Search 

Azcourts.gov

Arizona Judicial Branch



FAQ

Register       Login

ATTENTION: This site has been recently moved. If you had an account on our old forum site, you will have to register a new account here in order to be able to post replies.

 

NEW! The Court acted on many pending rule petitions at its August 29, 2017 Rules Agenda.  

Click on the Amendments from Recent Rules Agendas link below to go directly to the amendments and orders for each one.

Message from the Chief Justice

Current Arizona Rules 

Amendments from Recent Rule Agendas

Rule Amendments (2006 to present) 

Advisory Committee on Rules of Evidence


Pending Rules List

         Proposed Local Rules
                 Welcome!
This website allows you to electronically file and monitor court rule petitions and comments and to view existing rules of court, recent amendments of those rules, and pending rule petitions and comments. Any visitor to this site may view posts on this website, but to post a petition or comment you must register and log in. To view instructions on how to register and how to file a petition or comment, please visit our Frequently Asked Questions (FAQ) page. 
PrevPrev Go to previous topic
NextNext Go to next topic
Last Post 20 Jun 2013 02:06 PM by  gtrachtenberg
R-11-0024 Ethical Rule 1.15 (“Safeguarding Property”) of Rule 42, Arizona Rules of the Supreme Court
 66 Replies
Sort:
Topic is locked
Page 2 of 4 << < 1234 > >>
Author Messages
Cole.Sorenson
Posts:

--
15 Nov 2011 04:58 PM
Cole D. Sorenson, #013097
CANTOR LAW GROUP, PLLC
One East Washington St., Suite 1800
Phoenix, Arizona 85004
Telephone: (602) 254-8880
Facsimile: (602) 255-0815
Email: c.sorenson@cantorlawgroup.com


I have read the proposed change to ER 1.15 authored by Mr. Trachtenberg and Mr. Abney. It very eloquently and concisely outlines a major dilemma in personal injury lawsuits where the claimant is represented by counsel.

Some lien claims boarder on the absurd. Yet the providers still assert them which leaves the lawyer in a very uncomfortable position: pay the lien and/or compromise the lien and/or expose your client to a later claim.

Not only is it unfair to allow unmeritorious lien claimants to take advantage of my ethical duties with impunity, it is unfair to force an injury victim's attorney to file a lawsuit against the unmeritorious lien claimant to have the lien declared unenforceable or illegal. That improperly places the burden to disprove the validity of the lien upon the injury victim, instead of the party claiming the unmeritorious lien. The burden should be on the lien claimant to prove that it has a right to the injury victim's funds.

Giving a lien claimant 30 days to file an action to enforce its alleged lien will stop unmeritorious lien claimants from extorting money from injury victim's, while preserving the lien claimant's right to pursue a lien in those instances where the lien claimant believes there is a material dispute to the propriety of the lien.

The proposed change to ER 1.15 should be adopted in full.
kpearson
Posts:

--
17 Nov 2011 12:24 PM
Karl S. Pearson
PEARSON LAW, PLC
4422 N Civic Center Plaza Ste 101
Scottsdale, Arizona 85251
kpearson@pearson-law.com
Bar No. 014594

The proposed change to ER 1.15 authored by Mr. Trachtenberg and Mr. Abney should be adopted in full.

The current rule is being used by some as a means of "extorting" funds from our clients. we are currently obligated to retain our client's funds if someone is asserting a "lien" on the proceeds. In many situations, I am certain that the "lien" is without any merit, but I feel compelled to withhold my client's money as I do not want to run afoul of the current rule. Comment 4 to to the present rule refers to "matured, legal or equitable claims," but there is little guidance regarding what this means.

Accordingly, because lawyers do not want to be accused of "unilaterally" arbitrating the dispute, the clients funds are held hostage pending the resolution of the disputed claim. I have invited bogus lienholders to file suit, but they never do as they know they will lose. Instead, they threaten to file bar complaints if their bogus liens are not honored.

In such situations, clients can either choose to pay the lienholder some amount to release their funds, or file a lawsuit to determine the validity of the bogus lien. If a lawsuit is filed, the bogus lienholder will probably not even respond. However, the client will have to pay the filing fee and the cost of service. The funds will also be tied up for months until there is a ruling from the court.

The proposed rule change balances the competing interests. It allows a lien claimant ample time to file an action to enforce its alleged lien. It also allows the clients to have quicker access to their funds. The proposed rule change will help eliminate extortionate practices and promote fairness.

The proposed change to ER 1.15 should be adopted in full.




skivs11
Posts:

--
17 Nov 2011 04:02 PM
Ryan Skiver
Warnock MacKinlay & Carman, PLLC
7135 E. Camelback Rd., Suite F240
Scottsdale, AZ 85251
602.381.6626 (P)
602.381.6560 (F)
rskiver@lawwmc.com
AZ Bar #024552

I have read the proposed change to ER 1.15 authored by Mr. Trachtenberg and Mr. Abney. It sets forth a very real problem that personal injury lawyers must deal with repeatedly. I encourage the Committee to adopt the proposed rule change.

As a plaintiff's personal injury lawyer, we are required to expend more and more of our time and clients' funds addressing lien assertions by third parties. While some of those lien assertions have merit, many times they do not. In those situations where there is a lack of merit, because of the fear that the unmeritorious lien claimant may accuse me of not properly fulfilling my ethical duties under Rule 1.15, I am forced to withhold my client's funds pending some sort of resolution with the unmeritorious lien claimant. In other words, the client's money is oftentimes held hostage because of my ethical duties. Had my clients not retained an attorney, they would have immediate access to their funds.

Not only is it unfair to allow unmeritorious lien claimants to take advantage of my ethical duties with impunity, it is unfair to force an injury victim's attorney, i.e., me, to file a lawsuit against the unmeritorious lien claimant to have the lien declared unenforceable or illegal. That improperly places the burden to disprove the validity of the lien upon the injury victim, instead of the party claiming the unmeritorious lien. The burden should be on the lien claimant to prove that it has a right to the injury victim's funds.

Giving a lien claimant 30 days to file an action to enforce its alleged lien will stop unmeritorious lien claimants from extorting money from injury victim's, while preserving the lien claimant's right to pursue a lien in those instances where the lien claimant believes there is a material dispute to the propriety of the lien.

In conclusion, the proposed rule change set forth by Mr. Trachtenberg and Mr. Abney seeks to equitably place the burden of proving a lien claim upon the lien claimant. No longer will it be permissible for unmeritorious lien claimants to hold an injury victim's funds hostage because the injury victim retained counsel.

The proposed change to ER 1.15 should be adopted in full.

Sincerely,
/s/ Ryan Skiver

lkoschney
Posts:

--
17 Nov 2011 04:50 PM
Craig J. Simon
Simon Law Group, PLLC
2141 East Broadway Road, Suite 113
Tempe, AZ 85282
Ph: (480)745-2450
Fax: (480)745-2454
Attachments
nickmoceri
Posts:

--
18 Nov 2011 03:55 PM
Nicholas Moceri
Nick Moceri, P.C.
122 N. Cortez, suite 220
Prescott, AZ 86301
928-778-2444
Fax 928-445-6515
email nick.moceri@azbar.org
Bar No. 006038

I write in support of the proposed rule change. My thoughts are in line with Mr. Trachtenberg, Mr. Abney and many others.
The attorneys I am familiar with do their best to protect the interests of legitimate lienholders. There are, however, other lien claimants with claims that are more questionable (or downright invalid) that need to be dealt with. The proposed rule would put the burden of going forward and the burden of proof where it belongs, on the lien claimant.
Many of the persons we have deal with in these situations are professional collection agents. USA Today in this morning's edition had a front page headline about collection agents becoming more aggressive with debtors and crossing the line due to the tough economic times. There is no exception for clients of Plaintiffs' lawyers, and the current rule puts the collector in an even stronger position than if there were no attorney involved. The current rule allows the lien claimant to force the Plaintiffs' lawyer to hold the client's money hostage, thereby depriving the client of the client's funds and driving a wedge between client and attorney.
The proposed change would strike a good balance of competing interests. I urge its adoption.
Nick Moceri
bta4369
Posts:

--
21 Nov 2011 09:31 AM
Brian Allen
Udall, Shumway & Lyons, PLC
30 West First Street
Mesa, AZ 85201
(480) 461-5335
bta@udallshumway.com
Bar #17102

I support the proposed rule change. The issue involved in this proposed rule change is one of fairness. If a third party claims an interest in a claimant's settlement proceeds, the third party should act to protect that interest. This is what the rule change requires. That's fair.
lynn.goar@azbar.org
Posts:

--
06 Dec 2011 04:41 PM
Lynn Eric Goar
1955 W. Grant Rd., Ste. 125
Tucson, AZ 85745-1481
520-740-1447
Lynn.Goar@azbar.org

I strongly support the proposed amendment to Ethical Rule 1.15. Without repeating all of the previous comments in support of this amendment, I would like to state that the current rule unfairly burdens my clients and my practice. Should a party or entity have a legitimate claim to a client's recovery, the burden should be on them to assert it in a timely fashion rather than forcing my client to prove it is invalid. The proposed amendment still provides needed protections for valid liens without unfairly burdening the claimants or their attorneys.
Steve Bruzonsky
Posts:

--
09 Jan 2012 04:49 PM
Steven J. Bruzonsky
1152 E. Greenway, Suite 5
Mesa, AZ 85203
Phone: 480-969-3003
Fax: 480-962-5879
E-mail: SteveBruzonsky@cox.net

I essentially agree with the proposed change to Comment 4 to Ethical Rule 1.15, though I recommend a bit of revision to the proposed change for the reasons which I discuss below.

Liens and subrogation rights are perhaps the most complex and misunderstood topic in all of personal injury law. Please visit my website at www.stevenbruzonsky.com for a lot of information regarding many different types of liens. In addition to my personal injury practice,, I also handle complex lien situations in personal injury, medical malpractice and wrongful death cases for other Arizona attorneys representing injured claimants on a hourly rate basis. Please visit my website for (1) my “Liens Corner” articles on various injury lien subjects published in the monthly Arizona Association of Justice/Arizona Trial Lawyers Association (AAJ/AzTLA) publication “The Advocate” since 2006; (2) for my experience as Faculty and speaker for Continuing Legal Education seminars several times annually on lien related topics for various legal organizations including State Bar of Arizona, AAJ/AzTLA and Arizona Paralegal Association; and (3) for examples of complex lien situations that I have successfully resolved. I am also the Author (four chapters) and Associate Editor, "Arizona Personal Injury Lien Law and Practice", published by the AAJ/AzTLA (2006 with 2007 supplement).

1. The Problem:

My experience is that all too often, lien/subrogation claimants and/or their collection companies do not do their homework to ensure that they have a valid basis to collect their lien/subrogation interest, prior to asserting their lien/subrogation rights. Frankly, for the most part, they do not care about the legal basis, they care about how much they can collect. Most lien/subrogation interests are handled or collected by collection or subrogation companies, which are typically paid on a percentage basis of the amount collected.

During the past several years alone, subrogation/lien claimants have refused to withdraw lien claims which are in my opinion and expertise clearly or most probably invalid, yet when given repeated deadlines to file litigation (or otherwise settlement funds held in Trust would be disbursed without regard to the invalid lien claim), these subrogation/lien claimants failed to follow through to file litigation to protect their interest.

The most egregarious example of this are FEHBA healthplan lien claims, as it is 100% clear that there are no lawfully enforceable FEHBA healthplan lien claims in Arizona. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006) holds that there is no federal jurisdiction, no federal question presented, and no federal preemption of state anti-subrogation law for a Federal Employee Health Benefits Plan subrogation/lien presented, and that the claim must be litigated in state court subject to state law. So Arizona anti-subrogation case law clearly applies to any FEHBA lien claim. (Ethics Opinion 97-02, which advised that an FEHBA lien claim was required to be protected per ER 1.15, was based on the inquiring attorney’s statement that in his opinion the lien claim was valid, and was issued prior to the McVeigh U.S. Supreme Court decision discussed above.) However, lien collection companies for FEHBA healthplan lien claims, such as Rawlings for the Aetna FEHBA healthplan, regularly continue to claim liens and NEVER agree to drop their lien claims, preferring to use ER 1.15 to hold hostage the settlement funds unless and until the Plaintiff attorney agrees to some sort of monetary settlement. In such cases, I have generally given the FEHBA lien collection company multiple deadlines to file litigation, with litigation never being filed. In one case that I am currently handling on behalf of a local law firm, with a $320,000 FEHBA lien claim, a local Phoenix attorney representing Rawlings states in letters that “we will not hesitate to assert all legal rights and seek all remedies against your client available in law and in equity”, and that “you - - - may not distribute settlement proceeds until our lien is satisfied and paid in full” , clearly giving the inference of a threat to report the Plaintiff attorneys to the local bar for violation of ER 1.15.” Yet they have missed filing litigation on multiple deadlines and they also haven’t reported any ER 1.15 violation to the bar.

2. The Proposed Solution:

Attorneys Trachtenberg and Abney have proposed an excellent solution to this dilemma. However, I believe that their proposed change to Comment 4 to Ethical Rule 1.15 should be revised a bit.

