Can a lawyer pay a withdrawn prior attorney's lien out of settlement funds when the client objects?

Plain-English summary

Attorney A withdrew from a case, and Attorney B settled it. Attorney B asked the clients to release funds to Attorney A to obtain a release of Attorney A's lien, believing that Attorney A's expenses were needed and that a quantum meruit fee was reasonable, and that there was no dispute between the attorneys. The clients objected to paying any money to Attorney A. Attorney B was reluctant to pay Attorney A given the clients' instructions, and asked whether he could reimburse Attorney A's expenses and share the fees despite the clients' objection.

The opinion quoted Rule 1.15(c): when a lawyer holds property in which both the lawyer and another person claim interests, the property must be kept separate until there is an accounting and severance of their interests, and any portion in dispute must be kept separate until the dispute is resolved. Although the dispute here appeared to be between the client and Attorney A, the opinion concluded that Attorney B should keep the disputed amount separate under Rule 1.15 until that dispute is resolved. Because Attorney B had an interest in the matter, the opinion concluded he could represent the client in resolving the dispute only in compliance with Rule 1.7(b).

Currency note

This opinion was issued in 1992, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in May 2010 as generally consistent with the 2010 Rules (pointing to Rules 1.7 and 1.15(e)), while noting the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer pay a prior attorney's lien from settlement funds when the client objects?

A: The opinion concluded the lawyer may not pay over the client's objection; the disputed amount must be held separately under Rule 1.15(c) until the dispute is resolved.

Q: Does it matter that the two attorneys do not dispute the amount?

A: The opinion concluded that even though the dispute appeared to be between the client and the prior attorney, the lawyer holding the funds must keep the disputed portion separate until that dispute is resolved.

Q: Can the lawyer represent the client in the fee dispute?

A: The opinion concluded the lawyer, having an interest in the matter, may represent the client in resolving the dispute only in compliance with Rule 1.7(b).

Background and rules framework

The opinion interpreted Rule 1.15(c) (safekeeping property in which a third person claims an interest; holding disputed funds separately) and Rule 1.7(b) (conflicts where the lawyer's own interest may materially limit the representation) (Model Rules 1.15, 1.7).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.15 (safekeeping property) / Illinois Rule 1.15(c)
• Model Rule 1.7 (conflict of interest) / Illinois Rule 1.7(b)

See also

• ISBA Ethics Op. 93-03: Reporting Loans; Disputed Funds
• ISBA Ethics Op. 02-02: Fees From a Dissolved Client's Trust

Source

• Landing page: https://www.isba.org/ethics/opinions/9116