Thursday, November 29, 2012

Attorneys' obligations when presenting settlement to guardianship court for approval

On November 13, 2012, the Oklahoma Supreme Court issued an opinion in disciplinary proceedings against two attorneys.  The opinion is interesting on the issue of attorneys' obligations when presenting a settlement to a guardianship court for approval.

The Court noted that, "[i]n August, 2000, a settlement of $650,000 was reached with the defendants in ... nursing home litigation."  The plaintiff's lawyer then "filed an application with the guardianship court for approval of the settlement and distribution of its proceeds."  In his application, the plaintiff's lawyer requested a payment of $30,000 to a law firm that had previously represented the plaintiff, referring to the law firm's claim as a "doubtful and disputed claim."  The law firm had earlier claimed an attorney lien, but had not obtained guardianship approval of its contingent fee agreement.  Importantly, the law firm did not receive notice of the application filed with the guardianship court for approval of the settlement or approval of the payment to the law firm.
¶ 29 In this matter, Respondent Casey essentially took upon himself the task of arbitrating the dispute concerning the attorney lien that LL&D claimed. He determined both the validity and priority of competing attorney liens and sought distribution accordingly. He did not notify LL&D of his receipt of the settlement check nor did he notify LL&D that he would seek the guardianship court's approval of the settlement distribution. By doing so, he breached his obligation under Rule 1.15(b) and (c) to promptly notify anyone whom he knew to be asserting an interest in the settlement distribution so that person or entity could seek judicial resolution concerning the competing attorney liens.
¶30 A lawyer cannot become the sole arbiter concerning the right to settlement proceeds that is a matter for judicial determination following notice to the claim holders. Respondent Casey failed to meet his ethical obligation to see that the interested parties were notified of their need to assert that interest before the trial court.
Based on the above decision, the lawyer representing a guardianship estate owes an obligation to give notice of settlement proceeds to those who hold interests in the settlement proceeds.  Furthermore, the lawyer representing a guardianship estate certainly owes a duty to give notice to those who hold such interests when the lawyer requests a guardianship court to resolve any disputes regarding the enforceability or amount of the interests.

For the full decision, follow this link:

For more discussion on contingent fee agreements in the context of guardianship courts, follow this link: