Inquiry is made regarding the propriety of requesting or requiring plaintiff’s attorney to enter into agreements or releases which require the attorney to insure payment of medical bills or liens or to indemnify and hold harmless any party being released.
Inquiry is made as follows:
May a plaintiff’s attorney be required to execute a Release which requires that attorney to ensure that medical expenses and liens applicable to his or her client are paid from the settlement proceeds, when the representation is made during settlement negotiations that an agreement with the medical lien holder has been reached and payment will be made from the settlement proceeds?
May an attorney representing a plaintiff in personal injury litigation be required to indemnify and hold harmless any party being released as a result of the settlement negotiations from any medical expenses and/or liens which that attorney has represented will be satisfied and/or settled from applicable settlement proceeds, or which the law requires to be satisfied from any settlement?
It must first be determined to what extent a plaintiff’s attorney is obligated to withhold settlement proceeds from the client to pay outstanding medical bills or liens.
Rules of Professional Conduct (RPC) 1.15(c), as amended July 8, 2009, provides:
(c) 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 such funds or other property. If a dispute arises between the client and a third person with respect to their respective interests in the funds or property held by the lawyer, the portion in dispute shall be kept separate and safeguarded by the lawyer until the dispute is resolved.
Comment  to RPC 1.15 provides:
Third parties, such as a client’s creditors, may have just claims against funds or other property in a lawyer’s custody. A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client and accordingly may refuse to surrender the property to the client. However, a lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party. If not inconsistent with the interests of the client, the lawyer may file an interpleader action concerning funds in dispute between the client and a third party.
Tennessee Formal Ethics Opinion 87-F-109, adopted September 16, 1987, considered this issue prior to the adoption of the Rules of Professional Conduct and provided as follows:
This ethics opinion holds that a lawyer who has notice that a creditor of the client has a lien or assignment to the funds held on behalf of the client is ethically obligated to segregate and retain the disputed funds until the dispute is resolved. Payment of the disputed amount into court for a resolution of the matter is permissible after the parties have had a reasonable opportunity to resolve the dispute.
If there is no legitimate dispute about who is entitled to all or part of the funds in the attorney’s possession, the attorney must disburse the undisputed portion of the funds to the client or the third person as is appropriate. D.C. Ethics Op. 293 (1999); N.Y. State Op. 717 (1999). If, however, the attorney is aware that a third person has a “just claim”, for all or part of the funds in the attorney's possession to which "applicable law" imposes "a duty", the attorney may not ignore the third person’s interest.1 RPC 1.15, cmt. . If the third paty has a "just claim" to which "applicable law" imposes a duty, RPC l.15(c) ethically obligates the attorney to disregard his client's demands for the funds in their possession and to hold the funds until the dispute is resolved. A "just claim" which Rule 1.15 obligates the attorney to honor is one which relates to the particular funds in the lawyer's possession. Wisc. Ethics Op. E-09-01 (2009); Ohio Ethics Op. 2007-07 (2007); Ariz. Ethics Op. 98-06 (1998); D.C. Ethics Op. 293 (1999); Conn. Informal Op. 95-20 (1995). The phrases "just claims" and "duty under applicable law" have been construed to mean that the only type of third party "interest" which the attorney should preserve for a third person is a matured legal or equitable lien on the disputed funds or interest for which the attorney has agreed to serve as escrow agent. Ohio Ethics Op. 2007-7 (2007); R.I Ethics Op. 2007-02 (2007); Pa. Ethics Op. 2003-4 (2003); Utah Ethics Op. 00-04 (2000); D.C. Ethics Op. 293 (1999); Ariz. Ethics Op. 98-06 (1998). The term "interest" has been deemed to extend to a valid assignment by the client and to rights created by order of a court. Pa. Ethics Op. 2003-4 (2003).
The mere assertion, however, by a third person or entity that they are entitled to funds in the possession of the attorney does not trigger the Rule 1.15 obligation of the attorney to remit the funds to the third person or to safeguard the funds until the dispute is resolved.2 Debts of the client which merely come to the attention of the attorney are not "interests" protected by RuleA lawyer is not required to pay the general unsecured creditors of the client, including judgment creditors, who have not attached or garnished the funds in the lawyer's possession. Ariz. Ethics Op. 98-06 (1998); D.C. Ethics Op. 293 (1999); Va. Legal Ethics Op. 1747 (1992). Absent such an interest, the attorney has no ethical duty to withhold the funds from the client. Pa. Ethics Op. 2003-04 (2003). Unless the lawyer knows that the third person has a just claim, the attorney should deliver the funds to the client. D.C. Ethic Op. 293 (1999).
