UTAH STATE BAR ETHICS ADVISORY OPINION COMMITTEE
Opinion Number 11-01
Issued August 24, 2011
1. ISSUE: Two interrelated issues are before the Committee: First, may an attorney representing a plaintiff in a personal injury action indemnify and hold harmless a party being released from any medical expenses and/or liens which might remain unpaid after the settlement funds are fully disbursed? Second, in a personal injury action, may an attorney request another attorney to indemnify and hold harmless a party being released from any medical expenses and/or liens which might remain unpaid after the settlement funds are fully disbursed?
2. OPINION: It is a violation of the Utah Rules of Professional Conduct and improper for a plaintiff’s or claimant’s lawyer to personally agree to indemnify the opposing party from any and all claims by third persons to the settlement funds. As it is professional misconduct for a lawyer to “knowingly assist or induce” another lawyer to violate the Utah Rules of Professional Conduct, it is improper for a lawyer to request a plaintiff’s or claimant’s attorney to indemnify or hold harmless a party being released from third party claims which may remain unpaid after the settlement funds are fully disbursed.
(Approved June 2, 2000)
Issue: What are a lawyer’s ethical duties to a third person who claims an interest in proceeds of a personal injury settlement or award received by the lawyer?
Opinion: When a lawyer receives funds or property and knows a third person claims an interest in the funds or property, the lawyer must first determine whether the third person has a sufficient interest to trigger the duties stated in Rule 1.15(b). Only a matured legal or equitable claim-such as a valid assignment, a judgment lien, or a statutory lien-constitutes an interest within the meaning of Rule 1.15 so as to trigger duties to third persons under Rule 1.15. If no such interest exists, the lawyer may disburse the funds or property to the client. If such an interest exists, the lawyer must comply with the duties stated in Rule 1.15. Where the client does not have a good-faith basis to dispute the third person’s interest, the lawyer must promptly notify the third person, promptly disburse any funds or property to the third person to which that person is entitled, and render a full accounting when requested. If the client has a good-faith basis to dispute the third person’s interest, and instructs the lawyer not to disburse the funds or property to the third person, the lawyer must promptly notify the third person that the lawyer has received the funds or property and then must protect the funds or property until the dispute is resolved. (more…)
(Approved January 24, 1997)
Issue: What is the ethical obligation of an attorney to a client or former client, when the attorney is unable to locate the client, and the attorney is holding trust funds on behalf of that client?
Opinion: The first obligation of an attorney under these circumstances is to secure the funds on behalf of the client1as against all other possible claimants. In other words, if the funds are still held in the form of a check, the attorney should take care to endorse the check and deposit it into the attorney’s trust account to insure that the funds are not eventually lost to the client simply by the passage of time or the expiration of the client’s right to negotiate the instrument. (more…)
(Approved May 30, 1997)
Issue: Is a lawyer, acting as a trustee under the United States Bankruptcy Code, required to maintain bankruptcy estate trust funds in a financial institution that complies with check-overdraft reporting requirements described in Rule 1.15?
Opinion: No. A lawyer, acting as a trustee under the United States Bankruptcy Code, is not required to maintain funds in a financial institution that complies with the check-overdraft reporting requirements of Rule 1.15, because the administration of such bankruptcy funds is not the practice of law.
Facts: Pursuant to 11 U.S.C. § 1302, the United States Trustee appointed a lawyer as a Chapter 13 trustee for the District of Utah.1As a Chapter 13 trustee, the lawyer is a fiduciary for Chapter 13 estates created upon filing a petition for relief under Chapter 13 of the Bankruptcy Code. On behalf of the Chapter 13 estate, the trustee receives money from Chapter 13 debtors. The trustee is bonded, submits regular reports and is audited on a regular basis by the United States Trustee. (more…)
(Approved July 3, 1996)
Issue: May a lawyer choose a law-related charitable institution other than the Utah Bar Foundation to be the recipient of trust-account interest that is generated in such nominal amounts that it is impractical to pay them to individual clients?
Opinion: Because the Utah Supreme Court’s approval of the Utah State Bar’s “interest on lawyers’ trust accounts” (IOLTA) program is specifically limited to the Bar’s original proposal to dedicate small-interest amounts to the Utah State Bar Foundation, a lawyer who remits interest to a different charitable institution would violate Rule 1.15 of the Utah Rules of Professional Conduct unless the Court specifically authorizes another recipient. (more…)