As proposed, the amended comment may be interpreted to mean that a plaintiff’s attorney may simply give this certified mail thirty (30) day notice to any lien claimant, and if litigation isn’t filed within that deadline, then the plaintiff’s attorney may disburse settlement funds without regard to the lien claim. I do not believe that this is the intent of attorneys Trachtenberg and Abney. My understanding of their intent is that when there are substantial grounds for dispute as to the person entitled to the funds, that the plaintiff’s attorney may give this certified mail thirty (30) day notice. So if there are not “substantial grounds for dispute”, such as when the lien rights are reasonably established, then the plaintiff attorney can not utilize this certified mail thirty (30) day notice to avoid ER 1.15 ethical responsibity. For example, Medicare liens generally do not have any “substantial grounds for dispute” of the subrogation/lien right itself.

Also, I recommend a sixty (60) day notice, as this will give subrogation/lien collection companies and/or the subrogation/lien claimants more adequate time to refer the matter first to their own in house legal counsel, and then for referral to local Arizona counsel for litigation if they deem this appropriate. Too short of a notice period could result in the plaintiff attorney having disbursed all settlement funds without regard to the lien claim, yet the matter still gets referred to local Arizona counsel with litigation filed against the injury client.

3. My Recommended Amendment to the Comments:

[Additions to Comment 4 to Ethical Rule 1.15 (“Safeguarding Property”) of
Rule 42, Arizona Rules of the Supreme Court, by attorney Steven J.
Bruzonsky, are shown in bold print.]

The Rule also recognizes that third parties may have just claims against specific funds or other property in a lawyer's custody, such as a client's creditor who has a lien on funds recovered in a personal injury action. A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client. In such cases, when the third-party claim has become a matured legal or equitable claim, the lawyer must refuse to surrender the property to the client until the claims are resolved. A lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party, but, when there are substantial grounds for dispute as to the person entitled to the funds, the lawyer may file an action to have a court resolve the dispute. In the alternative, when there are substantial grounds for dispute as to the person entitled to the funds, the lawyer’s ethical duties under Rule 1.15(e) shall be satisfied (1) if the lawyer files an action to have a court resolve the dispute, placing the disputed funds in Trust pending court resolution of the dispute, or (2) alternatively, if the lawyer provides sixty (60) calendar days written notice, by certified mail, to the third-party. The written notice must state that the disputed funds will be held in Trust for those sixty (60) calendar days; that if the third party does not file an action to determine the third party’s lien or subrogation rights within those sixty (60) calendar days, then the disputed funds will be released immediately thereafter to the lawyer’s client; and that if the third party files the action to determine the third party’s lien or subrogation rights within those sixty (60) calendar days, then the lawyer will continue to hold the disputed funds in Trust pending resolution of the dispute.
SSiesco
Posts:

--
31 Jan 2012 06:27 PM
Sara Siesco
Bohm & Jones, P.C.
2141 E. Camelback Road, Suite 100
Phoenix, Arizona 85016
602-840-8787
ssiesco@bojolaw.com
State Bar No. 0257803

I have read the proposed change to ER 1.15 authored by Mr. Trachtenberg and Mr. Abney. It very eloquently and concisely outlines a major dilemma in personal injury lawsuits where the claimant is represented by counsel. I encourage the Committee to adopt the proposed rule change.

As a plaintiff personal injury lawyer, over the past few years I have been required to expend more and more of my time and client funds addressing lien assertions by third parties. Some of those lien assertions have merit. Unfortunately, many times they do not. In those situations where there is a lack of merit, because of the fear that the unmeritorious lien claimant may accuse me of not properly fulfilling my ethical duties under Rule 1.15, I am forced to withhold my client's funds pending some sort of resolution with the unmeritorious lien claimant. In other words, the client's money is oftentimes held hostage because of my ethical duties. Had my clients not retained an attorney, they would have immediate access to their funds.

Not only is it unfair to allow unmeritorious lien claimants to take advantage of my ethical duties with impunity , it is unfair to force an injury victim's attorney, i.e., me, to file a lawsuit against the unmeritorious lien claimant to have the lien declared unenforceable or illegal. That improperly places the burden to disprove the validity of the lien upon the injury victim, instead of the party claiming the unmeritorious lien. The burden should be on the lien claimant to prove that it has a right to the injury victim's funds.