The determination of whether, and to what extent, the third person's claim rise to the level of a colorable interest which requires protection under Rule 1.15 is a matter of substantive law. Pa. Ethics Op. 2003-4 (2003); R.I. Ethics Op. 95-60 (1996). In performing that analysis, one should consider whether the client signed a third party reimbursement form, participation agreement or other document addressing the right of subrogation, whether the right to subrogation is statutory and/or subject to federal pre-emption, whether the right of subrogation is secured or unsecured and whether the attorney or client has represented to the third party that it would be paid.2 Pa. Ethics Op. 2003-04 (2003). D.C. Ethics Op. 293 (1999) held that the following were "just claims":
It is concluded that RPC 1.15(c) obligate,§ an attorney to pay the settlement funds to the third person or to safeguard the funds until the dispute is resolved if one of the following exist: (1) an attachment or garnishment arising out of a valid judgment relating to disposition of the funds; (2) a valid and perfected statutory,3,4 contractual or judgment lien against the property; (3) a letter of protection or similar obligation specifically entered into to aid in obtaining the funds; (4) a written assignment or authorization signed by the client, counsel or other individual with authority conveying interest in the funds to the third person or entity; or (5) a court order relating to the funds in the attorney's possession.
Arizona Ethics Op. 98-06 (1998) analyzed this issue with respect to twelve different factual scenarios. The opinion held that in situations: (1) in which the attorney had notice of the medical provider's lien signed by the client, but not recorded, (2) in which the medical provider's lien was signed by the client and by the attorney, (3) in which the attorney orally agreed to reimburse the medical provider from settlement proceeds, (4) in which the attorney or. client had signed a letter of protection in favor of the medical provider, (5) in which the client had signed an assignment in favor of the medical provider, or (6) in which both the client and the attorney signed an assignment in favor of the medical provider, the attorney was required to comply with Rule 1.15 to protect the interest of the medical provider. In situation (7) in which a statutory lien was facially incomplete or untimely, but had been properly recorded, the attorney was required by Rule 1.15 to protect the provider's interest by holding the funds in dispute, but could contest the lien by interpleader or other proper means. In situations: (8) in which the attorney was aware of medical services provided by the medical provider because medical bills had bee1;1 provided to the attorney by the client, but for which the provider had made no deinand upon the ·attorney, (9) in which the medical provider had simply sent copies of the client's medical bills to the attorney, (10) in which the provider simply sent a letter to the attorney demanding payment for medical bills, (11) in which the attorney simply knew that the medical provider had treated the plaintiff, but the medical provider had no lien nor assignment and had taken no other demand action with regard to the bills, or (12) in which the medical provider's lien was not signed by the client nor attorney and was not recorded, the attorney was not required to notify nor disburse funds to the medical provider in compliance with Rule 1.15. The determinations made in the Arizona Opinion are consistent with and adopted in this opinion.
An attorney should not disburse the funds in his possession to a third person if the client contests the issue.5 If the attorney knows of a dispute and has a "good faith doubt"6 as to who is entitled to receive the disputed funds, the attorney must investigate, notify the third party, 7 and hold only the disputed funds until the dispute is resolved. The Rules of Professional Conduct do not, however, impose an obligation on the attorney to seek out third parties. Wisc. Ethics Op. E- 09-01 (2009); Conn. Informal Ethics Op. 95-20 (1995). While the dispute may be resolved by negotiation, arbitration or process of court, if necessary, the attorney cannot make the determination to whom the funds belong. RPC 1.15, cmt. , provides that an attorney "should not unilaterally assume to arbitrate a dispute between the client and a third party." Comment  further provides that filing an interpleader action is one alternative to resolve the dispute.8 The Rules do not otherwise prescribe the method or forum of resolving the dispute nor impose a duty to initiate action within a particular period of time. Such issues are controlled by substantive law. Pa. Ethics Op. 2003-4 (2003).
If the attorney ignores a duty owed to a third person and pays the disputed amount directly to the client, the attorney may be held liable to the third person. Such liability is a matter of substantive law beyond the scope of this opinion. Aetna Cas. & Sur. Co. V. Gilreath, 625 S.W.2d 269, 274 (Tenn. 1981), citing Motors Ins. Corp. v. Blakemore, 584 S.W.2d 204, 207 (Tenn. App. 1978), held:
... a lawyer will be held civilly liable to a non-client where he knowingly participates in the extinguishment of a subrogation interest of a non-client third party and delivers to his client funds that he knows belong to the third party and knows or should know, that he has thereby placed the funds beyond the reach of the third party ...
