March 7, 1983
A lawyer in possession of funds of a client with the lawyer claims as a fee which is in dispute, may retain the funds in a trust account and seek a quick and amicable settlement of the dispute.
If this fails, the lawyer may properly file an action or take other proceedings for an adjudication of the rights of all parties. Due notice of all proceedings must be given to client.
References: MCPR DR 9-102(A)(2); CI-663.
A lawyer successfully handled a social security claim. The lawyer attempted to collect the maximum fee allowed by law, 25 percent of the amount recovered. The lawyer assumed that authorization for lawyer fees was necessary from the Social Security Administration [SSA], but upon inquiry was advised that no money was withheld from the client's benefits, and that the lawyer would need to seek the fee from the client.
The client paid the fee, but subsequently complained that the lawyer failed to obtain proper authorization from SSA. The lawyer recontacted SSA and was informed that they had apparently made a mistake and confused the claim and that the money should have been withheld by the agency and that an authorization should be been obtained. The lawyer may still file for authorization, which takes several months to process. The lawyer placed an amount equivalent to the fee in a trust account and began the authorization process.
The committee shall not answer any inquiries concerning conduct which has already taken place nor is the committee authorized to answer questions of law.
In view of the evident current dissatisfaction of the client concerning the fee arrangement, the lawyer should maintain the trust status of the fee which you have received pending authorization from SSA and notify the client that authorization is being pursued so that the client will have an opportunity to oppose the allowance if desired.
In CI-663, a lawyer who was possession of funds collected on behalf of a client was not allowed to withdraw from the funds any portion belonging to the lawyer which is disputed by the client. MCPR DR 9-102(A)(2). When there is a conflict between lawyer and client about who is entitled to funds in the lawyer's possession and when this conflict is not quickly and amicably resolved, a lawyer may properly file an action for the adjudication of the rights of all the claimants.