Giving a lien claimant 30 days to file an action to enforce its alleged lien will stop unmeritorious lien claimants from extorting money from injury victim's, while preserving the lien claimant's right to pursue a lien in those instances where the lien claimant believes there is a material dispute to the propriety of the lien.

In conclusion, the proposed rule change set forth by Mr. Trachtenberg and Mr. Abney seeks to equitably place the burden of proving a lien claim upon the lien claimant. No longer will it be permissible for unmeritorious lien claimants to hold an injury victim's funds hostage because the injury victim retained counsel.
The proposed change to ER 1.15 should be adopted in full.

Sara Siesco
lkoschney
Posts:

--
21 Feb 2012 10:42 AM
JoJene Mills, P.C.
1670 East River Road, Suite 270
Tucson, AZ 85718-5834
Ph: 520-529-3200
Fax: 520-529-3113
Attachments
lkoschney
Posts:

--
02 Mar 2012 09:56 AM
John P. Torgenson, Esq.
Stephen D. Benedetto, Esq.
Julia S. Acken, Esq.
Jordan A. Smith, Esq.
Benedetto Torgenson, PLC
The Phoenix Plaza
2901 N. Central Avenue, Suite 200
Phoenix, AZ 85012
Ph: 602-759-0012
Fax: 602-513-7066


Attachments
Louis
Posts:

--
26 Apr 2012 01:32 PM
Louis T. Seletos
Farley, Seletos & Choate
Staff Counsel Farmers Insurance
2400 W. Dunlap Ave, Suite 305
Phoenix AZ 85021
602-395-2040
State Bar Number 009562
louis.seletos@farmersinsurance.com

I am a personal injury defense attorney and I agree with the proposed changes to this rule. The law should strive for both a fair resolution and certainty. Currently, the rule only serves to prolong the resolution of a matter often to the detriment of the client. The proposed change provides a mechanisim for valid liens to be asserted and enforced and brings the matter to a conclusion.
kcarman
Posts:

--
26 Apr 2012 02:12 PM
I support the proposed change to Rule 1.15 as the 30 days to file an action will ensure that alleged liens are dealt with properly and it equally stops the unnecessary delay for the injured person from receiving their settlement money. This is a common problem in my personal injury practice and as the rule currently stands plaintiffs and their lawyers are at the mercy of any lien claimant who may never respond to our numerous requests for lien information or payment compromises. Therefore, the money sits in trust for years just waiting for a response while countless hours of calls and follow-up letters are wasted on a lien claimant that is not interested in returning a phone call. I support this change and see it as necessary. Please adopt it in full.
Thank you.

Krista Carman
246 S. Cortez St
Prescott, AZ
86303
kcarman@lawwmc.com
928-445-8056
State Bar No. 021700
AZStateBar
Posts:

--
02 May 2012 03:42 PM
John A. Furlong, Bar No. 018356
General Counsel
State Bar of Arizona
4201 North 24th Street, Suite 100
Phoenix, Arizona 85016-6266
602.252.4804
John.Furlong@staffazbar.org
Attachments
Czachar
Posts:

--
04 May 2012 01:28 PM
Christopher J.Zachar,Esq.
3301 East Thunderbird Road
Phoenix, Arizona 85032
Ph: 602-494-4800 Fax: 602-494-3320
Czachar@zacharlaw.com


I have read with great interest the submission by Mr. Trachtenberg and Mr. Abney. I have also read many of the comments submitted by Arizona counsel.

It is my opinion that this amendment to Rule ER 1.15 is very much needed.

I have been practicing in the area of personal injury law for 20 years in Arizona. Over that time, the application of ER 1.15 has evolved, and become even more important in the day to day practice of personal injury attorneys. It seems that everyday we are in process of receiving and evaluating lien claims, and explaining the issues to our clients. In the same discussion we explain exactly "who is the client" and to whom we owe legal duties of due care. While we belive that we understand these issues, the truth is that lien "claimants" are often able to hold a client's recovery "hostage" with a mere allegation that they have a claim, irregardless of merit. Often these disputes drag on for months. There must be a better way and clearly, as the one asserting a lien claim, the lien claimant must bear the burden of proving entitlement--not the other way around. A mere allegation of a claim should not be able to hold "hostage" a client's recovery for any excessive duration. Limits must be imposed.

As I understand the Petition, the request is made to place the burden of proof upon the lien claimant and establish a time frame for determination. In fairness to our clients, the victims, ER 1.15 must be amended in this regard. A 30 day window as described by my colleagues is most fair and appropriate in this instance.