See also, Hankins v. Seaton, 1998 Tenn. App. LEXIS 419 (Tenn. Ct. App. June 25, 1998) (attorney liable for failure to honor a signed subrogation agreement); Greenwood Mills, Inc., v. Burris, et. al., 130 F.Supp.2d 949 (D.C. Tenn. 2001) (attorney liable for failure to pay BRISA subrogation interest).
Tennessee Formal Ethics Opinion (TFEO) 97-F-141, issued February 4, 1998, addressed clauses proposed by defense attorneys for inclusion in releases to settle personal injury cases. The opinion held, in part:
The attorney's signature on a release should vouch only for the fact that the client releases the defendant. A requirement that a plaintiff's attorney become a party to a release might create conflict of interest between plaintiffs attorney and the plaintiff in violation of DR 5-l0l(A). Therefore, these clauses are prohibited except in cases where the plaintiff's attorney releases a claim for attorney fees.
RPC 1.7(b), Conflict of Interest: General Rule, provides in part:
(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents in writing after consultation.
Comment  to RPC 1.7 provides in part:
The lawyer's own interests should not be permitted to have an adverse effect on the representation of a client . . . If the probity of a lawyer's own conduct in a transaction is in serious question, it may be difficult or impossible for the lawyer to give a client detached advice. A lawyer may not allow related business interests to affect representation, for example, by referring clients to an enterprise in which the lawyer has an undisclosed interest.
Arizona Opinion 03-05 (2003) considered the same question posed in the second paragraph of the inquiry herein. The Arizona opinion held, in part:
The mere request that an attorney agree to indemnify Releasees against lien claims creates a potential conflict of interest between the claimant and the claimant's attorney. The attorney's refusal, for ethical reasons, to accede to such a demand as a condition of settlement could prevent the client from effectuating a settlement that the client otherwise desires.
The insistence upon an attorney's agreement to indemnify as a condition of settlement could, for example, cause the lawyer to recommend that the client reject an offer that would be in the client's best interest because it would potentially expose the lawyer to the payment of hundreds of thousands of dollars in lien expenses, or litigation over such lien expenses.
The attorney's acceptance of such a condition would also create a conflict of interest with an existing client under ER 1.7 because the client's failure or refusal to repay a lien could make the client's lawyer its guarantor.
That might materially limit the representation by virtue of the lawyer's own interest in having the client (rather than the lawyer) pay the liens in full. Even if the lawyer were willing to accept that potential financial burden, and even if the lawyer were ethically permitted to provide such financial assistance, such an agreement might compromise the lawyer's exercise of independent professional judgment and rendering of candid advice in violation of ER 2.1.
While ER 1.2 requires an attorney to abide by a client's decision whether to accept an offer of settlement, a settlement agreement that requires the attorney to indemnify, or hold the Releasees harmless, violates ER 1.8.
Since, under ER 1.8, an attorney cannot ethically provide financial assistance to a client by paying, or advancing, the client's medical expenses before or during litigation, an attorney cannot ethically agree, voluntarily or at the client's or Releasees' insistence, to guarantee, or accept ultimate liability for, the payment of those expenses.
It is concluded that the ethics rules relied upon in Arizona Opinion 03-05 are consistent with Tennessee Rules of Professional Conduct l.7(b), 2.1, 1.2, and l.8(e) and that opinion's conclusions are adopted herein.9 Requiring a plaintiff's attorney to enter into agreements posed in the inquiry, particularly requiring that the attorney indemnify and/or hold harmless any party being released or subrogation interest holder from medical expenses or liens, creates a conflict between the interests of the plaintiff's attorney and those of their client. Consistent with TFEO 97-F-141, an attorney cannot ethically agree to such agreements and/or clauses. As discussed herein, the actions which are the subject of the first paragraph of the inquiry are obligations imposed upon the plaintiffs attorney by RPC l.15(c). The attorney is obligated to safeguard the funds in his possession until any dispute between the client and the third person regarding the funds is resolved. Whether the funds in the attorney's possession rightfully belong to the client or to the third person or entity may not be determined at the time that the release resolving the lawsuit is executed. The attorney cannot be required to breach the ethical obligations imposed upon the attorney by RPC l.15(c) by signing an agreement regarding disposition of the funds prior to the resolution of the· dispute. If the attorney makes misrepresentations in settlement negotiations regarding payment of medical bills or liens, as posed in the inquiries, the attorney's conduct will be subject to Rules of Professional Conduct, including 4.l(a) and 8.4(c), and/or liability pursuant substantive law beyond the scope of this opinion.
