Legal Ethics Opinion #1571

Fees--Misconduct: Attorney Lien in Personal Injury Settlement
When Client's Choose Departing Associate

You have presented a hypothetical situation in which a client
hires Attorney A, an independent contractor/associate of the Law
Firm of Attorney B, to handle a personal injury case.  One year
later, Attorney A leaves the Law Firm of Attorney B and opens his
own law practice.  While Attorney A was an independent
contractor/associate with Attorney B, all lawyer work performed
on client's case was performed by Attorney A.  The office staff
(i.e., personal injury legal secretaries) working on the case at
the direction of Attorney A were paid by Attorney B.

You indicate that the contract for representation on the personal
injury case was in writing between the client and the law firm of
Attorney B.  The written contract had the following provision:

   "Further, I agree that, in the event I am dissatisfied
   with his services, I will have the right to secure the
   services of another attorney, after reimbursing the law
   firm ... upon a quantum meruit basis; however, if he has
   begun negotiations with the defendant or the insurance
   company, I will be obligated to pay him 33 1/3% of the
   amount offered in settlement of my case, whether or not
   the same meets with my approval or acceptance.  And I
   hereby authorize new counsel to honor a lien for his said
   fee."

You further indicate that, after Attorney A left the law firm of
Attorney B, the client chose to have Attorney A continue as
counsel.  At the time the client made the decision to continue
with Attorney A, an offer for settlement had not been made by the
defendant's insurance carrier.

Attorney B then wrote a letter to the claims representative for
the defendant and asserted an attorney's lien pursuant to 54.1-
3932 of the Code of Virginia.  Attorney B wrote a letter to the
client which stated as follows: "In the event there is a
settlement on your case, my law firm holds a lien against same on
account of attorney's fees."

You advise that, by subsequent letter, Attorney A, on behalf of
client, requested that Attorney B provide an itemization of
services rendered on client's case to determine the attorney's
fees pursuant to the attorney's lien claimed by Attorney B. 
Attorney B did not respond to the request for itemization of
services rendered.  Attorney A again wrote Attorney B, requesting
that he provide an itemization of services rendered, but Attorney
B did not respond to the second request either.

Finally, you indicate that the client's personal injury claim was
settled.  As a result of Attorney B's refusal to provide an
itemization of services rendered, the attorney's lien issue has
been left unresolved.  In addition, there are unresolved
financial 
matters between Attorney A and Attorney B as to Attorney A's
termination of their professional relationship. Attorney B has
demanded that Attorney A pay him 70% of all attorney's fees paid
on all cases that were opened by Attorney A while associated with
the law firm of Attorney B, including the personal injury case in
question.

You have asked the Committee to opine under the facts of the
inquiry: (1) whether Attorney B has committed unethical conduct
in violation of DR 1-102(A)(4) and DRs 2-105(A), (B) and (C) by
refusing to provide Attorney A with an itemization of services
rendered, in an effort to coerce Attorney A to pay Attorney B 70%
of all attorney's fees pursuant to the employment arrangement
between Attorney A and Attorney B; (2) whether Attorney A has an
obligation, under DR 1-103(A), to report Attorney B's conduct to
the Virginia State Bar; and (3) whether Attorney B may ethically
refuse to provide Attorney A with an itemization of services
rendered in a contingent fee case.

The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 1-102(A)(4) which states that a lawyer shall
not engage in conduct involving dishonesty, fraud, deceit, or
misrepresentation which reflects adversely on a lawyer's fitness
to practice law; DR 1-103(A) which requires that a lawyer having
information indicating that another lawyer has committed a
violation of the Disciplinary Rules that raises a substantial
question as to that lawyer's honesty, trustworthiness, or fitness
to practice law in other respects, shall report such information
to the appropriate professional authority; and DR 2-105(A), (B),
and (C) which sets forth the ethical requirements as to fees. 

The committee opines relative to your inquiries as follows:

1. You ask whether Attorney's B conduct is in violation of DRs
   1-102(A)(4), and 2-105(A), (B) and (C).  Disciplinary Rule 2-
   105(A) requires that fees be adequately explained to the
   client.  The plain language of DR 2-105(B) indicates that the
   basis or rate of a lawyer's fee shall be furnished on request
   of the lawyer's client.  In addition, DR 2-105(C) indicates
   the requirement for a closing statement in contingent fee
   matters.   Attorney A has requested an itemization of
   services rendered on behalf of the client. Thus, the
   committee is of the opinion that it is improper, under the
   provisions of DR 2-105, for Attorney B to refuse to supply
   such itemization.

   The committee is not empowered to make the factual
   determination necessary to decide whether or not Attorney B's
   refusal to provide an itemization is an attempt to coerce
   Attorney A into paying Attorney B in excess of the
   contractual arrangement.  The committee, however, cautions
   that the recited facts indicate a demand by Attorney B of 70%
   of the attorney's fees, not 70% of the settlement funds.

   If it is factually determined that Attorney B's refusal to
   provide the itemization was an attempt at coercion, such
   refusal may also be violative of DR 1-102(A)(4).

2. Your second inquiry concerns the obligation to report
   Attorney B's conduct to the Virginia State Bar. Disciplinary
   Rule 1-103(A) contains a two-prong test for determination of
   obligatory reporting of another lawyer's misconduct.  SeeLEOs #1004, #1528.  First, the reporting lawyer must have
   information which establishes to a reasonable degree of
   certainty that another lawyer has committed a violation of
   the Disciplinary Rules.  Second, the reporting lawyer must
   reasonably determine that the violation raises a substantial
   question about the other lawyer's honesty, trustworthiness or
   fitness to practice law in other respects.  Certain
   violations of the Disciplinary Rules may be so egregious that
   reasonable lawyers could not differ as to whether those
   violations should be reported.  See LEO #977.  

   The Committee cautions that in every case the reporting
   lawyer must be vigilant in observing DR 7-l04's prohibition
   against threatening to present or presenting a disciplinary
   charge solely to gain an advantage in a civil matter.  

   On the facts presented, Attorney B's refusal to provide an
   itemization of services is a violation of DR 2-l05(A), (B),
   and (C), which, coupled with the assertion of an attorney's
   lien on the settlement proceeds and a demand for 70% of the
   attorney's fee in all similar cases, raises a substantial
   question about Attorney B's fitness to practice law in other
   respects.

3. Finally, the committee reiterates its position, stated in
   issue #1, that Attorney B may not ethically refuse to provide
   Attorney A with an itemization as to services rendered to the
   client.

Committee Opinion
July 12, 1994