On Friday morning, the Board of Governors of the State Bar of Georgia unanimously passed my motion to refer to the Disciplinary Rules & Procedure Committee the question of whether Rule 1.15(I)(b) should be amended so as to more clearly define specific interests of creditors of clients as to which an attorney may be required to provide notice, accounting or payment from a client’s funds.
The State Bar of Georgia Formal Advisory Opinion Board published the "First Publication of Proposed Formal Advisory Opinion Request No. 05-R6" in the June 2007 issue of the Georgia Bar Journal, interpreting Georgia Rule of Professional Conduct 1.15(I)(b), which provides:
Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by 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.
I’ve not been able to find out exactly who asked for the interpretation of this rule or who actually drafted the proposed advisory opinion (pdf page 82 in June 2007 Georgia Bar Journal). However, the opinion used broad terms without explanation. It did not define what constitutes a "prima facie valid" claim and what claims of clients’ creditors are “presumptively enforceable.” By its breadth and vagueness, the opinion would have implicitly supported threats by insurance companies to disbar lawyers who stand up for their clients against abusive demands by the insurance companies for reimbursement. All too often when we try to settle cases, we have to deal with insurance companies that always demand reimbursement of medical benefits for which the insured had paid premiums. Such demands are generally based upon obscure provisions in the fine print on about page 47 of contracts of adhesion of which the insured may not have even received a copy, and which are generally in conflict with Georgia’s "full compensation" rule which is codified at O.C.G.A. § 33-24-56.1.
I know from experience how tedious it can be for lawyers who practice in the trenches every day to meet every month or two with a bunch of law professors and deliberate about the meaning of obscure provisions of the Rules of Professional Conduct. While the Formal Advisory Opinion Board made a conscientious effort, in this instance the opinion issued had a disturbing range of negative potential effects. After studying the opinion, I posted an online petition to generate opposition. The petition and the comments of lawyers signing it online raised numerous concerns, among which are:
• creation of conflicts between lawyers and clients,
• intrusion into attorney-client confidentiality & duty to advocate for clients,
• allowing purported creditors with dubious claims to hold settlements hostage,
• lack of clear guidance as to what constitutes "prima facie valid" claim and what claims of clients’ creditors are “presumptively enforceable”
• lack of guidance about conflicts between medical insurance subrogation claims and the “full compensation” rule in Georgia law, and the “made whole” doctrine under 11th Circuit ERISA law.
• lack of guidance about the distinction between a legal interest in a specific fund and the rights of a mere general creditor
• lack of guidance about the right of a client to prefer one creditor over another such as, for example, preferring a child support arrearage over a obscure reimbursement provision in the fine print of a health insurance policy.
From talking with some members of the Formal Advisory Opinion Board, I understand that these concerns were expressed within that board, but some members insisted on publishing the opinion for comment anyway. Well, there certainly were comments.
Rule 1.15(I) doesn’t have to be interpreted this way. The Connecticut Bar Ethics Committee has interpreted this rule to limit its application to: (i) judgments; (ii) statutory or judgment liens; (iii) letters of protection; and (iv) consensual security agreements.
Friday morning at the State Bar annual meeting at Ponte Vedra Beach, Florida, the Board of Governors unanimously passed my motion
to refer to the Disciplinary Rules and Procedures Committee the question of whether Rule of Professional Conduct 1.15(I)(b) should be amended, and to advise the Formal Advisory Opinion Board to further study Proposed Formal Advisory Opinion Request No. 05-R6, to more clearly define the specific interests of creditors of clients as to which an attorney may be required to provide notice, accounting or payment from a client’s funds, such as (i) judgments; (ii) statutory or judgment liens; (iii) letters of protection; and (iv) consensual security agreements.
The Shigley Law Firm represents plaintiffs in wrongful death and catastrophic injury cases statewide in Georgia, and in other states subject to the multijurisdictional practice and pro hac vice rules in each state. Ken Shigley was designated as a "SuperLawyer" in Atlanta Magazine and one of the "Legal Elite" in Georgia Trend Magazine. He is a Certified Civil Trial Advocate of the National Board of Trial Advocacy, Chair of the Southeastern Motor Carrier Liability Institute and former chair of the Georgia Insurance Law Institute. He particularly focuses on cases arising from truck wrecks and accidents (tractor trailers truck wrecks, semi truck wrecks,18 wheeler truck wrecks, big rig truck wrecks, log truck wrecks, dump truck wrecks.