Peter M. Gorski
Law Offices of Peter Gorski, PLC
40 North Central Avenue, Suite 1400
Phoenix, Arizona 85004
480-730-1777
480-305-5974
[email protected]
Arizona State Bar No. 009102

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Respectfully,
Peter M. Gorski

Sara Siesco
Jones|Raczkowski, PC
2141 East Camelback, Suite 100
Phoenix, Arizona 85016
Phone: (602) 840-8787 Ext. 122
Fax: (602) 840-0425
E-Mail: [email protected]
Bar Number: 027803

Dear Justices,

I am writing in support of Petition R-12-0032.

The current state of ER 1.15 (1) creates an ethical-equivalent to a prejudgment attachment without any statutory or constitutional protections; (2) places attorneys in a conflicted position owing ethical and legal duties to both clients and third-parties whom may be adverse to one another, e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and (3) exposes clients, particularly clients under financial distress, to illegitimate claims.

ER 1.15 freezes client funds without any established or preliminary legal process merely triggered by "claim[ed] interests" of third-parties. ER 1.15(e),applies broadly to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in an inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with the clients to whom they owe fiduciary duties. The situation is worsened by the Rule and Comment's suggestion that the burden is on both attorney and client to litigate the existence or scope of alleged third-party claims. Personal injury clients are often under financial duress. Tort recoveries, after all, only aim to put the victim back to where they were before the tort. These clients are left vulnerable to illegitimate claims against their tort recoveries forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

/s/ Sara A. Siesco

Amy Langerman (Az Bar No.: 009174)
Law Offices of Amy Langerman
951 Coronado Avenue
Coronado, CA 92118
619-437-4579
619-437-4580 (fax)
[email protected]

Dear Justices:

I write in support of the proposed changes to E.R. 1.15 authored by Mr. Trachtenberg and Mr. Abney. I echo many of the sentiments raised by the attorneys who have already commented on this proposed change. I write to add a few additional thoughts for consideration.

For the first 20 years of my career, I handled personal injury, wrongful death, and employment litigation, much of which included claims for health care treatment and ended up resulting in liens by doctors, insurers, and others, seeking to take the proceeds that I had finally recouped, often after years of battle, for a seriously injured victim of tortious misconduct. Those “takers” seemed to become more and more cavalier as the years went by and as insurance companies whittled away at what they were paid under health or other insurance for the care they provided. They wanted more. They had been paid up front, and now wanted more.

None of these health care providers were governed by the ethical rules that I had to follow. They could say or do pretty much whatever they wanted with impunity. They often would quote to me their view of MY ethical obligations, telling me that I COULD NOT distribute one penny of whatever it was they were holding hostage until and unless my client incurred more costs, more time, more heartache and more trauma from the system that mandated that I hold THEIR money until I filed a lawsuit and I sued to prove that someone’s lien was bogus. I had never before heard of or seen a system that allowed people claiming they were owed money to sit back and do nothing to either prove up their claim or seek a resolution to what they were owed. They got a free ride. They would threaten with the power they wielded. They knew that regardless of how specious their claim was, they could extort something out of the injured and infirm, simply by their bullying tactics.

I was thrilled to see the original proposal that was submitted to remedy this problem and wrote in support of it. I was disheartened to see the State Bar, through its committee structure, jettison a fair and balanced approach to the solution and one that was properly filed under Rule 28. Instead of allowing the Rule 28 process to complete itself, the State Bar decided to veto the proposition, not because it was wrong, and not because it was unfair, but because it could and because its corporate attorney members and their clients benefit from delay. They threw this back to the committee process that has largely never fairly represented both sides. In the years when I chaired the Amicus Curiae Committee of the Arizona Trial Lawyers Association (1984-2004), I also sat on the Civil Practice Committee (at least for a while), where I saw how the committee structure worked. The committee was not bipartisan nor did it ever attempt to do what was fair or balanced. No matter how many judges or commercial lawyers would join with the underrepresented plaintiff bar, the defense could call out members who showed up only when needed to vote and jettison a proposal. After I successfully used the Rule 28 process to present the rule proposed by a bipartisan subcommittee to amend Rule 35 but that had been vetoed in a party line vote in the committee as a whole, I was “uninvited” on the committee. I relay this experience because once again, the forces that control the State Bar have put a hold on the previous rule to submit one that does NOT resolve the problem and makes the matter worse. It does NOT seek to protect BOTH sides, which is what the State Bar should be doing. Thus, Mr. Abney and Mr. Trachtenberg are once again proposing a solution that protects valid lien holders, is consistent with procedures and rules already in place for “pre-judgment attachments”, and places the onus of proving ownership to funds on the party disputing the matter.

