My new client discharged his first personal injury attorney after rejecting a settlement offer, and that attorney filed a lien for one-third of the rejected offer. Do I have to report the first attorney, and what fee is he entitled to?

Plain-English summary

A client contacted the attorney to seek representation in a personal injury matter after just discharging his prior attorney. The client told the attorney that the first attorney had obtained a settlement offer the client found unacceptable and refused. On reviewing the client's file, the attorney found the first attorney had filed a lien equal to one-third of the rejected settlement offer, which the inquiring attorney felt effectively prevented the client from obtaining effective representation. The attorney asked the panel what steps, if any, he should take. As a secondary matter, the attorney separately asked about a different client who had refused a settlement offer he obtained and then discharged him: should his own fee be a percentage of that offer, or calculated on a quantum meruit basis?

The panel stated its rules do not empower it to rule on the propriety of conduct by an attorney other than the inquiring attorney, but noted it is well settled that an attorney who obtains a settlement offer a client refuses, and who is subsequently discharged, is entitled to payment on a quantum meruit basis only, citing its own Digest of Ethics Advisory Panel Opinion 89-21 and the cases cited therein. The panel then quoted Rule 8.3(a)'s mandatory reporting requirement and its comment limiting the obligation to offenses a self-regulating profession must vigorously prevent, with "substantial" referring to the seriousness of the possible offense rather than the quantum of evidence. Citing Professor Hazard's treatise, the panel reiterated that society does not impose a general duty to report crime, that an enforced "snitch rule" could weaken the profession, and that merely technical violations would not qualify for mandatory reporting, whereas destruction of subpoenaed evidence, suborning perjury, or self-dealing with trust funds would. It again discussed In re Himmel, in which the Illinois Supreme Court suspended a lawyer's license for failing to report another attorney's fraudulent conversion of client funds. The panel held that if the attorney reasonably believes the first attorney's conduct rose to the requisite level of seriousness, Rule 8.3 obligates him to report it and his reporting would be protected; if he does not reasonably believe that, he is under no obligation to report it. On the secondary fee question, the panel took the position that in the circumstance described, the discharged attorney is entitled to an attorney's lien calculated on a quantum meruit basis only.

Currency note

This opinion was issued in February 1990, after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 8.3 as originally adopted. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process. 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 mentioned here.

Common questions

Q: If my client's prior attorney filed a lien for a large share of a rejected settlement offer, must I report that attorney?

A: It depends on the inquiring attorney's own reasonable belief. The panel held that if he reasonably believes the prior attorney's conduct rose to the requisite level of seriousness, Rule 8.3 obligates him to report it; if not, he has no obligation to report it.

Q: What fee is an attorney entitled to if the client rejects a settlement offer and then discharges the attorney?

A: The panel stated it is well settled, citing its own Opinion 89-21, that an attorney who obtains a settlement offer the client refuses and is then discharged is entitled to payment on a quantum meruit basis only.

Q: Can the panel decide whether my client's former attorney actually did something wrong?

A: No. The panel stated its rules do not empower it to rule on the propriety of conduct by an attorney other than the inquiring attorney.

Background and rules framework

The opinion applies Rule 8.3(a) of the Rhode Island Rules of Professional Conduct, as adopted effective November 15, 1988, requiring a lawyer with knowledge of another lawyer's substantial rule violation to report it, and reaffirms the panel's quantum meruit rule for discharged counsel from its own Opinion 89-21, in response to an inquiry about a discharged attorney's lien and a related fee question for a different discharged-attorney scenario.

Citations and references

Rules of Professional Conduct:

• MR 8.3 (reporting professional misconduct)
• RI RPC 8.3(a), as adopted November 15, 1988

Statutes:

• None cited.

Cases:

• In re Himmel, 533 N.E.2d 790, 125 Ill.2d 531, 127 Ill. Dec. 708 (Ill. 1989), cited for suspension of an attorney's license for failing to report another lawyer's fraudulent conversion of client funds under the reporting rule's predecessor, DR 1-103(a).

Other opinions cited:

• RI EAP Digest of Ethics Advisory Panel Opinion 89-21, cited for the rule that a discharged attorney who obtained a rejected settlement offer is entitled to a quantum meruit fee only.