The proposed change to ER 1.15 should be adopted in full.



bwarnock
Posts:

--
04 May 2012 03:29 PM
Brian Warnock
Warnock, MacKinlay& Carman
7135E Camelback Rd Ste F240
Scottsdale AZ 85251
602-381-6669
bwarnock@lawwmc.com
Bar # 012400

I have read the proposed change to ER 1.15 authored by Mr. Trachtenberg and Mr. Abney. It very appropriately addresses a major dilemma in personal injury lawsuits where the claimant is represented by counsel. I encourage the Committee to adopt the proposed rule change.

As a plaintiff personal injury lawyer, over the past few years our firm has been required to expend more and more time and client funds addressing lien assertions by third parties. Very few of those lien assertions have merit. Where there is a lack of merit, because of the fear that the unmeritorious lien claimant may accuse us of breaching ethical duties under Rule 1.15, we must withhold client's funds pending some sort of resolution with the unmeritorious lien claimant. In other words, the client's money is oftentimes held hostage because of our ethical duties. Had our clients not retained an attorney, they would have immediate access to their funds.

Not only is it unfair to allow unmeritorious lien claimants to take advantage of our ethical duties with impunity , it is unfair to force an injury victim's attorney, to file a lawsuit against the unmeritorious lien claimant to have the lien declared unenforceable or illegal. That improperly places the burden to disprove the validity of the lien upon the injury victim, instead of the party claiming the unmeritorious lien. The burden should be on the lien claimant to prove that it has a right to the injury victim's funds.
Giving a lien claimant 30 days to file an action to enforce its alleged lien will stop unmeritorious lien claimants from extorting money from injury victim's, while preserving the lien claimant's right to pursue a lien in those instances where the lien claimant believes there is a material dispute to the propriety of the lien.

In conclusion, the proposed rule change set forth by Mr. Trachtenberg and Mr. Abney seeks to rightfully place the burden of proving a lien claim upon the lien claimant. No longer will it be permissible for unmeritorious lien claimants to hold an injury victim's funds hostage because the injury victim retained counsel.

The proposed change to ER 1.15 should be adopted in full.

alangerman
Posts:

--
04 May 2012 04:20 PM
Amy Langerman
Law Office of Amy Langerman
951 Coronado Avenue
Coronado, CA 92118
619-437-4579
alangermanlaw@aol.com

Dear Justices:

I write in support of the petition to amend ER 1.15 filed by Geoffrey Tractenberg and David Abney. While I reside in California presently, I am an attorney, licensed to practice law in the State of Arizona and continue to practice in Arizona (state and federal courts) as well as the Office of Administrative Hearings. While the scope of my practice has changed over the years, for the first 20 years of my practice, I was an attorney handling personal injury, medical malpractice and employment discrimination cases, many of which involved claims for injuries resulting in medical expenses for which some third party claimed some kind of lien. While initially, those liens were handled swiftly and efficiently under Arizona common law that prohibited assignments of personal injury claims and effectively outlawed third party lien claims, over the years, federal and state law changed and lien claims became a veritable cottage industry for collection agencies and their attorneys. The victim of this industry was the injured claimant, who already having suffered at the hands of a tortfeasor, now suffered even more, at the greedy hands of third parties and their administrators, adjusters and most commonly, assignees, who sought to profit by making spurious claims that were too costly for the victims to fight. The lawyer who was trying to pursue justice for the victim, and had successfully negotiated a fair resolution (or obtained a verdict), now was forced to hold his or her client’s recovery in a bank while some third party held it hostage. Strong words? You bet! The rule change here is designed to deal with a significant loophole that allows for abuse of victims through delay, recalcitrance, and sometimes, extortion.

