Thursday, May 2, 2013
We reported on a March 28 decision of the District of Columbia Court of Appeals that held prospectively that, when an attorney promptly learns of a dispute over funds disbursed as legal fees, the attorney must return the funds to escrow pending resolution of the dispute.
Well, such a result is far too protective of client interests for the Board on Lawyer Absolution (oops, I meant the Board on Professional Responsibility) to tolerate.
The BPR now seeks rehearing a rehearing or rehearing en banc.
...the division's decision potentially holds legal fees legitimately disbursed from trust pursuant to a written retainer or other writing hostage to the after-the-fact frivolous objections of a disgruntled client, and gives the client unprecedented leverage to negotiate a discount - particularly if the lawyer believes he may be facing a charge of misappropriation for having spent the fee. Apart from the obvious unfairness in such a result, the ruling poses practical problems for the administration of a law office, and particularly for solo and small practicioners, who may need the funds to meet office or living expenses.
Read the court's opinion and you will see how little the board's "parade of horribles" relates to the actual facts and the division's holding:
We hold that substantial evidence supported the Hearing Committee's finding that [the attorney] was aware of a dispute prior to disbursing [the client's] settlement award...
We are unconvinced by the Board's reasoning that, once disbursed, funds can "no longer [be] client or protected funds." If disbursing funds from a client trust account automatically removed the funds from the protection of Rule 1.15, an attorney could easily circumvent the protections afforded by this rule by disbursing putatively earned fees without ever providing clients an opportunity to dispute the fee...We cannot accept an interpretation of the rule that would so easily allow an attorney to circumvent its protections.
It's hard to believe that the board has the audacity to attack this reasoning and result.
Also, please excuse my skepticism that the board really cares about solo and small firm lawyers.
Will these people ever think about protecting people when lawyers are entrusted with their funds?
I won't hold my breath. (Mike Frisch)