What does a Vermont lawyer do with settlement funds when a client's medical provider claims a share?
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This page answers the general question as of 2007. Ask about yours and see what the current Vermont Rules of Professional Conduct say for your facts, with citations.
Plain-English summary
A medical provider sent a personal injury lawyer an agreement the client had signed directing payment of the provider from any settlement or judgment. The provider also requested the lawyer's signature. The committee concluded that Rules 1.15(b) and (c) did not require the lawyer to sign or formally acknowledge the proposed agreement before receiving funds. The lawyer had declined to sign it, and the committee found that response consistent with those rules.
Once settlement funds arrive, the opinion applies Rule 1.15(a) to their deposit in a client trust account. It calls for prompt notice to the client and consultation about the provider's claim. The conclusion directs the lawyer to seek the client's permission to notify the provider, determine whether the distribution is disputed, and keep disputed funds separate until resolution.
The committee expressly declined to decide whether the client's agreement created a valid statutory or equitable lien under Vermont or New Hampshire law. Its analysis addressed the lawyer's ethical handling of funds when the client and provider claim interests in them.
In practice
For the agreement presented, the opinion distinguishes the period before the lawyer receives settlement funds from the period after receipt. It says no Rule 1.15 duty to the provider arose before receipt. After receipt, the lawyer must hold the funds in trust, notify the client, and avoid distributing disputed amounts until the competing claims are resolved.
Common questions
Q: Must the lawyer sign the provider's proposed medical lien agreement?
A: The opinion says there is no ethical obligation to sign it unless the client directs the lawyer to do so. The committee did not decide whether the client's agreement itself created a valid lien.
Q: What happens when the settlement funds arrive?
A: The opinion applies Rule 1.15(a) to deposit the funds in a client trust account. It requires prompt notice to the client, consultation about the provider's claim, and separation of disputed amounts until the dispute is resolved.
Q: Must the lawyer notify the medical provider without the client's direction?
A: The synopsis says the lawyer is not required to notify the provider unless the client directs it. The analysis says Rule 1.15(b) appears to require notice to the provider; the conclusion directs the lawyer to seek the client's permission to notify the provider. The opinion does not reconcile those statements.
Background and rules framework
The committee discussed Vermont Rules of Professional Conduct 1.15(a), (b), and (c) on safeguarding funds, notifying persons with an interest, and separating disputed property. It distinguished an earlier committee opinion, 96-05, and discussed New Hampshire Bar Association Formal Opinion 1998-99-03 because the lawyer in that matter had signed an agreement with the third party.
Citations and references
Rules of Professional Conduct:
- Vermont Rules of Professional Conduct 1.15(a), 1.15(b), 1.15(c)
Other opinions cited:
- Vermont Advisory Opinion 96-05, an earlier medical lien question
- New Hampshire Bar Association Ethics Committee Formal Opinion 1998-99-03, a lawyer's agreement with a lien claimant
See also
Source
- Landing page: Vermont Bar Association medical lien opinions
- Original PDF: Advisory Opinion 07-03
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