See also

• RI EAP Op. 89-21: One-Third Fee on Gross Settlement Proceeds However Denominated Is Permissible, but a Discharge-Contingent File Lien Is Not
• RI EAP Op. 90-04: Reporting Duty, Rule 8.3
• ABA Formal Op. 487: Fee Division with Client's Prior Counsel

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2090-13.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

DIGEST OF ETHICS ADVISORY PANEL

OPINION 90-13, REQUEST 86
Issued February 27, 1990

An attorney seeks Panel advice as to the proper course of action under the circumstances he describes. The attorney states that he has been contacted by a client who has requested that the attorney represent him in connection with a personal injury. The attorney indicates that the client has just discharged another attorney who had represented him up to this point. The client told the attorney that his first attorney obtained an offer of settlement which the client found unacceptable and refused. The attorney states that upon reviewing the client's file, he found that the first attorney filed a lien equal to one third of the rejected settlement offer. The attorney states that he feels the existence of this lien effectively prevents the client from obtaining effective representation. The attorney asks what steps, if any he should take.

The Panel's Rules do not empower it to rule on the propriety of attorney conduct other than that of the inquiring attorney. It is well settled, however, that an attorney who obtains a settlement offer which a client refuses and who is subsequently discharged by the client is entitled to payment on a quantum meruit basis only. See Digest of Ethics Advisory Panel Opinion 89-21 and the cases cited therein.

Rule 8.3, entitled "Reporting Professional Misconduct" provides, in pertinent part:

(a) A lawyer having knowledge that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects shall inform the appropriate professional authority.

The comment to this rule provides, in pertinent part:

This Rule limits the reporting obligation to those offenses that a self-regulating professional must vigorously endeavor to prevent. A measure of judgment is, therefore, required . . . The term "substantial" refers to the seriousness of the possible offense and not the quantum of evidence of which the lawyer is aware.

In his analysis of the scope of Rule 8.3 Professor Hazard notes that "although the duty to report violations is an important aspect of the bar's self governance . . . [o]ur society, unlike some others, does not impose a general duty to report crime, even serious crime." Professor Hazard goes on to note that "an enforced 'snitch rule' could weaken the profession . . . by breeding mutual suspicion." I G. Hazard The Law of Lawyering, 555-556. Explaining the scope of Rule 8.3, Professor Hazard notes that "[m]erely technical violations . . . would not qualify [under the mandatory reporting provisions of Rule 8.3] whereas destruction of evidence under subpoena, suborning perjury or self-dealing with trust funds would." Id. at 556.

Rule 8.3 simply outlines the scope of mandatory reporting on one's fellow attorney. Attorneys may report lesser infractions to the appropriate authorities as they see fit.

The Illinois Supreme Court had occasion to review the application of this reporting requirement as it was formerly embodied in DR 1-103(a) in In re Himmel, 533 N.E.2d 790, 125 Ill.2d 531, 127 Ill. Dec. 708 (1989). The court found that Attorney Himmel's failure to report unprivileged information concerning another attorney's fraudulent conversion of client funds warranted suspension of his license. In so holding the court stressed that Himmel's failure to report his brother attorney's misconduct had effectively frustrated any disciplinary authority investigation and was thus tantamount to interference with the administration of justice.

The Panel takes the position that if the attorney reasonably believes that the conduct of the opposing counsel rose to the level of seriousness outlined above, then Rule 8.3 obligates him to report it to the disciplinary authorities, and his conduct in this respect would be protected. If, however, the attorney does not reasonably believe that the conduct rose to the requisite level of seriousness then the Panel takes the position that the attorney is under no obligation to report it to the disciplinary authorities.

As a secondary part of his inquiry the attorney advises the Panel that he obtained a settlement offer for a different client which the client refused. This client now wishes to retain other counsel. The attorney asks the Panel whether the attorneys fee should be a percentage of the offer or whether it ought to be calculated on a quantum meruit basis. The Panel takes the position that in this circumstance one is entitled to an attorney's lien calculated on a quantum meruit basis only.

Ethics Advisory Panel advice is protective in nature. There is no requirement that an attorney abide by a Panel opinion, but if he or she does, he or she is fully protected from any charge of impropriety.