The most common problem that I faced was recalcitrance and delay. I echo the experiences of Jojene Mills, my former associate, who explained a recent experience she had, just trying to get someone to even respond. My office would write and call and email and would be met with silence. Sometimes we could reach someone who understood what we needed; often, we would get a person answering a phone who was clueless. We would try to get documents to which an injured person was entitled (e.g. plan documents to support a claimed lien, an itemized bill to see if the lienholder was charging only reasonable and necessary expenses and not $30.00 for one Tylenol tablet) and would be met with silence. We would try to get an affirmation of the actual amount claimed to be owing and the statutory or legal basis to support such a claim and would be get nothing other than a copy of the demand for payment/claim. As an attorney working on a contingency fee, I got nothing more for handling a lien dispute; my fee was a percentage of the recovery. I was trying to resolve a disputed claim to the client’s share of the recovery, a claim that often was without legal basis under Arizona or federal law. Ethically, I could not distribute the funds to my client even when the law was clear that the lienholder had no valid claim. I remember years ago calling the State Bar Ethics hotline and asking if I had to succumb to the extortion of a lienholder making a legally unsupportable claim (e.g. a lienholder claimed they were entitled to be paid when the law made clear they had no lien) and I was told that if the lienholder made a claim, no matter how spurious, I could not disburse the funds unless I was willing to be on the hook for any lawsuit that the lienholder then wanted to file, something my malpractice carrier would likely not have defended or paid. Unscrupulous lien holders could assert a claim, force me to hold the funds hostage and then would do nothing hoping that the injured client would finally give in and pay something. It would be too costly (emotionally and often economically) to file yet another claim, in an overworked court system, seeking a declaratory judgment over who owed what to whom.

The proposal before the court hurts NO VALID lien holder or, for that matter, a third party who seeks to make a claim to funds, even if spurious. It recognizes that if a lienholder is trying to make a claim for property (in this instance, a personal injury recovery), they would have the burden to establish their entitlement and the amount of their entitlement. What this does is mandate that they act timely and reasonably to pursue their rights and that THEY pursue them. Most of these lienholders had no problem filing a claim shortly after the services were provided as they are required to do to perfect the claim; once filed, they feel they are protected, regardless of the legal validity of their filing. If their claim is valid, they have an incentive to act promptly upon notice of a settlement because the plaintiff’s attorney knows that the claim must be paid, knows the law on compromise, and most of those claims will be resolved informally. But, if there is no valid basis for the claim, but the lienholder has filed a claim nonetheless, why should they be allowed to sit back, ignore legitimate inquiry for substantiation (factual and legal) of the asserted claim rights, and when the claim is settled, continue in obstructionist tactics hoping to get something by wearing down the victim even further. Why should the victim have to file some sort of declaratory action when the lienholder otherwise would have to prove up their claim anyway. If a lienholder wants to make claim to someone else’s personal injury recovery, the lienholder should be given notice of the intent to distribute as proposed by the Tractenberg/Abney amendment and then 30 days to act on their legal rights or waive them. It is a fair compromise that hurts no one that is acting in good faith.

The proposed change to ER 1.15 should be adopted in full.

ahernandez
Posts:

--
04 May 2012 06:10 PM
Amy Hernandez
Piccarreta Davis PC
145 S. 6th Avenue
Tucson, Arizona 85701
520-622-6900 phone
520-622-0521 fax
ahernandez@pd-law.com
022892

I have read the proposed change to ER 1.15 authored by Mr. Trachtenberg and Mr. Abney. It eloquently and concisely outlines a major dilemma in personal injury lawsuits where the claimant is represented by counsel. I encourage the Committee to adopt the proposed rule change.

As a plaintiff personal injury lawyer, over the past few years I have been required to expend more and more of my time and client funds addressing lien assertions by third parties. Some of those lien assertions have merit. Unfortunately, many times they do not. In those situations where there is a lack of merit, because of the fear that the unmeritorious lien claimant may accuse me of not properly fulfilling my ethical duties under Rule 1.15, I am forced to withhold my client's funds pending some sort of resolution with the unmeritorious lien claimant. In other words, the client's money is oftentimes held hostage because of my ethical duties. Had my clients not retained an attorney, they would have immediate access to their funds.

Not only is it unfair to allow unmeritorious lien claimants to take advantage of my ethical duties with impunity , it is unfair to force an injury victim's attorney, i.e., me, to file a lawsuit against the unmeritorious lien claimant to have the lien declared unenforceable or illegal. That improperly places the burden to disprove the validity of the lien upon the injury victim, instead of the party claiming the unmeritorious lien. The burden should be on the lien claimant to prove that it has a right to the injury victim's funds.
Giving a lien claimant 30 days to file an action to enforce its alleged lien will stop unmeritorious lien claimants from extorting money from injury victim's, while preserving the lien claimant's right to pursue a lien in those instances where the lien claimant believes there is a material dispute to the propriety of the lien.

In conclusion, the proposed rule change set forth by Mr. Trachtenberg and Mr. Abney seeks to equitably place the burden of proving a lien claim upon the lien claimant. No longer will it be permissible for unmeritorious lien claimants to hold an injury victim's funds hostage because the injury victim retained counsel.