I support this Proposed Amendment and I support the process of Rule 28. I oppose further efforts to deny the Rule 28 process by relegating rules to committees that DON’T represent all sides of the bar and do NOT present a fair process “for the little guy”. Rule 28 affords those who are interested an opportunity to speak and seeks to place the responsibility of a fair process for ALL parties in the judicial system back in the Supreme Court, where it should be.

Respectfully, the rule proposed by Mr. Tractenberg and Mr. Abney should be neither controversial nor controverted. It is balanced. It protects the rights of lienholders, even those who are acting illegally, immorally, and improperly by trying to extort money. It gives them the opportunity to prove up their claim and to be paid, IF they are entitled to. But, it no longer puts victims at the mercy of those who used the former process to bully and abuse.

In conclusion, the proposed rule promotes equity and should be adopted in full.


Sincerely,
Amy Langerman

Jeffrey I. Ostreicher, Esq.
Jeffrey I. Ostreicher, PC
333 W. Roosevelt St.
Phoenix, Arizona 85003
602-495-9726
602-495-9706 (fax)
[email protected]
Bar No. 005271

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process.  In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims."  ER 1.15, Comment No. 4.  This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties.  The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims.  The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort.  This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice.  This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants.  It should be adopted in full.

/s/ Jeffrey I. Ostreicher

Steven L. Reed
O’Steen & Harrison, PLC
1757 E Baseline Road, Ste 111
Gilbert, AZ 85233
Phone: 480-644-1558
Fax: 480-644-1695
[email protected]
Bar Number 006951

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.


/s/ Steven L. Reed

Ilya Elena Lerma, Esq.
Tidmore Law Offices, LLP
301 E. Bethany Home Road, Suite B140
Phoenix, AZ 85012
(602) 264 1973 (phone)
(602) 230-7377 (fax)
[email protected]
Bar No. 019573

Hon. Justices of the Supreme Court,

The proposed amendment to E.R. 1.15 authored by Mr. Trachtenberg and Mr. Abney provides clear and necessary guidance to attorneys facing treacherous ethical waters. It further serves to protect the rights of injured parties against unverified and tenuous claims asserted by third parties. I vehemently support the adoption of this proposed language.

Unfortunately, it is not at all uncommon for third-party providers to assert unsubstantiated or unrelated claims against anticipated personal injury recovery/proceeds. Often, this is done in an unscrupulous attempt to force recovery, compromise or payment where none exists. Other times, it is an ill-prepared (often large, corporate) entity that will arbitrarily and egregiously lay claim to substantial proceeds of recovery because it failed to examine the treatment record to verify validity of the claim. In either case, the client and the attorney are forced to contend with overreaching and wholly unsubstantiated claims to their detriment. Indeed, there is no meaningful prerequisite for the assertion of the claim that triggers the ethical obligation to guard funds for an entity that is NOT the client. The lawyer must essentially act in the interest of the claimed lienholder despite the fact this places the lawyer in direct conflict with the client.

This matter requires the urgent attention of the Court as it faces the personal injury litigator on a daily basis. The proposed language offers concise guidance in an area that is becoming increasingly problematic for the personal injury practitioner. The proposed amendment does nothing to hinder the legitimate claims of medical providers and further serves to eliminate the conflict of interest specter looming when the attorney is forced to act against the interest of the client. The proposed amendment should be adopted in full and as urgently as possible.

Respectfully,

/s/ Ilya E. Lerma

William S. Chick
4500 N. 32nd Street, Suite 201C
Phoenix, AZ 85018
PHONE (602)954-7975
FAX (602)954-4629
[email protected]
State Bar # 003387








Dear Justices,

I am writing in support of Petition R-12-0032.

The current state of ER 1.15 (1) creates an ethical-equivalent to a prejudgment attachment without any statutory or constitutional protections; (2) places attorneys in a conflicted position owing ethical and legal duties to both clients and third-parties whom may be adverse to one another, e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and (3) exposes clients, particularly clients under financial distress, to illegitimate claims.