This the 10th day of September, 2010.
Roger Alan Maness
Virginia Anne Sharber
Thomas Stratton Scott, Jr
APPROVED AND ADOPTED BY THE BOARD
1 Ohio Ethics Op. 2007-7 (2007) (when a lawyer knows there is a dispute between a client and a third person who has a lawful claim under applicable law to funds in the lawyer's possession, the lawyer's ethical duty under Rule 1.15 is to notify both the client and the third person and hold the disputed funds in trust until the dispute is resolved); S.C. Ethics Adv. Op. 05-08 (2005) (lawyer who knows that insurer has actual subrogation claim against settlement proceeds may not pay all proceeds to client but must retain sufficient funds to pay subrogation claim); La. Public Op. 05-RPCC-004 (2005) (lawyer's obligation to third parties is separate and distinct from the obligation to the client and may not be disregarded at the request or direction of the client); N.C Formal Ethics Op. 4 (2001) (attorney may ignore client's instruction to pay proceeds to client only if there is a valid lien or other valid legal assignment of the rights in the proceeds); Ala. Ethics Op. 2003-02 (2003) (rules ethically preclude an attorney from failing or refusing to honor his commitment to pay a client's creditors); Va. Legal Ethics Op. 1747 (1992) (a lawyer who knows that his client has made a valid assignment of rights to the proceeds of a settlement or has allowed for the creation of a consensual lien on settlement cannot disregard the third party assignee or lienholder's rights, notwithstanding a client's directive to do so); Md. Ethics Op. 94-19 (1993) (lawyer must disregard client instruction not to pay creditor where client had a valid agreement with creditor); Md. Ethics Op. 96-16 (1996) (lawyer whose client instructs him not to pay creditor despite client's subrogation agreement with creditor must hold funds until dispute is resolved); Mich. Informal Ethics Op. RI-61 (1990) (lawyer may not disburse to client if aware of outstanding lien; unless resolved, attorney must initiate court proceeding to resolve which portion belong to lien holder and client); R.I. Ethics Op. 95-60 (1996) (lawyer cannot obey client's instruction to refuse reimbursement to health insurer but must notify the insurer and pay the funds in which insurer has legally enforceable interest); R.I. Ethics Op. 95-31 (1995) (lawyer whose client agreed in writing to pay wife one-half of personal injury proceeds must notify the wife and keep disputed portion of proceeds separate until resolution); S.C. Ethics Adv. Op. 94-20 (1994) (if lawyer knows client has executed valid doctor's lien he may not comply with client's instruction to disregard it); S.C. Ethics Adv. Op. 93-14 (1993) (attorney who agreed to honor statements signed by client regarding lien for medical care provider may not ignore client's instruction to do otherwise but must notify the provider and hold the funds until the dispute is resolved).
