Opinion 2007-14
(December 2007)

The inquirer is counsel for the respondent in an underinsured motorist case where the claimant's lawyer has been suspended from the practice of law and has not been replaced. The suspension was for conduct unrelated to the litigation of this claim. Prior to the effective date of the suspension, the claimant's attorney had completed the arbitration hearing and all other work on the case. The inquirer seeks information about how to pay an award entered in a private arbitration, where typically the payment would be by check made payable to both the claimant and the attorney. He also seeks guidance on communication directly with claimant to dismiss a related pending court action appointing the arbitrator, and whether the suspended lawyer can be contacted with respect to that procedural issue.

Pennsylvania Rules of Disciplinary Enforcement (“Pa. R.D.E.”) 102 defines "formerly admitted attorney" as "[a] disbarred, suspended or inactive attorney."

Pa.R.D.E. 217 relates to "Formerly Admitted Attorneys." Under Pa.R.D.E. 217(j), a suspended attorney may "not engage in any form of law-related activities in this Commonwealth" except in accordance with the specific requirements set forth in that rule. Explicitly prohibited under subpart (j)(4) is:

(iii) [performing] any law-related services for any client who in the past was represented by the formerly admitted attorney;

*** (v) having any contact with clients either in person, by telephone or in writing, except as provided in paragraph (3) [limited to ministerial matters, subject to review by a supervising attorney];

*** (ix) negotiating or transacting any matter for or on behalf of a client with third parties or having any contact with third parties regarding such a negotiation or transaction;
(x) receiving, disbursing or otherwise handling client funds.
Pennsylvania Rule of Professional Conduct (the "Rules") 1.16 governs withdrawal of representation. Rule 1.16(a) requires an attorney to withdraw where:

(1) the representation will result in violation of the Rules of Professional Conduct or other law.
Rule 4.3 governs communication with those not represented by counsel. Under Rule 4.3(a), a lawyer "shall not state or imply that the lawyer is disinterested." Rule 4.3(b) prohibits a lawyer from giving advice to a person who is not represented, “other than the advice to secure counsel, if the lawyer knows or reasonably should know the interests of such person are . . . in conflict with the interests of the lawyer’s client.” Finally, the lawyer should make reasonable efforts to correct any misunderstanding about the lawyer's role in the matter. Rule 4.3(c).

Rule 1.15 addresses the safekeeping of property. Under Rule 1.15(c), in connection with a client-lawyer relationship, if a lawyer is in possession of property in which two or more persons claim an interest, the property shall be kept separate by the lawyer until the dispute is resolved. The Rule requires the lawyer to distribute "all portions of the property as to which the interests are not in dispute."

The first portion of the inquiry seeks advice about how to pay the arbitration award, where such awards typically are paid by delivery to counsel of a check made payable to the claimant and his/her attorney.

No check may be delivered to the suspended attorney. As set forth above, Pa.R.D.E. 217, subpart (4)(x), explicitly prohibits a suspended attorney from "receiving, disbursing or otherwise handling client funds." Thus, a check for the full amount may be made payable to the claimant and sent directly to him/her but the analysis does not end there.

The question arises, as to whether the suspended attorney has an interest in any portion of that settlement amount. There are two principal lines of authority addressing this issue. In some jurisdictions, a suspension is considered to be an unjustified voluntary abandonment of the client which "precludes recovery for legal work performed prior to the disciplinary action." See, Kourouvacilis v. American Federal of State, County and Municipal Employees, 841 N.E.2d 1273, 1279-80 (Mass. App. Ct. 2006). The other line of authority holds that a suspended attorney may recover the reasonable value of the services rendered prior to the discipline in certain circumstances. Id. The leading case so holding which applies Pennsylvania law is Eisenberg v. General Motors Acceptance Corp., 761 F. Supp. 20, 22 (E.D. Pa. 1991). The Eisenberg court reasoned that if a client is permitted to withhold payment of an earned fee, the client will be unjustly enriched. Id. See also, Hiscott and Robinson v. King, 626 A.2d 1235 (Pa. Super. Ct. 1993). In most of these cases, and particularly in Eisenberg, the courts allow counsel to be paid the reasonable value of services provided to the client before the disciplinary action only where the attorney is "disbarred or suspended from practice for reasons which are unrelated to his representation of a particular client . . . ." Id.; see also Kourouvacilis, 841 N.E.2d at 1280-81 (collecting cases).

Thus, if the suspension was related to work performed specifically for the claimant, the suspended attorney has no right to a fee and the check in the full amount may be sent to the claimant without any impact on the former counsel. If the suspension was unrelated to the work performed, the suspended attorney has a right to recover the reasonable value of the services s/he performed.

The inquirer may communicate with the claimant, as discussed in more detail in the following section, to determine if there is an agreed upon amount for those fees. Inquirer may confirm that amount with the suspended attorney. In that situation, two checks may be issued, one sent directly to the claimant and another to his/her former counsel. Where a dispute as to the amount exists, the inquirer should ascertain the portion of the award as to which there is no dispute. As to that portion of the award, the inquirer shall issue a check. See Rule 1.15(c). As to the disputed portion, one alternative to paying the full amount to the claimant would be to hold the money in escrow and possibly request a conference with the court. Another alternative would be to file a petition for interpleader in the open court action, asking the court to determine the appropriate division of the award between the claimant and the suspended attorney and then to close the case.

The second portion of the inquiry seeks advice about directly contacting the claimant about a stipulation to discontinue and end a related case pending in the Court of Common Pleas.

The interworkings of Rule 1.16 and Pa.R.D.E. 217 require that an attorney who has been suspended from the practice of law withdraw from representing the claimant in this case. See, Eisenberg, 761 F. Supp. at 22 ("disbarment or disciplinary resignation automatically terminates the attorney client relationship by operation of law . . . ."). Thus, the claimant must be treated as an unrepresented party under Rule 4.3.

If the petition for interpleader is filed, as discussed above, no further contact need be made with the claimant except as required by the court.

If no petition for interpleader is filed, the attorney may contact the claimant directly with a stipulation to discontinue and end the litigation. In that communication, the lawyer may suggest that the claimant review the stipulation with independent counsel. See, Rule4.3(b). In addition, should the claimant contact the inquirer for any advice about the matter, the only advice the inquirer can provide is to obtain independent counsel. As set forth above, Pa.R.D.E. 217 prohibits the suspended lawyer from engaging in any matter "for or on behalf of a client with third parties or having any contact with third parties regarding such a . . . transaction." The lawyer need not copy the suspended attorney on the communication.

CAVEAT: The foregoing opinion is advisory only and is based upon the facts set forth above. The opinion is not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. It carries only such weight as an appropriate reviewing authority may choose to give it.