If a client disappears after a case is settled, can the lawyer sign the settlement draft, take his fee, and hold the rest in escrow?

Plain-English summary

A plaintiff's attorney in a negligence case against a public transit authority received a settlement draft for the agreed amount, but the client could no longer be located to sign it. The inquiry asked whether the lawyer could settle on the absent client's behalf, sign the draft, deduct his fee, and hold the remainder in an interest-bearing escrow account, and whether a retainer agreement could include a general power of attorney letting the lawyer settle without further client contact.

The committee answered the first questions in the negative, treating In re Walner (Ill. 1988) as directly on point. In Walner the Illinois Supreme Court found an attorney acted improperly by settling a missing plaintiff's claim and signing the client's name without authority, and held that withdrawing the fee before the client knew of and approved the settlement violated former Disciplinary Rule 9-102(b); the court refused to call that violation "merely technical," stressing the lawyer's duty to preserve the client's funds. The court also faulted a nine-month delay in notifying the located client and tendering proceeds under Rule 9-102(c)(4). The committee added that if a settlement was authorized before the client disappeared, the lawyer still needs additional authority (from the retainer agreement or elsewhere) to sign releases and drafts and to deduct a contingent fee.

On the power-of-attorney question, the committee followed Walner's treatment of a general settlement power. The court declined to forbid such powers outright but condemned procuring general authority to settle, "particularly when the attorney is hired on a contingent basis," and said any such power should be "narrowly drawn to limit the attorney's power to settle within a certain range of options and for a certain time period." The committee noted the Review Board's concern that a client's disappearance could reflect death or disability, which would terminate a power of attorney.

Currency note

This opinion was issued in February 1989, under the former Illinois Code of Professional Responsibility and before Illinois adopted the 1990 (and later 2010) Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rules (Rules 1.5(c) and 1.15), while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer settle a case if the client has disappeared?

A: The opinion concluded it is improper to settle without the client's authority; settling a claim and cashing settlement checks without authorization is itself an impropriety requiring discipline, citing In re Walner.

Q: Can the lawyer sign the client's name to a settlement draft and take his fee?

A: Per the opinion, no, absent authority from the client; even where the fee appears appropriate, withdrawing it before the client knows of and approves the settlement violated former Rule 9-102(b), and the lawyer must preserve the client's funds.

Q: Is a general power of attorney to settle, placed in the retainer agreement, proper?

A: The opinion concluded such general powers are ordinarily improper; following Walner, any settlement power of attorney must be narrowly drawn, limited to a range of options and a set time period, especially in contingent-fee matters.

Background and rules framework

The opinion applied the former Illinois Code of Professional Responsibility: Rule 9-102 (preserving and accounting for client funds, including subsections (b) on notice and delivery and (c)(4) on prompt payment) and Rule 2-106 (fees). The Board's 2010 affirmation maps the analysis to current Illinois Rules of Professional Conduct 1.5(c) (contingent-fee writing and closing statement) and 1.15 (safekeeping property), which correspond to ABA Model Rules 1.5 and 1.15.

Citations and references

Rules of Professional Conduct:

• Illinois Code Rules 9-102(b), (c)(4); 2-106 (former Code, applied in the opinion)
• Illinois RPC 1.5(c), 1.15 (2010 equivalents per the Board's affirmation)
• MR 1.5 (fees), MR 1.15 (safekeeping property)

Cases:

• In re Walner, 119 Ill. 2d 511, 519 N.E.2d 903, 116 Ill. Dec. 688 (Ill. 1988), discipline for settling a missing client's case and withdrawing fees without authority

See also

• ISBA Ethics Op. 89-17: Who Is the Client When an Insurer's Staff Lawyer Defends the Insured
• ISBA Ethics Op. 89-14: Lawyer Who Is Also an Insurance Agent

Source

• Landing page: https://www.isba.org/ethics/opinions/8804