2 Wis. Formal Op. E-09-01 (2009) (when a lawyer holds funds in which the client and a third party assert an interest identified by lien, court order, judgment or contract, and a dispute arises over ownership or division of those funds, the lawyer must hold those funds in trust until the dispute is resolved; asserted interests which do not fall within one of the four listed categories do not trigger obligations under the Rule); Ohio Ethics Op. 2007-7 (2007) (not every claim of a third person triggers a lawyer's safekeeping duty, only a lawful claim that a lawyer knows of is an interest subject to protection under Rule 1.15; lawful claims involve a valid statutory subrogation right as to the specific funds in the lawyer's possession, a written agreement signed by the client promising payment or authorizing the lawyer to make a payment, a letter from a lawyer to a medical provider promising to uphold the client's agreement to pay the provider, a written agreement between an insured individual and a health benefits provider and a secured claim by a creditor that is specific to the funds in the attorney's possession); La. Public Ethics Op. 05-RPCC-004 (2005) (if the lawyer has actual knowledge of a lien, a privilege, a judgment or a guarantee of payment, then the funds do not belong solely to the client; instead, a third party also has an interest in the funds up to the amount of the lien, privilege, judgment or guarantee); Utah Ethics Op. 00-04 (2004) (not every claim made by a third person triggers the duties expressed in Rule 1.15; these duties are triggered when the lawyer receives funds or property in which the lawyer knows that a third person "has an interest."); Pa. Ethics Op. 2003-04 (2003); Conn. Informal Ethics Op. 95-20 (1995) (lawyer has no duty to act on mere assertions of third-party interests or to investigate whether third persons have interests in the client property); Conn. Informal Ethics Op. 01-08 (2001) (lawyer has duty to deliver client's property to the client upon the client's demand despite a third party's claim to the property, unless the lawyer knows of: (1) a valid judgment relating to disposition of the property; (2) a valid and perfected statutory, contractual or judgment lien against the property; (3) a letter of protection or similar obligation specifically entered into to aid the lawyer in obtaining the property; or (4) a written assignment, signed by the client, counsel or other individual with such authority conveying interest in the property to another person or entity); Md. Ethics Op. 97-20 (1997) (lawyer may disburse entire settlement to client where hospital failed to timely submit bills to insurer and thus had no legally valid claim); Ariz. Ethics Op. 88-6 (1988) (third-party claim that is not perfected lien or assignment does not affect client's right); Colo. Ethics Op. 94 (1993) (lawyer must distribute promptly to client if third person's claim does not arise out of statutory lien, contract, or court order); Ariz. Ethics Op. 98-06 (1998) ("actual knowledge" of assignment, medical lien, statutory lien, and letter of protection can trigger lawyer's duty to protect nonclient's interests); Va. Legal Ethics Op. 1747 (1992) (a lawyer's obligation under Rule 1.15 does not extend to all general creditors of the client, but only those persons who have an interest in the settlement proceeds either by law or assignment; if a third party has a valid statutory lien, contract or court order that grants an interest in the settlement proceeds, the lawyer may not ignore the third party's interests); R.I. Ethics Op. 95-60 (1996); Phila. Ethics Op. 86-134 (1986) (lawyer must disburse to client without retaining anything for physicians who are owed payment provided there is no agreement between doctors and client which the lawyer must recognize and protect).
3 Including,Hospital Liens, TCA 29-22-101 et. seq. and Medical Assistance Act, TCA 71-5-101 et. seq. ("... To the extent of payments of medical assistance, the state shall be subrogated to all rights of recovery, for the cost of care or treatment for the injury or illness for which medical assistance is provided, contractual or otherwise, of the recipients against any person... " TCA 71-5-l 17(a); "... If the plaintiff or plaintiff's attorney collects the judgment, each has the obligation to promptly remit the net subrogation interest, and attorneys' fees and costs to any counsel employed by the state or its assignee, as required by the final judgment. .. " TCA 71-5-117(i))
4 Nothing in this opinion is intended to relieve any individual or entity, including plaintiff's counsel, of any obligations, including reporting and/or payment obligations, imposed by the Medicare Secondary Payer Act, 42 U.S.C. §1395y, et seq. Counsel may be subject to a direct action suit by the Center for Medicare and Medicare Services (CMS), recovering attorney fees collected through a settlement or release that is not properly reported and negotiated consistent with the obligations of the statute. 42 U.S.<;::. §1395y(b)(2)(B). 42 U.S.C. §1395y(b)(2)(B)(iii) provides, in part:
Action by United States. In order to recover payment made under this subchapter for an item or service, the United States may bring an action against any or all entities that are or.were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan. The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity. In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan's payment to any entity...
As provided in 42 CFR 41l.24(g):
Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.
42 U.S.C. §1395y(b)(2)(B)(iv) provides:
Subrogation rights. The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.
42 CFR 41l.26(a) provides:
Subrogation. With respect to services for which Medicare paid, CMS is subrogated to any individual, provider, supplier, physician, private insurer, State agency, attorney, or any other entity entitled to payment by a primary payer.
5 R.I. Ethics Op. 2007-02 (2007) (where the client insists that the settlement proceeds be disbursed to the client, and where the inquiring attorney has received no notice of a claim from the health insurer, the inquiring attorney must disburse the settlement funds to the client); R.I. Ethics Op. 2008-03 (2008); Utah Ethics Op. 00-04 (2000) (if client in good faith disputes creditor's interest and instructs lawyer not to disburse property, counsel must protect property until dispute is resolved); Conn. Informal Ethics Op. 95-20 (1995) (lawyer cannot pay money to third person over client's objection).
