California Bar Professional Responsibility Long-Form Practice Test 2025 - Free Practice Questions and Study Guide

The rule regarding business transactions between a lawyer and their client emphasizes the importance of maintaining the integrity of the attorney-client relationship. The correct statement highlights that any business transaction must be made on fair and reasonable terms, which must be fully disclosed and confirmed in writing. This ensures that the client is fully informed of the terms of the transaction and can assess whether it is in their best interest.

This rule is rooted in the need to prevent any potential conflicts of interest and to protect clients from exploitation. Lawyers have a professional obligation to avoid situations where their financial interests may conflict with their professional duties to their clients. By requiring that all terms be fair and reasonable and fully disclosed in writing, the rule seeks to safeguard the client’s rights, ensuring that they can make informed decisions in these transactions.

The other choices do not accurately capture the essence of the rule. For instance, suggesting that no transactions are allowed without prior consent overlooks the possibility of legitimate transactions under the appropriate conditions. Additionally, the notion that clients must maintain a cash reserve for lawyer transactions is not a recognized rule and does not address the ethical responsibilities involved. Finally, asserting that transactions are allowed only if approved by a judge misrepresents the context; while certain transactions may require judicial oversight in specific circumstances, the