Liens and Ethics

Liens and Ethics

A personal injury attorney’s job is not complete after a settlement or verdict is reached.  In fact, reaching a settlement or verdict is sometimes the easiest part of the case.  Negotiating liens so that a client can keep her settlement/verdict funds has become an ever-increasing burden upon both personal injury attorney and client.

Attorneys must understand the ethical issues involved when negotiating liens and distributing settlement/verdict funds.  Clients should understand that their attorney is doing his best to assure maximum recovery in compliance with his ethical obligations.

The following is a summary of Arizona ethical rules, and law interpreting those rules, that typically arise in lien situations:

    • Arizona Ethics Rule 1.15 – Safekeeping Property

 

  • Arizona Bar Ethics Opinions

Opinion No. 88-02 – January 11, 1988

Opinion No. 88-06 – July 5, 1988

Ethics 97-02: Personal Injury; Settlements; Creditors of Client

Ethics 98-06: Liens, Creditors of Clients; Client Funds and Property; Settlements

Ethics 03-05: Conflicts of Interest; Settlements; Creditors of Client; Indemnify Releasee; Liens

    • In re Augenstein

, 177 Ariz. 581, 870 P.2d 399 (1994) (regarding failure to notify third party of settlement and satisfy lien executed on behalf of client).

    • In re Burns

, 139 Ariz. 487, 679 P.2d 510 (1984) (regarding failure to honor lien of third party).

  • South Carolina Bar Ethics Opinion 05-08 – 2005 WL 1123351 (requiring attorney to hold lien funds in trust when attorney has actual notice of lien, regardless of whether client instructs attorney not to pay lien)
  • Connecticut Bar Ethics Opinion 00-13 – 2000 WL 1370795 (requiring attorney to protect lien holder’s rights when the lien is “established conclusively”)
  • Connecticut Bar Ethics Opinion 98-13 – 2000 WL 993683 (absent “actual knowledge” of lien, there is no need to protect interests of lien holder)
  • Connecticut Bar Ethics Opinion 95-20 – 1995 WL 389639 (lawyer has no duty to seek out potential lien claimants)
  • South Carolina Bar Ethics Opinion 94-20 – 1994 WL 928296 (a lawyer who knows his or her client has made a valid assignment of litigation proceeds to a medical care provider may not ethically ignore the assignee’s rights and pay the assigned funds to the assignor-client)
  • South Carolina Bar Ethics Opinion 93-31 – 1993 WL 928278 (a lawyer does not have an affirmative duty to put health insurer on notice of a tort action. If the health insurer asserts a subrogation right, the lawyer needs to analyze the claim in light of the facts and advise the client as to the best course of action under the circumstances)
  • Alaska Bar Ethics Opinion 05-08 – 2008 WL 4354841 (the subrogated insurer’s right to receive proceeds from the insured plaintiff’s recovery in a lawsuit does not make the insurer a “client” of the lawyer under the ethics rules)
  • Connecticut Bar Ethics Opinion 99-16 – 1999 WL 958022 (lawyer has duty to protect lien holder’s interests when “actual notice” of lien is obtained)
  • Wisconsin Lawyer March 2009 – E-09-01: Third Party Lien on Settlement Proceeds (regarding a lawyer’s responsibilities when a client gives a third party a lien on settlement proceeds).

Should you have any questions about how to handle liens in personal injury cases, please contact Palumbo Wolfe partner,Scott I. Palumbo, at 602-265-5777.

 

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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