6 Utah Ethics Op. 00-04 (2000) (if client in good faith disputes creditor's interest and instructs lawyer not to disburse property, counsel must protect property until dispute is resolved); Ariz.Ethics Op. 88-6 (1988) (lawyer may disburse. money if he has concluded that one party is entitled to it under applicable law; but if good faith doubt, he should deposit into trust account pending resolution and initiate an interpleader or other proceeding to resolve the dispute); Ariz. Ethics Op. 98-06 (1998) ("actual knowiedge" of assignment, medical lien, statutory lien, and letter of protection can trigger lawyer's duty to protect nonclient's interests; but good faith doubt requires lawyer to place disputed portion of funds in trust pending resolution of conflicting claims); Wash. Ethics Op. 185 (1990) (iflawyer guaranteed payment to creditor, he must pay creditor unless there is good faith dispute as to amount of debt).
7 Ohio Ethics Op. 2007-7 (2007) (when a lawyer knows there is a dispute between a client and a third person who has a lawful claim under applicable law to the funds in the lawyer's possession, the lawyer's ethical duty under Rule 1.15 is to notify both the client and the third person and to hold the disputed funds in a trust account until the dispute is resolved.); La. Public Ethics Op. 05-RPCC-004 (2005) (upon receipt of funds or property in which a client and/or a third party has an interest, the lawyer shall promptly notify both the client and the third party); S.C. Ethics Adv. Op. 88-06 (1988); R.I. Ethics Op. 95-60 (1996) (lawyer cannot obey client's instruction to refuse reimbursement to health insurer but must notify the insurer and pay the funds in which insurer has legally enforceable interest); R.I. Ethics Op. 95-31 (1995) (lawyer whose client agreed in writing to pay wife one-half of personal injury proceeds must notify the wife and keep disputed portion of proceeds separate until resolution); S.C. Ethics Adv. Op. 93-14 (1993) (attorney who agreed to honor statements signed by client regarding lien for medical care provider may not ignore client's instruction to do otherwise but must notify the provider and hold the funds until the dispute is resolved).
8 Wis. Ethics Op. E-09-01 (2009) (if the dispute between a client and a third party over ownership of funds held in trust cannot be resolved, the lawyer should file a declaratory action to establish the respective rights of the client and third party); Ohio Ethics Op. 2007-7 (2007) (if efforts among the client, the third person, and the lawyer do not resolve the dispute and there are substantial grounds for the dispute, a lawyer may file an interpleader action asking the court to resolve the dispute); La. Public Ethics Op. 05-RPCC-004 (2005); Ala. Ethics Op. 2003-02 (2003) (if there is a legitimate question concerning the debt, or the amount of the debt, the attorney should interplead the disputed funds and let the court reach a determination regarding the creditor's claim); Mich. Informal Ethics Op. RI- 61 (1990) (lawyer may not disburse to client if aware of outstanding lien; unless resolved, attorney must initiate court proceeding to resolve which portion belong to lien holder and client); Utah Ethics Op. 00-04 (2000) (where a third person has a sufficient interest to trigger the duties expressed in Rule 1.15 and a client in good faith instructs the lawyer not to pay the third person, the lawyer must hold the funds or property until the dispute is resolved, or, if resolution seems unlikely, interplead the funds or property); N.C. Formal Ethics Op. 4 (2001).
9 See also: S.C. Ethics Adv. Op. 08-07 (2008) (attorney may not agree to serve as an indemnitor on behalf of her client to protect released parties in a settlement against lien claims asserted by third parties regarding settlement proceeds); Mo. Formal Op. 125 (2008) (it is a violation for an attorney to propose a settlement that includes a provision that would involve a violation of any of the Rules of Professional Conduct by another attorney); Ill. Adv. Op. 06-10 (2006) (a lawyer may not provide a personal guarantee that he will pay the lien and subrogation chargeable against a client's settlement proceeds); Kan. Op. 01-5 (2001) (such agreement places the lawyer in a position where he or she creates a conflict of interest between the client and the insurance company and insured, and/or the lawyer's own interests.); Ind. Ethics Op. 1 of 2005 (2005) (non-Medicare and Medicaid settlement agreements that require a counsel to hold harmless and indemnify the opposing party from subrogation liens and/or third-party claims violate our Rules); N.C. State Bar Ethics Op. RPC 228 (1996) (a lawyer for a personal injury victim may not execute an agreement to indemnify the tortfeasor's liability insurance carrier against the unpaid liens of medical providers);