If a lawyer holds judgment funds the client is entitled to, must the lawyer pay them to the client even though the losing side's appeal is still pending?

Plain-English summary

Plaintiffs won a money judgment that the Mississippi Supreme Court affirmed, also denying a stay. The defendants then sought review in the U.S. Supreme Court, which denied two stay applications but had not ruled on the merits. The defendants paid the judgment by delivering payment to the plaintiffs' attorney. The plaintiffs demanded their money, and the attorney asked the Committee for guidance given the still-pending appeal.

The opinion turned on Rule 1.15(b), which directs that a lawyer shall, except as otherwise permitted by law or agreement with the client, promptly pay or deliver to the client any funds the client is entitled to receive. The Committee noted that whether the clients were entitled to the funds is a question of law, and that, like the ABA committee in Informal Opinion No. 1376 (1977), it is prohibited from opining on questions of law. Assuming without deciding that the clients were legally entitled to the funds, the Committee concluded the lawyer would be required to pay them on request.

The Committee acknowledged the pending appeal and a possible (if statistically unlikely) reversal could raise future claims over the funds. Even so, if the clients are presently entitled as a matter of law and have requested payment, Rule 1.15(b) commands prompt payment, and the lawyer should advise the clients of the possibility of reversal. If the funds are still in dispute as a matter of law, the lawyer should not distribute them.

In practice

Under this opinion, a Mississippi lawyer holding funds a client is legally entitled to must, on the client's request, promptly pay them out under Rule 1.15(b), even while the opposing party's appeal is pending, and should advise the client of a possible reversal. The opinion conditions that duty on legal entitlement, which the Committee will not decide; where entitlement to the funds remains in genuine legal dispute, the opinion directs the lawyer not to distribute.

Common questions

Q: Must a lawyer release judgment funds to the client while the other side appeals?

A: Per this opinion, yes, if the client is entitled to the funds as a matter of law and requests them; Rule 1.15(b) requires prompt payment, with advice about a possible reversal.

Q: What if it is unclear whether the client is legally entitled to the money?

A: The opinion says the Committee cannot decide the legal-entitlement question, and that if the funds are still in dispute as a matter of law, the lawyer should not distribute them.

Q: Does the lawyer have to warn the client about the pending appeal?

A: Yes. The opinion directs that, in paying the funds, the lawyer shall advise the clients of the possibility of appellate reversal.

Background and rules framework

The opinion applies Mississippi Rule of Professional Conduct 1.15 (safekeeping property, the analog of Model Rule 1.15), specifically Rule 1.15(b)'s duty to promptly deliver funds a client is entitled to receive. It treats the underlying entitlement as a legal question outside the Committee's authority, following ABA Informal Opinion No. 1376 (1977).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.15 / Mississippi Rule 1.15: safekeeping property (Rule 1.15(b) on prompt delivery of funds the client is entitled to receive).

Other opinions cited:

• ABA Committee on Ethics & Professional Responsibility, Informal Opinion No. 1376 (February 18, 1977): entitlement to funds is a question of law the committee may not decide.

See also

• MS Bar Ethics Op. 184: Third-Party Claims on Funds
• MS Bar Ethics Op. 244: Lis Pendens for Fees
• MS Bar Ethics Op. 243: Unclaimed Trust Funds

Source

• Landing page: https://www.msbar.org/ethics-discipline/ethics-opinions/formal-opinions/121/
• Original PDF: https://www.msbar.org/media/1029/et_op_121-amended.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

ETHICS OPINION NO. 121

OF THE MISSISSIPPI BAR

RENDERED June 15, 1986

AMENDED April 17, 2013

CLIENT FUNDS - Where a lawyer possesses funds which his client is entitled to receive in payment of a favorable court judgment, the lawyer shall promptly pay such funds to the client at the client's request even though a pending appeal may raise future questions concerning the funds.

The Ethics Committee of the Mississippi Bar has been asked to render its opinion on the following situation:

After the plaintiffs in a civil lawsuit received a money judgment, the defendants appealed to the Supreme Court of Mississippi which affirmed the lower court's judgment and denied the defendants' application for a stay of execution and enforcement of the judgment. The defendants then appealed to the United States Supreme Court which denied two separate stay applications by the defendants but which has not yet ruled on the merits of the appeal. The defendants then paid the amount of the judgment to the plaintiffs and their attorney by delivering the payment to the plaintiffs' attorney. The plaintiffs have demanded that their attorney turn the money over to them. In turn, their attorney has asked this Committee for ethical guidance.

While the Committee has been unable to locate any precedents which squarely address this situation, Rule 1.15(b) of the Mississippi Rules of Professional Conduct ("MRPC") directs that a lawyer shall "except as . . . otherwise permitted by law or agreement with the client . . . promptly pay or deliver to the client . . . any funds or other property the client is entitled to receive."

Here, the lawyer has possession of the funds, and the clients have requested that the funds be paid to them. However, the client's entitlement to receive the funds is a question of law, see ABA Comm. on Ethics & Professional Responsibility, Informal Opinion No. 1376, at 2 (Feb. 18, 1977) and like the ABA's Committee on Ethics & Professional Responsibility, id, this Committee is prohibited from rendering opinions on questions of law. Assuming, without deciding, that the clients here are entitled as a matter of law to receive the funds in payment of the judgment which their lawyer has in his possession, the Committee is of the opinion that the lawyer would be required to pay such funds to the clients at their request.

The Committee recognizes that the pendency of the appeal and a possible future reversal, however statistically unlikely, may raise future claims between the plaintiffs and the defendants as to the funds. Nevertheless, if the clients are presently entitled as a matter law to the funds in the possession of their lawyer and they have requested payment by the lawyer, then Rule 1.15(b), MRPC, commands the lawyer to promptly pay such funds to the clients. In so doing, the lawyer shall advise the clients of the possibility of appellate reversal. However, if the funds are still in dispute as a matter of law the lawyer should not distribute the funds.