The Law Trumps a Client’s Directive for Payment

January 4, 2018

Suppose you are a personal injury attorney.  The client has agreed to the settlement and when it comes time to go over the settlement disbursement summary, the client balks at paying a particular medical provider.  Suppose, also, that this medical provider has perfected a valid lien pursuant to G.S. §44-49(a).  Until recently, the State Bar had said that the attorney may pay the medical provider over the client’s objection, with the implication that the decision to do so was within the sound discretion of the attorney.  No more.  Now, pursuant to a recent ethics opinion (2017 FEO 4), if the settlement funds are subject to a perfected statutory lien, the attorney MUST pay the medical provider, even over the client’s objection.

The ethics opinion does indicate that if the client has a valid dispute with the provider about the amount of the charges or whether they were in fact incurred, the attorney must leave the disputed funds in trust.  The attorney may release the funds when the dispute is resolved.  The attorney must, however, inform the client that “absent a prompt resolution of Provider A’s claim that is satisfactory to both parties, Lawyer will eventually be obligated to deposit the funds into the court for disposition. In the interim, if a final judgment is entered on Provider A’s claim such that the claim is no longer in dispute, pursuant to N.C. Gen. Stat. § 44-50, Lawyer must pay Provider A over the client’s objections.”  This section of the opinion creates an affirmative duty to interplead the funds if there is no prompt resolution.  The attorney may not continue to hold the disputed funds indefinitely or even for a lengthy period of time.

Suppose the client then refuses to settle because he or she does not want to pay a provider, or perhaps your attorney fee either.  Well, that’s the subject of a different blog.


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