ER 1.15 freezes client funds without any established or preliminary legal process merely triggered by "claim[ed] interests" of third-parties. ER 1.15(e),applies broadly to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in an inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with the clients to whom they owe fiduciary duties. The situation is worsened by the Rule and Comment's suggestion that the burden is on both attorney and client to litigate the existence or scope of alleged third-party claims. Personal injury clients are often under financial duress. Tort recoveries, after all, only aim to put the victim back to where they were before the tort. These clients are left vulnerable to illegitimate claims against their tort recoveries forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Cole D. Sorenson
The Law Office of Cole D. Sorenson PLLC
1302 W. Camelback Road
Phoenix, AZ 85013
602-535-1201 (fax)
[email protected]
013097

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.


/s/ Cole D. Sorenson

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted puts me in the conflict-riddled position of owing dueling ethical and legal duties to my client and third-parties. These duties are almost always adverse to one another and violate ethical rules by putting me in the untenable position of representing dueling interests.

The practical and real-world effect of ER 1.15 is that it freezes client funds without any legal process. This ethical rule as currently written is triggered by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." I do not even know what the true definition of a "matured legal or equitable claim" is and the Comment warns against me "unilaterally arbitrating" these matters.

This puts me at odds with my client to whom I owe a fiduciary duty. The situation is worsened by the Rule and Comment's suggestion that the burden is on me and my client to file suit to litigate the existence or scope of these alleged third-party claims. The fact is, most injured clients are under financial duress and this leaves them vulnerable to illegitimate claims against their tort recoveries. It forces my client to make the choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Attorney Joseph Silence Bar#012351
4727 E. Bell Rd. Suite 45 PMB 227
Phoenix, AZ 85032
[email protected]
Phone 602-243-9900
Fax 602-482-0562

JoJene Mills
Law Office of JoJene Mills, P.C.
1670 East River Road, Suite 270
Tucson, Arizona 85718
(520) 529-3200
(520) 529-3113 (fax)
[email protected]
Arizona State Bar No. 10372

I am writing in support of the R-12-0032, to amend E.R. 1.15. Because this Petition attempts to remedy the same problems as R-11-0024, I repeat my comment to that Petition. These problems have only grown worse since my association’s efforts last year.

The Petition and Comments to this point describe well the terrible dilemma lawyers and personal injury claimants face as a result of “liens” claimed in a myriad of circumstances. These issues are very complex, such that the Arizona Trial Lawyers Association devotes a day-long seminar, every year, to updating current law and practices concerning liens.

So that the Court has the full picture: personal injury claimants are entitled to fair compensation for all the harm they suffer due to the negligence of another. University of Arizona v. Superior Court, 136 Ariz. 579, 585, 667 P.2d 1294, 1300 (1983). Fair compensation includes past medical expenses. Saide v. Stanton, 13 Ariz. 76, 78, 659 P.2d 35, 37 (1983), Revised Arizona Jury Instructions (Civil) Negligence, Personal Injury Damages 1 “Measure of Damages.”

The claimant’s medical expenses may have been paid by a third entity, most frequently under a contract for health insurance, but also sometimes by AHCCCS, Medicare, government employee health benefits, workers compensation carriers or others. If the claimant recovers, through verdict or settlement, the third parties MAY have a right to be paid back some of their expenses in paying for the claimant’s medical or other needs. Originally, such claims were invalid as impermissible assignments of personal injury claims. This is because of common law policy that “to require an injured policy holder to return to his insurer the benefits for which he has paid premiums is to deny him the benefits of his thrift and foresight.” Allstate Ins. Co. v. Druke, 118 Ariz. 301, 304, 576 P.2d 489, 492 (1978).

In addition, some healthcare providers claim a right to “balance bill” against personal injury recoveries. A.R.S. §33-931, et seq. In other words, providers claim a right to recover money for their services above and beyond the amount they agreed to accept under contracts with health insurers, AHCCCS, Medicare, etc.

There are some statutes that provide this right and a method for determining how much must be paid back in some situations. This is true for AHCCCS (A.R.S. §36-2915), Medicare (42 USC §1395 et seq), workers compensation cases (A.R.S. §2301023). There are other situations in which third parties, especially group health insurers, claim a right to repayment that is valid in only some states, but not others, under federal ERISA law. Then there are the “balance billing” claims. All these situations are referred to in the personal injury practice as “liens.”

With every lien, there is a gauntlet of questions that must be resolved by the claimant’s attorney in order to adequately protect the client’s rights, i.e. make sure the client does not repay invalid or excessive liens. These questions include: (1) is it a legally valid lien? (2) Are the amounts claimed related to the injury at issue? (3) Will the lien be reduced so that the lien holder pays its fair share of the fees and costs necessary to generate the fund, i.e. the “procurement costs” in the common fund doctrine? See e.g. Lobambard v. Samaritan Health Service, 195 Ariz. 543, 991 P.2d 246 (App. 1998). (4) If the claimant receives less than the claim’s full value, due to inadequate insurance, comparative fault of others or other reasons, is the lien proportionately reduced?

