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April 22, 2022 | Gary Burger

Can a Lawyer not Pay Liens for her Client?

A lawyer cannot guarantee payment of liens in a settlement. The client can, but not the lawyer. MO Informal Opinion 125 – violates ethics rule 4-1.8(e).

Illinois Advisory Opinion No. 06-01 agrees that Rule 1.8(d) bars personally guaranteeing payment of a lien because it constitutes “the provision of financial assistance to his client.”

But it goes on to say that “under Rule 1.15(b), a lawyer representing a plaintiff has an obligation to segregate the settlement funds over which a third party has a claim, to notify persons who have an in interest in those funds (including lien/subrogation claimants) and then distribute the funds owed to said persons.”

Failure to segregate the funds and then distribute them results in the lawyer being directly liable to the third-party subrogation claimant. Western States Ins. Co. v. Olivero, 283 Ill.App. 3d 307, 670 N.E.2d 333, 218 Ill. Dec. 836 (3d Dist. 1996).