Question: May Attorney ethically sign a portion of a subrogation agreement issued by Client’s employee benefit plan in which Attorney acknowledges the plan’s subrogation and lien rights, agrees to treat Attorney’s lien on any recovery as subordinate to the plan’s lien for reimbursement, and agrees not to disburse funds from the proceeds of any settlement or judgment Client receives until the fund’s subrogation, assignment, lien and reimbursement claims have been satisfied?
Answer: Because one of the terms of the agreement requires Attorney not to disburse any funds from settlement or judgment until the fund’s claims are satisfied, Attorney must obtain Client’s informed consent prior to signing the agreement.  See Rules 4-1.2 and 4-1.15(d).  In seeking consent, Rule 4-1.4 requires Attorney to discuss the matter with Client to the extent reasonably necessary to permit Client to make informed decisions about the representation.  Following settlement or recovery, if Client disputes the fund’s claimed right to any part of the proceeds, Rule 4-1.15(e) requires Attorney to keep the disputed portion of the proceeds separate until the dispute is resolved.  If Client instructs Attorney not to pay the fund from the proceeds, Attorney must hold the funds in trust for a reasonable time to allow resolution of the dispute. If the dispute is not resolved within a reasonable period of time, Attorney must seek guidance from a court, which may take the form of an interpleader action.  See Mo. Formal Ethics Op. 125.  Whether meeting Attorney’s ethical obligations would require Attorney to violate any legal obligations under the agreement, and whether the terms of the agreement are lawful and enforceable, are matters of law outside the scope of an informal ethics opinion.

Informal Opinions are ethics advisory opinions issued by the Office of Legal Ethics Counsel to members of the Bar about Rule 4 (Rules of Professional Conduct), Rule 5 (Complaints and Proceedings Thereon), and Rule 6 (Fees to Practice Law) pursuant to Missouri Supreme Court Rule 5.30(c). Written summaries of select Informal Opinions are published for informational purposes as determined by the Advisory Committee of the Supreme Court of Missouri pursuant to Rule 5.30(c). Informal opinion summaries are advisory in nature and are not binding. These opinions are published as an educational service and do not constitute legal advice.

To request an Informal Opinion, please visit: https://mo-legal-ethics.org/for lawyers/requesting-an-informal-advisory-opinion/.

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