The unfortunate reality is that a majority of “liens” are sold by health insurers and governments to collection companies. Lawyers must try to resolve the questions above with people who are essentially bill collectors, clerks who have no knowledge, or interest, in questions about validity. They simply keep sending the same demand for payment, over and over again, without acknowledgement of any questions raised.

The most abusive situations seem to occur with “ERISA liens.” Many years ago, in an attempt to lower health care costs for employers, Congress allowed employers to “self-fund” health benefits for their employees and a vast set of regulations arose for those “self-funded” plans. However, health insurers have used the ERISA statutes to argue than in any group health plan (not just self-funded plans), state insurance regulations, including assignment prohibitions like Allstate v. Druke, were preempted and ALL health plans had a right to a lien. The result is that claimants’ lawyers must request complicated tax returns, insurance contracts and other documents to confirm that THIS plan is indeed a self-funded plan. Then, all the other questions about reduction of the lien remain.

All these questions must be addressed to Pension Plan Administrators, yet collection attempts come from outside companies who are essentially bill collectors. Despite federal regulations that require them to provide beneficiaries with evidence of the applicable plan, these entities routinely ignore such requests, sometimes for years.

Your undersigned most recently dealt with a lien claimed by MUZAK against their employee who collected in a medical malpractice case. For two years, in multiple letters, I asked for proof of the validity of the lien. I never got it and it was clear that neither the vendor nor the Plan Administrator was going to respond. This was despite a threat for $64,000 in fines that were due to my client under federal regulations requiring disclosure of the plans. The vendor simply responded repeatedly with the same form letter demanding full payment, for charges that included services unrelated to the medical malpractice claim.

I do not believe that after two years of research, letters and being ignored (which followed nearly two years of prosecuting a medical malpractice case) that E.R. 1.15 required that I expend significantly more of my client’s money to file a lawsuit, probably in federal court, as either a declaratory judgment or interpleader case. However, some have interpreted the comment to E.R. 1.15 to require that onerous step.

Entities claiming “liens” carry the burden of proving the validity and accuracy of their debt in any “action” to enforce that debt. That action would also be subject to a statute of limitations, preventing exactly the kind of dilatory tactics we routinely see by alleged lien holders. The burden (including the costs) of initiating such an action legally rests upon the party claiming the debt. If that entity fails to initiate such an action after the claimant denies the debt, then the claimant should assume there is either no valid claim or that the entity chooses not to assert the claim.

Petition R-12-0032 clears up any confusion about these basic legal principles. The Petition should be granted.

JoJene Mills

Randall A. Hinsch
Plattner Verderame, P.C.
316 E. Flower St.
Phoenix, AZ 85012
Phone: (602)266-2002
Fax: (602)266-6908
[email protected]
Bar # 010280


Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Randy Hinsch

William C. Bacon
Goldberg & Osborne
33 N. Stone #900
Tucson, AZ 85701
520-879-7165
Fax: 520-620-3991
[email protected]
State Bar No. 004895

Dear Justices,

I am writing in support of Petition R-12-0032 submitted by the Arizona Association for Justice. The proposed changes to ER 1.15 would significantly improve the Rule.

The present ER 1.15, virtually forces clients to compromise and pay questionable or even illegitimate claims in order to obtain the benefit of their settlement. It also puts attorneys in an untenable position where they owe a duty to third parties whose interest are in direct conflict with their clients.

The resolution suggested by the present Rule and the Comments, that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims, is no solution at all. In any reasonable dispute resolution setting, the burden is on the party making the claim. The present Rule turns this on its head by forcing a client and the attorney to disprove the claim by incurring unreasonable cost and expending additional time. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

/s/ William C. Bacon

Craig J. Simon, Esq.
The Simon Law Group
2141 East Broadway, Suite 113
Tempe, Arizona 85282
480-745-2450 phone
480-745-2454 fax
[email protected]
SBN: 018920


Dear Justices:

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 years. Many of my clients are extremely frustrated when these questionable claims delay their settlements.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Joseph D'Aguanno
Harris, Powers & Cunningham, P.L.L.C.
361 E. Coronado Road, Suite 101
Phoenix, AZ 85004
602.271.9344 (p)
602.252.2099 (f)
[email protected]
SBN: 020421

Dear Justices,

I am writing in support of Petition R-12-0032. ER 1.15 needs to be amended because its current incarnation creates a conflict of interest - requires competeing ethical and legal duties to clients and third-parties (which are usually adverse to my client). Legitimacy of lien claims has no bearing on the real world application of ER 1.15 since it is triggered merely by "claim[ed] interests" of third-parties.

