The Florida Bar
Funds received and held in trust by an attorney for some different purpose may not, over the client's or former client's objections, ethically be applied to the satisfaction of an attorney's claim, or claimed lien, for costs and fees without prior approval of the application by a court of competent jurisdiction. Further, if the property held in trust is money or other readily divisible property, the retention under claim of lien of an amount or portion in excess of that necessary to satisfy the obligation to the attorney is improper.
February 15, 1982
February 15, 1982
CPR: DR 9-102(B)
Integration Rule: 11.02(4)
Opinions: 68-21, 71-67
Chairman Ervin stated the opinion of the committee:
A Florida attorney holds in his trust account funds he had received from administration of an estate, which funds were owed by the estate to the attorney's former client. Upon receipt of the funds, the attorney requested authorization from his former client to apply a portion of said funds to unpaid attorney's fees and costs from the attorney's earlier, unrelated representation and advised the former client of his intent to place a "retaining lien" against the funds.
The former client refused authorization to so apply the funds and the attorney thereafter (apparently without reference to or assertion of a lien of any sort) sought and secured a default money judgment in small claims court against the former client for a specified amount of costs and attorney's fees.
The attorney inquires whether he may now ethically apply a portion of the sum he holds in trust to satisfaction of his judgment against his former client and remit the balance or, alternatively, whether he may direct the sheriff to levy on the funds he holds in his trust account.
Section 11.02(4) of the Integration Rule provides as follows, in pertinent part:
(4) Trust funds and fees. Money or other property entrusted to an attorney for a specific purpose, including advances for costs and expenses, is held in trust and must be applied only to that purpose. Money and other property of clients coming into the hands of an attorney are not subject to counterclaim or setoff for attorney fees, and a refusal to account for and deliver over such property and money upon demand shall be deemed a conversion. This is not to preclude the retention of money or other property upon which the lawyer has a valid lien for his services or to preclude the payment of agreed fees from the proceeds of transactions or collections. (Emphasis supplied.)
It is noted that the above-quoted section treats separately the instances where "retention" and "payment" are authorized, and uses the more restrictive term "retention" with reference to a "valid" claim.
In addition, DR 9-102(B) of the Florida Code of Professional Responsibility provides as follows, in pertinent part:
(B) A lawyer shall:
(1) Promptly notify a client of the receipt of his funds, securities, or other properties.
(4) Promptly pay or deliver to the client as requested by a client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive.
In prior Advisory Opinions 68-21 and 71-67 this Committee expressed its opinion that the question of whether the attorney had a valid lien against a client's property coming into the attorney's hands was a question of law for the courts, not one of ethics subject to opinion by this Committee, which question is not fully resolved by the securing of an earlier money judgment against the client.
The Committee adheres to its prior opinions and the view stated therein. The proper procedure would be for the attorney to promptly file an action seeking establishment of a retaining lien or other entitlement as to the funds, or a portion thereof, or otherwise pay the sums to the former client as demanded. The Committee is of the opinion that funds received and held in trust by an attorney for some different purpose may not, over the client's or former client's objections, ethically be applied to satisfaction of an attorney's claim, or claimed lien, for costs and fees without prior approval of the application by a court of competent jurisdiction.
The Committee is of the further opinion that where the property held in trust is money or other readily divisible property, the retention under claim of lien of an amount or portion in excess of that necessary to satisfy the obligations to the attorney is not ethically proper.