I'm holding a minor's personal-injury settlement check, but the child has since been placed in foster care. How should I distribute the funds?
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This page answers the general question as of 1991. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
The inquiring attorney reached a personal injury settlement in favor of a minor child before the child was placed in foster care, and the attorney is holding the settlement check. The attorney asked the panel how to proceed.
The panel took the position that the attorney should bring an interpleader action and join all appropriate parties, including the insurance company, as parties seeking a determination as to how the settlement proceeds should be distributed. Pending the court's decision, the attorney should not take the legal fee or do anything to diminish the proceeds in any respect.
The panel added that joining the insurance company in the interpleader action will achieve full notice to it of the changed circumstances in the case.
Currency note
This opinion was issued in 1991, 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 renumbered and amended several provisions. 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 Treat this page as historical context, not current guidance.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: What did the panel say I should do with the minor's settlement funds?
A: Per the opinion, bring an interpleader action and join all appropriate parties, including the insurance company, and ask the court to determine how the proceeds should be distributed.
Q: Can I take my legal fee while the distribution question is pending?
A: No. Per the opinion, pending the court's decision the attorney should not take the legal fee or do anything to diminish the proceeds in any respect.
Q: Why join the insurance company?
A: Per the opinion, joining the insurance company in the interpleader action achieves full notice to it of the changed circumstances in the case.
Background and rules framework
The opinion cites no numbered Rule of Professional Conduct. It resolves the question on the general principle governing a lawyer who holds settlement funds subject to competing or uncertain claims: rather than deciding distribution unilaterally, the lawyer places the funds before the court through interpleader and preserves them intact until the court rules. That approach mirrors the safekeeping-of-property duty later associated with Model Rule 1.15, which the panel did not cite here.
Citations and references
Rules of Professional Conduct:
- None cited. The panel resolved the inquiry on the general duty to preserve settlement funds and submit their distribution to the court through interpleader.
Statutes:
- None cited.
Cases:
- None cited.
Other opinions cited:
- None cited.
See also
- RI EAP Op. 91-37: When a Client Refuses to Pay Medical Bills From a Settlement
- RI EAP Op. 91-53: Holding Disputed Fee Funds in Escrow
- RI EAP Op. 97-17: Protecting Disputed Medical-Lien Funds in Trust
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%2091-66.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 #91-66, Request #136
Issued September 19, 1991
An attorney seeks Panel advice regarding a guardianship case in which a personal injury settlement in favor of a minor child was reached prior to the child's being placed in foster care. The attorney is holding the settlement check.
The Panel is of the opinion that the attorney should bring an interpleader action and join all appropriate parties, including the insurance company, as parties seeking a determination as to how the settlement proceeds should be distributed. Pending the court's decision, the attorney should not take the legal fee or do anything to diminish the proceeds in any respect.
Joining the insurance company in the interpleader action will achieve full notice to it of the changed circumstances in the case.
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