ER 1.15 forces attorneys to freeze client fund without any established legal process -- let alone an efficient and equitable process. This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The conflict with the client's interests is exacerbated by the Rule's requirement that the attorneys and their client file suit to litigate the existence or scope of the alleged third-party claim. This is impractical and unfair because most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants. The examples of illegitimate claims in the Petition mirror the types of circumstances I now face in my personal injury practice.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation, and protecting the public from improper third-party claimants. It should be adopted in full.

/s/ Joseph D'Aguanno

Page Chancellor Marks
Management Attorney
State Bar No. 014372
Goldberg & Osborne
33 N. Stone, Suite 900
Tucson, AZ 85701
520-909-0915

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032. I help manage Goldberg & Osborne, a large personal injury lawfirm. As a result, I am very involved in lien claims against our clients' personal injury matters.

The current state of ER 1.15, as written, places lawyers (as myself and others in my Firm) in a conflict position daily. It is unquestionable that the current ER 1.15 creates a duty that hold to my client and to a third party (with very different interest than my client). Our clients are normally very poor, at times, they cannot withstand the fight with lienholders. I am often questioned by clients as to who we represent - the client or the lienholder? This is a very tough question to answer with the current ER 1.15.

The real-world effect of ER 1.15 is that it freezes client funds. It is extremely hard to determine who holds a "matured legal or equitable claims." We cannot just "guess" or make a determination, even if the third party withholds information or stalls for years, because we are not allowed to "unilaterally arbitrate" these matters.

Then, we are required to file suit. Again, costing our clients hundreds of dollars and add on the additional time before our clients can receive their money. As written, the ER only protects the large business and not the victim. The victim is set back both financially and with time. In my opinion, this is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Truly,

Page Chancellor Marks
Management Attorney
Goldberg & Osborne
33 N. Stone, Suite 900
Tucson, AZ 85701
520-909-0915

Robert Edwards
2150-Third Avenue
Suite 300
Anoka, MN 55303
763-427-1400
Fax: 888-863-6041
[email protected]
Bar #020813



Dear Justices;

Recently I had an experience that was decidedly unpleasant and directly related to the current ER 1.15.

I was representing an individual in a personal injury case, a rather small claim, and in the middle of that I received a lien notice from the chiropractor who treated the client. Shortly after that I received another lien notice, this one from the State of Arizona. It concerned a significant child support arrearage that my client had incurred. Apparently a division of the state had supported my client's children and now had a lien for back due child support. I spoke to the person who sent me the lien and they informed me that the only thing that could be deducted from the settlement draft was attorneys fees and expenses, and that the chiropractor's lien could not. Based on that conversation, when the settlement check came in I deducted our attorneys fees and costs and then paid the balance to the state. When the chiropractor found out about this he was more than just a little upset. He threatened to file an ethical complaint against me for not honoring his lien unless I paid it out of my own pocket. Rather than deal with the issue, in light of how ER 1.15 is currently written and interpreted, I went ahead and paid the man even though it resulted in a net loss on the case. That is, the amount of his bill was more than the attorneys fees we had collected.

I heartily endorse the proposed change to ER 1.15 as submitted by the Arizona Association for Justice.

Respectfully submitted,

Robert Edwards

David J. Diamond
Goldberg & Osborne
33 N. Stone Avenue, Suite 900
Tucson, Arizona 85701
Phone: 520-909-0909
Fax: 520-620-3991
Email: [email protected]
Arizona Bar No. 010842


Re. Petition R-12-0032


Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

David J. Diamond

Gabriel D. Fernandez
437 W. Thurber Rd. #16
Tucson, AZ 85705
Bar #: 016483
520-293-6255
Fax: 520-293-3937
[email protected]

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Gabriel D. Fernandez
Law Offices of Gabriel D. Fernandez, P.C.

Darren M. Clausen, Esq.
Clausen and Moore Law Firm
4578 E. Camp Lowell Drive
Tucson, Arizona 85712
Phone: 520-327-7113
Fax: 520-327-3414
Email:[email protected]
Arizona State Bar No. 019427

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort.
This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Sincerely,
/s/ Darren M. Clausen, Esq.

