My personal injury client agreed, verbally in one case and in a signed doctor's lien in another, that treating physicians would be paid from the settlement. Now that the money is in, the client wants me to keep it and not pay the doctors. Can I follow that instruction?

Plain-English summary

An attorney asked the panel about distributing client settlement funds under two related scenarios. In the first, the attorney and client agreed that the attorney would ask the treating medical professionals not to initiate collection proceedings on the condition that they would be paid when a judgment or settlement was obtained; the providers relied on that representation and held off collecting. In the second, the client not only agreed verbally but also signed a form titled "Medical Reports and Doctor's Lien" authorizing the attorney to pay the providers directly from settlement proceeds. In both scenarios, once the funds arrived, the client changed his mind and directed the attorney not to pay the medical debts.

The panel quoted Rule 1.2(d), which bars a lawyer from assisting a client in conduct the lawyer knows is fraudulent. It also pointed to the Interprofessional Code of Cooperation between the Rhode Island Bar Association and the Rhode Island Medical Society (adopted 1985), whose Article 4, sections 4.3 and 4.4 address advising clients that medical bills are their responsibility and obtaining client authority to pay providers directly from a settlement. For the first scenario, the panel took the position that because the client agreed to pay the providers out of the settlement and the providers forwent collection in reliance on that agreement, an attorney who assists the client in violating the agreement would violate Rule 1.2(d). For the second scenario, the panel found that committing the agreement to writing did not change the analysis: where client, provider, and attorney all agree the bills will be paid by the attorney from settlement funds, it violates Rule 1.2(d) for the attorney to accede to the client's later request to disregard the agreement.

The panel added a caution about the specific lien form submitted. It noted that it generally cannot "embark on the task of editing," but observed that the form went beyond the sample language approved in the Interprofessional Code. While it is permissible and desirable for a client to state in writing that he will honor an agreement he makes, the submitted form attempted both to bind some future attorney the client might hire and to have the client agree never to rescind the document and that a rescission "will not be honored by my attorney." The panel held that a client may not be asked to agree to surrender the right to terminate the lawyer's services, so those two portions of the form were impermissible, citing the Comment to Rule 1.2 and the ABA/BNA Manual of Professional Conduct.

Currency note

This opinion was issued in August 1990, after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which reorganized several rules addressed here, and the Interprofessional Code the opinion relies on may have changed. 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 tells me not to pay the doctors after settlement, do I have to follow that instruction?

A: Under this opinion, no, where the client had agreed the providers would be paid from the settlement and the providers relied on that agreement; the panel held that helping the client renege would violate Rule 1.2(d)'s prohibition on assisting fraudulent conduct.

Q: Does it matter whether the agreement to pay the providers was oral or written?

A: No. The panel found that reducing the agreement to a signed doctor's lien did not alter its position; the Rule 1.2(d) violation turns on the existence of the agreement and the providers' reliance, not on its form.

Q: Can a doctor's lien form say the client agrees never to rescind it?

A: No. The panel held that a client may not be asked to surrender the right to terminate the lawyer's services, so a clause stating the client will never rescind the form and that rescission will not be honored by the attorney is impermissible, as is a clause purporting to bind a future substituted attorney.

Background and rules framework

The opinion applies Rule 1.2 of the Rhode Island Rules of Professional Conduct, adopted effective November 15, 1988. Rule 1.2(a) requires a lawyer to abide by the client's decisions concerning the objectives of representation, subject to stated exceptions, and Rule 1.2(d) bars assisting a client in conduct the lawyer knows is fraudulent. The panel read the right-to-discharge principle (reflected in Rule 1.16) into its analysis of the lien form, citing the Comment to Rule 1.2. The panel also drew on the Interprofessional Code of Cooperation between the Rhode Island Bar Association and the Rhode Island Medical Society (1985), Article 4, sections 4.3 and 4.4.

Citations and references

Rules of Professional Conduct:

• MR 1.2 (scope of representation)
• MR 1.16 (declining or terminating representation; right to discharge counsel)
• RI RPC 1.2(a), 1.2(d), as adopted November 15, 1988

Statutes:

• None cited.

Cases:

• None cited.

Other opinions cited:

• RI EAP Digest of Opinion 87-3 (panel generally will not undertake to edit submitted agreements)
• ABA/BNA Manual of Professional Conduct 31:101 et seq.

