Opinion 1726

Your question concerns your ethical obligation to pay part of the settlement proceeds on a personal injury claim to a third party. Prior to settling your client's claim, you received the client's written assignment of part of the settlement proceeds to a third party. However, the client subsequently instructed you not to pay the assigned part of the settlement proceeds to the third party based on his good faith objections that the payment should not be made.

Assuming you reasonably believe the positions of your client and third-party attorney to be taken in good faith, the Committee is of the opinion that you are not obligated to pay the $800 to the third-party attorney or to your client. The $800 should be deposited in an interest-bearing trust account until the entitlement to the funds has been resolved by agreement or by adjudication.

I am enclosing for your information Formal Opinion No. 185 (1990) of the Washington State Bar Association, which is not directly on point but discusses related issues. You may also want to review Rule 1.15(c) of the Model Rules of Professional Conduct, though that rule has not been adopted in Washington. The comment to the model rule addresses this issue. See American Bar Association, Annotated Model Rules of Professional Conduct 233-34, 244 (3d. ed. 1996).

Advisory Opinions are provided for the education of the Bar and reflect the opinion of the Committee on Professional Ethics (CPE) or its predecessors. Advisory Opinions are provided pursuant to the authorization granted by the Board of Governors, but are not individually approved by the Board and do not reflect the official position of the Bar association. Laws other than the Washington State Rules of Professional Conduct may apply to the inquiry. The Committee's answer does not include or opine about any other applicable law other than the meaning of the Rules of Professional Conduct.