Opinion 91-3
(March 1991)

The Committee has been asked whether, under the circumstances outlined below, the inquiring attorney ("Inquirer"), counsel for a plaintiff in a personal injury action, may accept payment of the attorney's contingent fee directly from the defendant's insurance carrier. We understand the facts pertinent to this inquiry to be as follows.


Approximately one year ago, Inquirer's firm ("Firm") negotiated a $6,000 settlement for the plaintiff in a personal injury matter. Before distribution, however, the plaintiff died of causes unrelated to the matter without having executed a release. The Committee assumes that the plaintiff also did not consent to the schedule of distribution of the settlement proceeds. The plaintiff's widow now refuses to open an estate to facilitate consummation of the settlement.

The defendant's insurance company proposes to pay the settlement amount by check payable directly to the Firm. The Inquirer and Firm believe that they have earned their 40% contingent fee are therefore entitled to payment of it and an amount sufficient to pay the remaining bills to the medical providers who treated the plaintiff for the personal injuries he sustained in the underlying accident. The Inquirer asks whether the fee may ethically be paid directly to the Firm by the defendant's insurance carrier.

Rule 1.8(f) of the Rules of Professional Conduct states:

A lawyer shall not accept compensation for representing a client from one other than the client unless:

(1) the client consents after full disclosure of the circumstances and consultation;

(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and

(3) information relating to representation of a client is protected as required by Rule 1.6.

The Committee assumes (and does not opine as to) the Firm's legal entitlement to the contingent fee it claims. Irrespective of such entitlement, it is clear that condition (1) of Rule 1.8(f) is not fulfilled. Neither the client nor a representative of his estate has consented to the Firm being compensated directly by the defendant's insurance company. This is equally true of the proposed reimbursement of medical bills. In sum, the suggested method of payment would contravene the Rule in the present circumstances.

By analogy to the circumstances covered by Rule 1.14, the Inquirer may, however, consider initiating appropriate procedures to secure appointment of a representative authorized to execute and deliver the necessary release and otherwise consummate the settlement amount, take into account the provisions of Rule 1.15, pertaining to the safekeeping of property.

     

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.