When a client stops responding, can the lawyer take a fee and pay a doctor's lien out of the client's trust funds without the client's direction?

Plain-English summary

Lawyer L represented Ms. B for injuries from an auto accident, but she stopped cooperating, ignoring letters and calls and refusing a certified letter, leaving L unable to continue the representation. A $353.00 balance remained in the trust account on Ms. B's behalf, representing medical-payments coverage L had obtained as a courtesy without deducting a fee. L felt entitled to some fee for substantial time spent, and Ms. B had signed a doctor's lien in favor of Dr. K. L repeatedly asked Ms. B to authorize disbursing the balance to Dr. K and to himself, with no response. The inquiry asked whether L may take a reasonable fee from the balance and forward the remainder to the physician.

The opinion concluded the answer was no. It explained that Rule 10.2(E) requires a lawyer holding client funds in trust to pay or deliver those funds only as directed by the client. Because Ms. B had given no direction about the disbursement, Lawyer L should continue to hold the money in trust. The opinion added that, although there appeared to be a valid physician's lien against some portion of the trust funds, Lawyer L should refrain from disbursing any money to Dr. K until he obtained the client's consent to pay some or all of the amount billed, or was required to pay a liquidated amount by a valid court order, and that any funds subject to an ongoing dispute should be retained in trust.

Currency note

This opinion was issued in 1989, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. The trust-account provision it applies (Rule 10.2(E)) has since been renumbered and revised (the corresponding Model Rule is 1.15). 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 Treat this page as historical context, not current guidance.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, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer take a fee from a client's trust funds when the client won't respond?

A: No. The opinion concluded that, absent the client's direction, the lawyer must continue to hold the funds in trust and may not take a fee from them.

Q: Can the lawyer pay a doctor's lien out of the trust balance?

A: Not without the client's consent or a valid court order. The opinion concluded the lawyer should refrain from paying the physician until one of those occurs.

Q: What happens to funds that are in dispute?

A: The opinion stated that any funds subject to an ongoing dispute should be retained in trust.

Background and rules framework

The opinion applied North Carolina Rule 10.2(E), which requires a lawyer holding client funds in trust to pay or deliver them only as the client directs (corresponding to Model Rule 1.15). The analysis treats the client's silence as the absence of direction, which leaves the lawyer no authority to disburse to himself or to a lienholder, and treats disputed funds as money that must stay in trust.

Citations and references

Rules of Professional Conduct:

• North Carolina Rule 10.2(E) (paying or delivering entrusted funds only as the client directs)
• MR 1.15 (safekeeping property; disputed funds)

See also

• NC Ethics Op. RPC 125: disbursement of settlement proceeds
• NC Ethics Op. RPC 127: conditional delivery of settlement proceeds

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-75/

Original opinion text

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

Inquiry:

Last year Lawyer L began representation of Ms. B for injuries she received in an automobile accident. Since that time Ms. B has failed to cooperate in the processing of her claim, has not given any response to numerous letters, has not returned telephone messages, and has not accepted a certified letter. Lawyer L feels that he is no longer in a position to provide representation to Ms. B based on her lack of cooperation.

The question which has arisen deals with a $353.00 balance which is maintained in the trust account on behalf of Ms. B. This represents a portion of the medical payments coverage which was received on behalf of Ms. B. Lawyer L generally obtains medical payments coverage for his clients as a courtesy with no deduction of legal fees. However, Lawyer L has spent a great deal of time on this case and feels that he should be entitled to some fee. Additionally, Ms. B has signed a doctor's lien in favor of Dr. K.

Lawyer L has on several occasions written Ms. B asking her to authorize him to disburse this amount to Dr. K for his outstanding expenses and to himself in payment for legal services performed. There has been no response. May Lawyer L ethically take a reasonable legal fee from this balance and forward the remainder to Ms. B's physician for his services?

Opinion:

No. Rule 10.2(E) of the Rules of Professional Conduct requires a lawyer holding client funds in trust to pay or deliver those funds only as directed by the client. In this case the client has evidently not offered any direction regarding the disbursement of the funds in question and Lawyer L should therefore continue to hold this money in trust. Although there would appear to be a valid physician's lien against some portion of the trust funds, Lawyer L should refrain from disbursing any money to Doctor K until he obtains his client's consent to pay some or all of the amount billed or is required to pay some liquidated amount by a valid court order. Any funds which are the subject of an ongoing dispute should be retained in trust.