Opinion 97-10
(June 1997)

You have asked the Committee for an opinion concerning the following situation:

In June of 1996, you tried a case for a client that was injured as a result of a slip and fall accident. After several days of a trial, the case was settled. Before trial, you were notified of a subrogation claim asserted by a worker's compensation carrier that had paid medical and other benefits to your client. At the time of the settlement, you contacted the attorney for the workers' compensation carrier to discuss a resolution of the carrier's lien. Shortly thereafter, at the request of counsel for the carrier, you provided a list of your litigation expenses, and recommended a particular figure for the resolution of the subrogation claim.

Over the next month, you called the lawyer for the carrier several times, but did not receive any return call or response regarding settlement of the subrogation claim. In March of 1997, you wrote directly to counsel for the carrier to confirm that there had been no response to your proposals to compromise the subrogation lien, and in your correspondence you noted that there had been no effort to contact you for a lengthy period of time to discuss the subrogation claim.

The Committee understands that more than three months have now passed since your last letter to counsel for the carrier, and that you have never been contacted by counsel or any representative of the carrier regarding its subrogation claim. Under these circumstances, while you are concerned about retaining substantial funds in an escrow account that were set aside to satisfy the workers' compensation carrier's subrogation claim, you are equally concerned that, if you turn these funds over to your client, the carrier may still assert a claim against you in the future on the basis of its alleged lien.

Rule 1. 15(b) of the Pennsylvania Rules of Professional Conduct provides as follows:

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 said property.

In view of the guidance provided by Rule 1. 15(b), it is the opinion of the Committee that you should communicate in writing directly with the worker's compensation carrier regarding its subrogation claim and, at the same time, a copy of your correspondence should also be delivered to the attorney with whom you were previously dealing. The Committee is further of the opinion that your correspondence with the carrier and attorney may state that you intend to distribute the funds in the escrow account that you have otherwise been holding unless you receive a return communication within fifteen days. In the meantime, you should continue to escrow the funds that may be used to satisfy the subrogation claim. You may not simply release the finds to your client with the admonition that the client is under an obligation to satisfy or pay the subrogation claim asserted by the carrier.

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.