"We can't do the work we think we need to do if we don't have the resources," Henderson Hill, one of Mr. Nichols' four lawyers, told Superior Court Judge Hilton Fuller.
The comments came at a hearing in which the defense asked Judge Fuller to block prosecutors from seeking the death penalty against Mr. Nichols because of the defense funding crisis.
"I think our circumstances are dire," Mr. Hill said. "We are currently in a position that risks us being in conflict with our client."
Prosecutor Christopher Quinn challenged Mr. Hill's assertions, saying there is no basis for Judge Fuller to prevent the state from seeking the death penalty.
"The discretion to seek the death penalty rests with the district attorney," Mr. Quinn said.
He said that he doesn't believe "that there is authority for the court to strike the death notice in a situation like this."
There was no immediate ruling from Judge Fuller. The judge said he would issue a decision in a few days.
Jury selection in Mr. Nichols' murder trial in the 2005 rampage has been postponed several times because of the defense funding issue. It is set to resume Oct. 1.
Judge Fuller's options include postponing jury selection again, ordering the state to provide more money for Mr. Nichols' defense or, as the defense wants, prevent the state from seeking the death penalty if Mr. Nichols is convicted.
Judge Fuller suggested he would not delay the trial further, telling Mr. Hill at the hearing, "Your time ought to be spent in preparation for jury selection."
In a motion filed late Sunday, Mr. Nichols' lawyers said they have been told there might not be any more state funds to pay their bills.
The lawyers said the state public defender's office first told them that the office would pay for only one-third of their projected costs to complete Mr. Nichols' murder trial, but then withdrew the offer and indicated no further money for Mr. Nichols' defense could be guaranteed.
At last count, Mr. Nichols' defense has cost the Georgia Public Defender Standards Council more than $1.8 million, according to the council. The cost is projected by the council to reach $2.4 million by the end of trial.
Mr. Nichols' defense is being paid for by the state agency because he is indigent.
Judge Fuller indicated at the hearing that he is concerned about the defense funding issue. He asked the prosecutor whether one of his options would be to let the trial proceed and if there is a conviction, order a new trial if he doesn't think the first one was fair.
Specifically, he asked what would happen if the state public defender's office truly doesn't have money for Mr. Nichols' defense.
"Well, your honor, I don't know what you're going to do then," Mr. Quinn said. "I guess we would have to cross that proverbial bridge when we come to it."