Dana Roberts
Knapp & Roberts
8777 N. Gainey Center Dr. Suite 165
Scottsdale, AZ 85258
480-991-7677
Fax: 480-991-0058
[email protected]
013654

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

/s/ Dana R. Roberts

I write in support of R-12-0032 PETITION TO AMEND ETHICAL RULE 1.15, RULE 42, RULES OF THE ARIZONA SUPREME COURT. I think the proponents and supporters have well stated the need for the rule and the injustice it seeks to ameliorate, and I will not burden the court with repetitive argument. I do wish to state that the problem is real, it impacts thousands of injury cases, and gives medical lien claimants -- including unjustified lien claimants -- a power to hold other people's money hostage which is unique in the law (except perhaps for the IRS).

Richard S. Plattner
Plattner Verderame, PC
PO BOX 36570
Phoenix, AZ 85067-6570
602-266-2002 - phone
602-266-6908 - fax
[email protected]
#005019

Amy Hernandez
Piccarreta Davis PC
145 S. 6th Avenue
Tucson, Arizona 85701
520-622-6900
520-622-0521 fax
[email protected]
Bar No. 022892

Please consider my comment regarding the proposed ethical rule related to lien claims. I practice exclusively in plaintiff's personal injury. From a practical standpoint, dealing with liens can take as much time and effort as proving and resolving the personal injury case. This is because the entities that claim a lien are often from out of state, do not understand Arizona law, ignore communications, and frequently have no basis for their claim.

While I may personally disagree with certain liens, when properly asserted under Arizona or federal law I have no hesitation ensuring they are promptly paid from my client's recovery. It is the entities that make invalid claims and then blackmail me and my client that are the most difficult to resolve. You can cite Arizona law to them until they are blue in the face and they simply send another demand letter. Rarely are attorneys involved on the opposite side. You communicate with a lay person who seldom understands liens in Arizona or when ERISA actually applies. It can be a never ending black hole. All the while, the client has to wait to close this chapter of their lives. I have had clients simply give up and instruct me to pay "something" to the lien holder in order to move forward. It is hard for a client to understand that his or her recovery is held hostage when their attorney is explaining that the lien is invalid and should not be paid. Clients wonder if the lien is invalid, why can't you disperse to me?

As other comments point out, this scenario is not accepted in any other area of the law. It should not be tolerated as it relates to lien claims either. Thank you.

Ryan Skiver
Warnock MacKInlay & Carman, PLLC
7135 E. Camelback Rd., Suite F240
Scottsdale, Arizona 85251
P(602)381-6669
F(602)381-6560
[email protected]
State Bar # 024552


Dear Justices,

I believe the proposed change to ER 1.15 submitted by the Arizona Association for Justice is an improvement and I am writing in support of Petition R-12-0032.

The current state of ER 1.15, is flawed, and puts an attorney in an improper ethical position between their obligations to clients and to those of alleged lien holders.

The practical and real-world effect of ER 1.15 is that it freezes client funds, by preventing release without a proper determination as to validity of a claimed interest.

This puts attorneys at odds with their clients, and strains the relationship. Forcing the client to then litigate an additional issue and drag their case out even farther to establish that the claimed liens are invalid.

This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

The examples of illegitimate claims in the Petition accurately reflect the situations I face in my personal injury practice.

The proposed change in R-12-0032 protects legitimate third-party claims, while also helping to ensure conflict-free representation and protecting the public from improper third-party claimants.

The proposed change should be adopted as written.


/s/ Ryan Skiver

Alan Bowman #006134
Bowman & Smith, PC
113 W Giss Parkway
Yuma, Az 85364
928-783-8879
928-314-1186 (fax)
[email protected]

I am a certified specialist in wrongful death and injury litigation since 1990. I have only done this kind of law since 1979 when I was first admitted. Dealing with potential claims of third parties on settlement proceeds by liens or subrogation is constantly taken up more and more of my practice. I support the changes to ER 1.15.

A current reading of ER 1.15 and comments with opinions from the State Bar places the burden, unfairly on injured victims to resolve the claim before there is any adjudication that there is a valid claim. It creates a substantial hardship on the injured person. It obligates the victim's attorney to start litigation against all claimants, even your own client, thereby creating a conflict of interest with my own client and causing them to need separate counsel which they can not afford.

Moreover, it leverages my client to resolve unfair claims because of substantial financial issues. Many claimants will not even respond to questions other than they are making a claim.

