Facts: My clients, plaintiffs, became trapped in defendant’s elevator in April 1962, and sustained psychic injuries, and were attended by Dr. R. Dr. R, furnished his medical reports and bills in June 1962. On December 24, 1962, Dr. R. wrote me:
I have not been paid for my services to these patients who are your clients in the actions noted below: (naming them). Your prompt cooperation in settling these bills would be greatly appreciated.
On receipt of said letter I did not inquire of my clients as to the accuracy of Dr. R’s representation that he had not been paid, and I wrote to him as follows, without thereby intending to create a lien for his past services:
Dec. 28, 1962
I have received your Statement dated Dec. 24, 1962 and regret to state that like so many other cases, this action is still pending***. I don’t expect it to be disposed of for an additional year or two.
I shall communicate with you before making disbursements from any proceeds recovered in this action, and at that time if my clients still owe you a balance
please be assured that the full amount of such balance shall be paid to you first.
For over six years thereafter there was no communication between Dr, R and the undersigned. In November 1969 by telephone I requested Dr. R to testify at trial. He demanded $300 for each court appearance, which was rejected as exorbitant. A judge signed a subpoena ordering Dr. R to testify but my process server reported that Dr. R was evading service. The trial judge refused to permit adjournment.
For want of Dr. R’s testimony at trial, injuries could not be effectively shown, and my clients were forced to accept small amounts in settlement at the close of cross-examination.
Payment of settlements has not yet been received by me.
Dr. R and now his attorney, inform me Dr, R was not paid. My clients insist Dr. R was paid in full, and instruct me to pay him nothing.
Question 1. What duty, if any, do I as plaintiffs’ attorney owe to their attending physician, Dr. R, at this time?
Question 2. If Dr. R commences suit to recover on his claim of nonpayment, do you consider it not improper for his patients to counter-claim for damages based on his failure to reason ably cooperate for trial?
The Committee does not advise on questions of law. It: takes no position as to the propriety of your communication to Dr. R or as to the existence or enforceability of any legal obligation on your part or on the part of your clients that may have been created thereby.
Former Canon 11 provided in pertinent part that
“Money of the client or collected for the client or other trust property coming into the possession of the lawyer should be reported and accounted for promptly
Accordingly, it has been held that the attorney should upon making a collection remit promptly to his client and not withhold the funds collected to induce settlement and payment of claims of other against the client. DR9-102(B)(4); ABA Formal Opinions 125, 163. “There is a positive duty upon the attorney of record to endeavor to see that the net amount due the client (after the attorneys claim for services) gets into his hands without molestation from anyone…” N.Y.City Opinion 216.
It is recognized that in a proper case an attorney may, within the some of his employment. engage and pay for the services of others, including expert witnesses, requesting, proceeding a litigated matter, and that such services may properly be paid or provided for by the attorney prior to remitting to the client moneys received by him in settlement of the case. Drinker, Legal Ethics, 156-157 (1953); N.Y. County Opinion 321. Thus, an attorney has been held obliged to comply with an agreement to pay stipulated sums out of the recovery where such agreement has been made by or with the knowledge and consent, express or implied, of the client and (at least where there has been intervening reliance or change of position by the creditor) notwithstanding any subsequent contrary instructions to the attorney from the client. Drinker, op. cit. 157, note 31; N.Y. City Opinion 240. But we know of no authority for requiring such payment out of a settlement fund as a matter of legal ethics where, as would appear to be the case here, the services of the attending physician were not engaged by the attorney or even performed principally for purpose of the litigation, there was no assignment to the physician of any portion of the proceeds of the litigation, and the clients now insist that the physician was paid in full.
Under the circumstances, it would seem to be appropriate that you notify the physician in writing of your clients’ claim of having paid his bills in full and that you have turned over to the clients their shares of the proceeds of the recovery.
There appears to be no ethical impediment to the interposition of the counterclaim described provided the clients’ attorneys are satisfied as a factual and legal matter that it is not frivolous or unwarranted, as to which the Committee expresses no view. See Canons 15, 30, 31, 32; DR 7-102(8)(1), (2); EC 7-4.
March 19, 1971