See also

• RI EAP Op. 2007-02: Provider Claims on Settlement Funds
• RI EAP Op. 2011-04: Disputed Third-Party Funds in an Escrow Account

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%2090-31.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 #90-31, Request #388
Issued August 2, 1990

An attorney seeks Panel guidance as to the proper distribution of client funds under two related circumstances.

The attorney first advises the Panel that he represents a client who is seeking funds in connection with a physical injury. The attorney states that he and his client agreed that the attorney would ask the medical professionals who have provided treatment not to initiate collection proceedings on the condition that they would be compensated when a judgment or settlement was obtained. The attorney states that he did this and that the medical professionals relied upon his representation and did not initiate collection proceedings. Upon receipt of the settlement funds the client changed his mind and directed the attorney not to pay debts incurred for medical treatment. The attorney asks what obligations he now has with regard to the distribution of the settlement funds.

In a second scenario the attorney advises the Panel that he again represents a client seeking funds in connection with a physical injury, but in this scenario the client not only agreed verbally that he would compensate treating medical professionals when a settlement or judgment was obtained but also executed a form entitled "Medical Reports and Doctor's Lien." This form includes the client's authorization to the attorney to pay sums due to medical professionals directly out of settlement proceeds. It provides that the client understands that he or she is fully responsible for medical bills submitted in connection with treatment. The form also includes the following paragraph:

I agree never to rescind this document and that rescission will not be honored by my attorney. I hereby instruct that in the event another attorney is substituted in this matter, the new attorney honor [sic] this lien as inherent to the settlement and enforceable upon the case as if it were executed by him.

Upon receipt of the funds this client too changes his mind and, the agreement notwithstanding, directs the attorney not to pay debts incurred for medical treatment. The attorney asks what obligations he has with regard to the distribution of settlement funds in this second scenario.

Rule 1.2, titled "Scope of Representation" provides, in pertinent part:

(a) A lawyer shall abide by a client's decision concerning the objectives of representation subject to paragraphs (c), (d), (e)

(d) A lawyer shall not . . . assist a client in conduct that the lawyer knows is . . . fraudulent .

The Interprofessional Code of Cooperation for the Rhode Island Bar Association and the Rhode Island Medical Society, (hereinafter "Interprofessional Code") adopted in 1985 includes specific provisions, implementing some of the obligations arising from Rule 1.2 in the contexts described. Article 4, sections 4.3 and 4.4 of the Interprofessional Code provide:

4.3. Attorneys should advise their clients that bills rendered for such medical services by a physician are the sole responsibility of the client and are independent of pending litigation, and that such bills are due and payable when rendered by the physician. Attorneys should also incorporate into their agreements with clients an assurance that treating physicians will be paid unpaid balances from the proceeds of the case.

4.4. Counsel should obtain authority from the client to pay medical bills directly to the physician in the event of a settlement or judgment in accordance herewith.

With regard to the first scenario described, the Panel takes the position that since the client agreed to pay medical professionals out of funds received in settlement and the medical professionals agreed to forgo collection proceedings in reliance on this agreement, if the attorney assists the client in violating this agreement, the attorney will be in violation of Rule 1.2(d).

In the second scenario, the fact that the agreement to pay medical professionals out of settlement proceeds is committed to writing does not alter the Panel's position. The Panel finds that if a client, medical professional and attorney all agree that the bills for medical treatment will be paid to the medical professional by the attorney out of the funds received through settlement then it is a violation of Rule 1.2(d) for the attorney to accede to a client's subsequent request that the attorney disregard the agreement.

The Panel issues a word of caution with regard to the specific agreement form which the attorney submitted for review. The Panel generally cannot "embark on the task of editing." See digest of opinion 87-3. In this case, however, the Interprofessional Code includes sample language approved by both the state's medical and legal associations and designed to describe the various obligations at issue in this inquiry. The language submitted exceeds the reach of the language approved in the Interprofessional Code. It is permissible and desirable for a client to indicate in writing that he will honor the terms of the agreement he makes. The agreement submitted, however, does not simply set forth the client's obligations; it appears to include an attempt to bind some future attorney hired by the client. The agreement submitted also includes a statement which the client is to ratify:

"I agree never to rescind this document and that a rescission will not be honored by my attorney"

A client may not be asked to agree "to surrender the right to terminate the lawyer's services." Two portions of the agreement submitted, both cited above, have this effect and are therefore impermissible. See, Comment, Rule 1.2; ABA/BNA Manual of Professional Conduct 31:101 et seq.

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.