I am trying to bring a declaratory judgment on a case right now but the claimant is in Wisconsin and claims they do not do any business in Arizona so there is no jurisdiction. I already know from case law that the federal court has no jurisdiction. This involves over $200,000.00 that my client needs. Where do they go to resolve this issue?

The proposed change puts the burden where it belongs, on the person making a claim. They should have to bring an action and prove their claim, just like everyone else.

Carol A. Bowman
Bowman & Smith, P.C.
113 W. Giss Parkway
Yuma, AZ 85374
FAX Number (928) 329- 1816
[email protected]


Dear Justices,



This proposed rule change to ER 1.15 is a needed reform to the current rule which essentially places attorneys in conflict with their own clients when a third party makes a claim to tort proceeds held for a client. Under the current rule, the mere making of a claim to proceeds by a third party can trigger ethical duties to the third party by the attorney that can conflict with duties to the client. As many other comments have noted, the current rule also suggests that the client or his or her attorney must bring suit to establish the legitimacy of these claims.

The proposed rule change would place the burden where it belongs--on the person or entity making the claim--and at the same time provide a procedure for establishing the legitimacy of these claims that does not place an attorney in the position of potentially being in conflict with clients. This rule change should be adopted as proposed.

H. Christian Bode
Bode & Collins, P.L.C.
7377 E. Doubletree Ranch Road #210
Scottsdale, Arizona 85258
480-355-5020 (phone)
480-355-5021 (fax)
[email protected]
Bar No. 0007346

I urge the adoption of the amendment proposed for the reasonas stated by the others who have commented on the proposal. The current rule allows vague threats or claims to prohibit distribution of funds properly belonging to clients. Often, the amount held does not justify the client hiring an attorney to prosecute a claim to gain possession of the (client's own presumptive) money and resolving the dispute can be outside of the representaiton agreement signed by the client with the holding attorney. Therefore, the funds languish in limbo. The proposal provides a practical mechanism for bringing the dispute to a timely resolution and the funds being distributed to their rightful owneer.

Krista M. Carman
Warnock, MacKinlay & Carman, PLLC
246 S. Cortez Street
Prescott, AZ 86303
928-445-8056
Fax 928-445-8046
[email protected]
Az State Bar No. 21700

Dear Justices,

I am writing in support of Petition R-12-0032 as submitted. The proposed changes to ER 1.15 would significantly improve the Rule.

The present ER 1.15, virtually forces clients to compromise and pay questionable or even illegitimate claims in order to obtain the benefit of their settlement. It also puts attorneys in an untenable position where they owe a duty to third parties whose interest are in direct conflict with their clients.

The resolution suggested by the present Rule and the Comments, that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims, is no solution at all. In any reasonable dispute resolution setting, the burden is on the party making the claim. The present Rule turns this on its head by forcing a client and the attorney to disprove the claim by incurring unreasonable cost and expending additional time. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort and rarely ever do. This leaves injured clients exposed to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

The proposed change in this petition creates a balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Thank you for your consideration,

/s/ Krista M. Carman

Robert Bohm, Esq.
Knapp & Roberts
8777 N. Gainey Center Dr. Suite 165
Scottsdale, AZ 85258
480-991-7677
[email protected]
005226

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. This in turn can be emotionally and financially stressful on the client. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. Clients are often forced to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants due to illegitimate claims against their tort recoveries.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I face. This problem has gotten worse within the last decade. This is why I agree with the Petition R-12-0032. It establishes a reasonable and just balance between allowing legitimate third-party claims, creates an environment of conflict-free representation, and protects clients from unacceptable third-party claimants.

/s/ Robert Bohm

Scott B. Seymann
Adelman German, PLC
8245 N. 85th Way
Scottsdale, AZ 85258
Tel: 480-607-9166
Fax: 480-607-9031
[email protected]
Arizona State Bar # 027215

Dear Justices,

I am writing to express my support of the proposed change to ER 1.15 as submitted by the Arizona Association for Justice in Petition R-12-0032.

Currently ER 1.15 raises several concerns:

(a) it creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) it leaves attorneys owing dueling ethical and legal duties to clients and third-parties (which are often adverse to one another); and

(c) it makes clients vulnerable to illegitimate claims.

