[ATTORNEY DISCIPLINE]

ETHICS BYTE:
At all costs, remember to be civil

by DIANE KARPMAN


The recent Feldsott case is significant because a lawyer prevailed and was fully exonerated at the State Bar Court and the court clarified significant issues involving lawyers' liens.

In Feldsott (Review Dept. 1997) 3 Cal. State Bar Ct. Rptr. 754, the Office of Enforcement (prosecutors) charged the lawyer with one count of violating Rule of Professional Conduct 4-100(B)(4), which requires that the lawyer promptly pay, in response to a request of the client, any funds in possession of the lawyer that the client was entitled to receive.

Prosecutors asserted that where a settlement check is received for the benefit of the client, made out to both the lawyer and the client, the lawyer must endorse the draft and tender payment to the client, no matter what.

In Feldsott, the lawyer was substituted out of the case and filed notice of an attorney's lien. The initial lien was consented to by the client in the fee agreement and the lawyer claimed $5,000 in fees, although his time records showed that he was owed $9,000. The case settled for $26,500. The draft was issued to the client, the second lawyer and Mr. Feldsott. In reliance upon the Matter of Kaplan (1993) 2 Cal State Bar Ct. Rptr. 509, the second lawyer and his client demanded that Feldsott endorse the draft. Gosh, it seems as if not every attorney-client relationship is made in heaven.

Feldsott reasonably and in good faith offered three alternative methods of handling the problem. He suggested that the carrier issue two checks, one to the client and one to him, to be held by the State Bar until the dispute was resolved; that the funds be placed in an account requiring two signatures or in a blocked account; or finally, that they submit to binding fee arbitration. None of these solutions was acceptable to the miserly client, who was seeing a flashing light saying "windfall." The client went as far as to bring a malpractice action against Feldsott, who filed a cross-complaint for $5,000.

Significantly, at all times, Feldsott was willing to release the funds indisputably due to the client. This is very important because it showed that Feldsott was not impeding his client's realization of the settlement, but merely protecting his lien rights according to the original fee agreement.

The Review Department of the State Bar Court reaffirmed that lawyers have continuing fiduciary duties to clients that may extend beyond closing the file. They found, however, that the assertion of a lawyer's lien for fees, if it is in good faith and not excessive, can justify a lawyer's refusal to endorse a client's settlement check.

And the moral of the story? Well, it isn't the fact that the client was nasty, vindictive and mean-spirited, but that the lawyer didn't lose it, or fly off the handle, and demonstrated civility and professionalism in asserting his lien for services rendered.


Diane Karpman of Los Angeles represents attorneys at the State Bar and is an expert witness in legal malpractice, conflicts of interest and partnership dissolutions.

[CALBAR JOURNAL]