In re Allen, No. 49S00-0111-DI-613
| Decision Date | 09 February 2004 |
| Docket Number | No. 49S00-0111-DI-613, No. 45S00-0209-DI-502. |
| Citation | 802 N.E.2d 922 |
| Parties | In the Matter of Michael E. ALLEN, Respondent. In the Matter of Patrick W. Young, Respondent. |
| Court | Indiana Supreme Court |
Kevin McGoff, Indianapolis, IN, Attorney for Respondent Michael E. Allen.
Samuel J. Goodman, Indianapolis, IN, Attorney for Respondent Patrick W. Young. Donald R. Lundberg, Executive Secretary, Seth T. Pruden, Staff Attorney, Indianapolis, IN, Attorney for the Indiana Supreme Court Disciplinary Commission.
Disciplinary Action
Attorneys who, during the course of a representation, receive settlements funds in which a third party has an undisputed legal interest are obligated promptly to deliver those funds to the third party. If entitlement to settlement funds is disputed, an attorney must hold the disputed funds in a separate account until the dispute is resolved.
The Disciplinary Commission has charged respondent attorneys Michael E. Allen and Patrick W. Young with attorney misconduct arising out of factually similar but unrelated incidents involving failure to deliver settlement funds to a third party entitled to receive them or to hold disputed funds separate. The Commission has charged each with violating Ind.Professional Conduct Rule 1.15(b). The respondents have agreed with the Commission upon resolution of the charges. The agreements, which call for the respondents to be publicly reprimanded, are now before us for final resolution. This opinion recounts the facts and circumstances of each case.
Indiana Professional Conduct Rule 1.15(b) provides, in relevant part:
Except as stated in this rule or otherwise permitted by law or agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.
The Comment to Prof.Cond.R. 1.15(b) provides:
Third parties, such as a client's creditors, may have just claims against funds or other property in the lawyer's custody. A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client, and accordingly may refuse to surrender the property to the client. However, a lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party.
Respondent Allen was admitted to this state's bar in 1981. Beginning in 1994, he represented a woman on a claim for injuries she sustained in an automobile accident. During the course of the representation, the woman received $5,212 in chiropractic treatment for her injuries. Allen sent to the chiropractor a "letter of protection," which provided that the doctor would be paid from the proceeds of any personal injury settlement. In 1999, the client's claim settled for $24,259. The client advised Allen that she would pay the chiropractor if the respondent would forward to her sufficient settlement proceeds. Allen did not retain funds to pay the chiropractor, but forwarded $14,135.82 (the settlement proceeds less Allen's fee and amounts due to other medical providers) to the client, believing his client would pay the chiropractor from this amount. The client failed to pay the chiropractor.
The chiropractor who provided services to Allen's client had an undisputed claim to a portion of the settlement proceeds. Neither Allen nor the client disputed the chiropractor's entitlement, and his claim to the funds was memorialized in Allen's agreement (the "letter of protection") with him. Accordingly, Allen violated Prof. Cond.R. 1.15(b) when he failed promptly to deliver to the chiropractor settlement funds to which the chiropractor was entitled.
Respondent Young was admitted to this state's bar in 1984. Beginning in 1998, he also represented a client on a claim for injuries she suffered in an automobile accident. During the proceedings, the client received $4,786 in services from a chiropractor. Young and the client signed a "Doctor's Lien," which provided, inter alia, that the respondent would "withhold such sums from any settlement, judgment, or verdict as may be necessary to adequately protect" the chiropractor. Although $2,021.29 of the chiropractor's bill was paid, a balance of $2,764.71 remained when the client's case settled for $50,000. The client advised Young that she thought the chiropractor had overcharged her for services. She directed Young to pay to the chiropractor only...
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