A prior attorney has a disputed lien on my client's file. The case settled and I'm holding the funds. Do I pay the client, who says the lien is frivolous, or the prior lawyer?

Plain-English summary

The inquiring attorney's client had a lien placed on the file by a previous attorney. Once the case settled, monies were disbursed and held pursuant to Rule 1.15. The client filed a disciplinary action against the previous attorney alleging the lien was frivolous, and requested that the remaining monies on deposit with the inquiring attorney be paid to the client and not the previous attorney.

As a threshold matter, the panel declined to comment on the past conduct of an inquiring attorney, noting that Rule 2(d) of the Ethics Advisory Panel allows it to decline to render an advisory opinion when the request requires a determination about past conduct. The panel said it could comment on the attorney's disbursing the funds held by him that are subject to the attorney's lien, and that Rule 1.15(b) ("Safekeeping Property") governs. The panel quoted Rule 1.15(b), under which a lawyer receiving funds in which a client or third person has an interest shall promptly notify them and, except as otherwise provided, promptly deliver funds the client or third person is entitled to receive and render a full accounting on request.

Citing the comments to Rule 1.15, the panel observed that third parties such as a client's creditors may have just claims against funds in a lawyer's custody, that a lawyer may have a duty to protect such claims against wrongful interference by the client and may refuse to surrender the property, but that a lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party. The panel advised the attorney again suggest the Bar Association's fee arbitration program; in the interim, the disputed amount of the attorney's lien may be kept separate and not disbursed until the dispute is resolved. If the fee dispute cannot be resolved, the attorney may need to seek guidance from the proper tribunal in the form of an interpleader action.

In practice

Under this opinion, a lawyer holding settlement funds subject to a prior attorney's disputed lien should not decide the dispute or release the disputed amount to the client on demand; the funds fall under Rule 1.15's safekeeping-property duties. The opinion holds the disputed amount may be kept separate and undisbursed until the dispute resolves, that the lawyer should point the client to the Bar Association's fee arbitration program, and that interpleader is an available route to the proper tribunal if the dispute cannot be resolved.

Common questions

Q: Can I just pay the disputed funds to my client because the lien seems frivolous?

A: Per the opinion, no; the lawyer should not unilaterally arbitrate the dispute, and under Rule 1.15(b) the disputed amount may be kept separate and not disbursed until the dispute is resolved.

Q: What should I do with the disputed lien amount in the meantime?

A: Per the opinion, keep the disputed amount of the attorney's lien separate and undisbursed until the dispute is resolved, and again suggest the Bar Association's fee arbitration program.

Q: What if the fee dispute can't be resolved?

A: Per the opinion, the attorney may need to seek guidance from the proper tribunal in the form of an interpleader action.

Q: Why didn't the panel address the prior attorney's conduct?

A: Per the opinion, Rule 2(d) of the Ethics Advisory Panel lets it decline to render an opinion when the request requires a determination about past conduct.

Background and rules framework

The opinion applies Rhode Island Rule 1.15 (safekeeping property), corresponding to Model Rule 1.15, quoting Rule 1.15(b)'s prompt-notice, delivery, and accounting duties, and relies on the comments to Rule 1.15 regarding third-party claims and the prohibition on a lawyer unilaterally arbitrating a client-third party dispute. The panel also invoked its own procedural Rule 2(d) to decline commenting on past conduct.

Citations and references

Rules of Professional Conduct:

• MR 1.15 (safekeeping property)
• RI RPC 1.15(b); comments to Rule 1.15

Statutes:

• None cited.

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• RI EAP Op. 92-61: A Prior Attorney's Lien Divided by Quantum Meruit
• RI EAP Op. 91-53: Must Hold Disputed Fee Funds in Escrow Until Resolved
• RI EAP Op. 90-13: Reporting Duty Over Prior Counsel's Lien and Quantum Meruit Fee

Currency note

This opinion was issued in 1992 (Opinion 92-82, issued November 18, 1992), after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 1.15 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, which amended Rule 1.15 (safekeeping property). 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.

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%2092-82.pdf

Original opinion text

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

ETHICS ADVISORY PANEL
Opinion 92-82, Request #310
Issued November 18, 1992

An attorney seeks Panel advice regarding the following situation. The attorney's client has had a lien placed on the file by a previous attorney. Once the case settled, the inquiring attorney reports that monies were disbursed and held pursuant to Rule 1.15. The client filed a disciplinary action against the previous attorney alleging the lien was frivolous. The client requests that the remaining monies on deposit with the inquiring attorney should be paid to the client and not the previous attorney.

As a threshold matter, the Panel declines to comment on the past conduct of an inquiring attorney. Rule 2(d) of the Ethics Advisory Panel states that the Panel may decline to render an advisory opinion when the request requires a determination to be made concerning past conduct.

The Panel may comment, however, regarding the attorney disbursing the funds held by him which are subject to the attorney's lien. The Panel believes that Rule 1.15(b) entitled "Safekeeping Property" governs this inquiry. The Rule states that:

(b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third persons, shall promptly render a full accounting regarding such property.

In addition, the Comments to Rule 1.15 state that:

Third parties, such as a client's creditors, may have just claims against funds or other property in a lawyer's custody. A lawyer may have a duty under applicable law to protect such third party claims against wrongful interference by the client, and accordingly may refuse to surrender the property to the client. However, a lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party.

The Panel agrees that the requesting attorney should again suggest to the client that the fee arbitration program established by the Bar Association may provide a means for resolving this matter. In the interim, the disputed amount of the attorney's lien may be kept separate by the inquiring attorney and not disbursed until the dispute is resolved. If the fee dispute between the parties cannot be resolved, then the attorney may need to seek the guidance from the proper tribunal in the form of an interpleader action.