The proposed change to ER 1.15 should be adopted in full.
mark@breyerlaw.com
Posts:

--
06 May 2012 01:05 PM
Mark P. Breyer
Breyer Law Offices, P.C.
15715 S 46th Street, Suite 100
Phoenix, AZ 85048
(480) 505-2160
(480) 496-7311 fax
mark@breyerlaw.com
State of Arizona Bar No. 016862

Without repeating the comments of others, I would like to start with a proposition that would appear obvious from the submissions thus far: monies due to injured Arizona plaintiffs are being withheld as a result of lien claims that are sometimes unfounded. Under the current ethical rules, an attorney representing someone who is owed money is sometimes placed in the position of withholding funds even if there is no legitimate, valid lien. Thus, there must be a mechanism to allow attorneys to ethically represent their clients without unnecessary delay or unfair risks being placed upon the attorneys. At the same time, any ethical rule change must ensure that an attorney may not ignore the rights of lienholders with valid claims. The rule change proposed by Mr. Abney and Mr. Trachtenberg ensure the rights of valid lienholders will be protected, while at the same time minimizing unfair and undue delay to the rights of clients who hired Arizona counsel. Other than one small change, I support the proposal in its entirety.

It is worth noting that the rule change will have little impact on valid lienholders that exercise their lien rights with due diligence. Attorneys representing injured clients will still have significant disincentive to disbursing funds when a valid lien exists. Lienholders that choose to protect their rights still have the opportunity to do so and nothing in the proposal divests a valid lienholder of its right to pursue such a claim. Conversely, those who would like to take advantage of claimants by alleging liens that are known to be unsupportable under current Arizona law will be forced to stop bilking those who have been injured from money that should belong to the victim.

At the crux of the matter, I would echo the statements of Amy Langerman, above, "The proposal before the court hurts NO VALID lien holder or, for that matter, a third party who seeks to make a claim to funds, even if spurious. It recognizes that if a lienholder is trying to make a claim for property (in this instance, a personal injury recovery), they would have the burden to establish their entitlement and the amount of their entitlement. What this does is mandate that they act timely and reasonably to pursue their rights and that THEY pursue them. Most of these lienholders had no problem filing a claim shortly after the services were provided as they are required to do to perfect the claim; once filed, they feel they are protected, regardless of the legal validity of their filing. If their claim is valid, they have an incentive to act promptly upon notice of a settlement because the plaintiff’s attorney knows that the claim must be paid, knows the law on compromise, and most of those claims will be resolved informally."

The proposed change to ER 1.15 should be adopted in full with one exception. In recognizing the importance of protecting the rights of purported claimants, I would propose a 45 day time period after sending the initial letter. While this does slow the final recovery to the plaintiff, it virtually eliminates any lienholder from being forced to respond to the certified letter so quickly that it loses out on valid lien rights. While 30 days is probably more than sufficient, those extra 15 days - 45 days total - would eliminate any potential prejudice to a lienholder with a valid claim under almost any conceivable circumstance. Anything longer than 45 days becomes an unnecessary delay placed upon the injured client.
ecrowley
Posts:

--
07 May 2012 10:28 AM
Thomas G. Kelly, III
Law Office of Thomas G. Kelly, III
201 W. 2nd St.
Yuma, Az 85364
928 376-0794 (p)
928 376-0795 (f)
tgkellyiii@aol.com
AZ Bar #004703

I have read the proposed change to ER 1.15 and wholeheartedly support the Rule change.

I have practiced personal injury law for most of my 35 + years as a member of the Az State Bar. Over the past few years, the number of entities claiming a right to reimbursement out of a personal injury settlements/verdicts has grown astronomically. Many of these entities are represented by companies that can only be described as bill collectors. Their motivation is to obtain reimbursement for their masters, whether or not they are entitled to such reimbursement, because their compensation is based upon their success of their collection efforts. This scenario places the Attorney in the ethical dilemma of paying his client while risking a Bar complaint or holding the client's money hostage to a claim of reimbursement which may not be meritorious. It is unfair to place an attorney and his/her client in such an ethical/personal quandry.

Allowing the claimaint 30 days to file an action to enforce its purported claim is fair and will stop claims that are without merit while preserving the lien claimaint's rights.

In summary, the proposed Rule change protects the interests of lien holders and also eliminates improper collection practices against injured parties.

The change to ER 1.15 should be adopted as proposed.

Topic is locked
Page 2 of 4 << < 1234 > >>