express

undertaking (whether labeled a “certification” or an “acknowledgement”) to hold funds in his or

her client account does not give rise to any claim by the party to whom the commitment was

made when funds are later disbursed (i) in clear contravention of the promise and (ii) to the

attorney’s benefit. Saulter initiated the transaction with Prospect on behalf of his client. Indeed,

this was the second such loan Saulter had arranged for Wright-Housen; part of the proceeds from

Prospect’s loan were used to pay off an earlier loan from another lawsuit lender. Saulter, who

certified that he had “reviewed” and “explained” the terms and conditions of the agreement to

Wright-Housen, undoubtedly knew that if he did not agree to be bound by the irrevocable letter

of direction that required him to hold the proceeds of any settlement or judgment pending

resolution of Prospect’s claim under the loan agreement, Prospect would not have made the loan.

The record does not disclose what use Wright-Housen made of the proceeds of the loan, but it is

entirely possible that without Prospect’s money, Wright-Housen’s financial straits may have

forced her to accept a lowball settlement offer (resulting in lower attorney fees to Saulter). The

fact that Saulter believed, correctly as it turns out, that Prospect’s agreement was unenforceable,

did not give him license to disregard the commitments both he and his client voluntarily made.

And the fact that the victim of the breach of those commitments was a usurious lender should not

lead us to overlook the serious ethical concerns presented by Saulter’s conduct.




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