The practical effect of ER 1.15 is that it freezes client funds without any established or preliminary legal process. It is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. Thus the rule can be considered applicable in virtually every setting since the true definition of a "matured legal or equitable claim" is subject to wide interpretation, and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. Further, the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims only exacerbates the situation. Most injured clients are under financial duress, and this Rule leaves them vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the difficult choice between pursuing additional, burdensome litigation and making nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and they are representative of some of the circumstances I currently face in my personal injury practice. This is a problem that has increased substantially in recent years.

The proposed change in Petition R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation, and protecting the public from improper third-party claimants. This Petition should be adopted in full.

Gabriel D. Fernandez
437 W. Thurber Rd. #16
Tucson, AZ 85705
Bar #: 016483
520-293-6255
Fax: 520-293-3937
[email protected]

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort. This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 5 to 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Gabriel D. Fernandez
Law Offices of Gabriel D. Fernandez, P.C.

Darren M. Clausen, Esq.
Clausen and Moore Law Firm
4578 E. Camp Lowell Drive
Tucson, Arizona 85712
Phone: 520-327-7113
Fax: 520-327-3414
Email:[email protected]
Arizona State Bar No. 019427

Dear Justices,

I have read the proposed change to ER 1.15 submitted by the Arizona Association for Justice and am writing in support of Petition R-12-0032.

The current state of ER 1.15, as written and interpreted:

(a) creates an ethical-equivalent to a prejudgment attachment without any of the statutory or constitutional protections;

(b) puts attorneys in a conflict-riddled position of owing dueling ethical and legal duties to clients and third-parties (which are almost always adverse to one another), e.g., Hotel Emps. & Rest. Emps. Int'l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995) (holding that the imposition of a "dual service" to a client and third party lien claimant violates ethical rules and put attorneys in an "untenable position" of representing dueling interests that are typically adverse); and

(c) makes clients--particularly clients under financial distress--vulnerable to illegitimate claims.

The practical and real-world effect of ER 1.15 is that it freezes client funds, but it does so without any established or preliminary legal process. In fact, the ethical rule is triggered merely by "claim[ed] interests" of third-parties, ER 1.15(e), and is broadly applied to all "matured legal or equitable claims." ER 1.15, Comment No. 4. This results in inexorable application of the rule in virtually every setting since no one knows the true definition of a "matured legal or equitable claim" and the Comment warns against attorneys "unilaterally arbitrating" these matters.

This puts attorneys at odds with their clients, to whom they owe fiduciary duties. The situation is worsened, however, by the Rule and Comment's suggestion that the burden is on these attorneys and their clients to file suit to litigate the existence or scope of alleged third-party claims. The fact is, most injured clients are under financial duress -- after all, tort recoveries only aim to put the victim back to where they were before the tort.
This leaves injured clients vulnerable to illegitimate claims against their tort recoveries, often forcing them to make the impossible choice between expensive and time-consuming litigation versus extortive nuisance payments to unscrupulous third-party claimants.

I have read the examples of illegitimate claims in the Petition and those mirror the types of circumstances I now face in my personal injury practice. This is a problem that has increased substantially over the last 10 years.

The proposed change in R-12-0032 strikes a reasonable and just balance between protecting legitimate third-party claims, ensuring conflict-free representation and protecting the public from improper third-party claimants. It should be adopted in full.

Sincerely,
/s/ Darren M. Clausen, Esq.

J. Tyrrell Taber
2390 E. Camelback Road, Suite 400
Phoenix, AZ 85016
602-248-8203
602-248-8840
[email protected]
005204
Requesting rule ER 1.15 be repealed in full and replaced with Petition R-12-0032

Lawrence K. Lynde, Esq.
4506 N. 12th Street
Phoenix, Arizona 85014
602-944-5710
602-944-1136
[email protected]
Attorney Bar No.: 011156

Richard A. Cruz, Esq.
Managing Attorney
Pincus & Associates, PC
2133 E. Warner Road, Suite 101
Tempe, AZ 85284
480-777-2599
480-777-2799 (fax)
[email protected]
Bar No. 023164

Dear Justices:

The purpose of this writing is to support the changes proposed in Petition R-12-0032.

Without reiterating prior compelling arguments for the adoption of R-12-0032, my statement focuses on the inequitable burden my client (i.e. the victim) must bear to protect their settlement.

Under the current rule, the victim (via his/her lawyer) must incur the time and fees of filing “an action” against a third party in the event of a “dispute” over the victim’s property. As a result, the clients (1) lose out on the cost of money, (2) unfairly incur charges for filing an action and (3) makes them vulnerable to “extortion”/illegitimate claims (i.e. forcing to either institute litigation or pay something to end the illegitimate claim).

Under the proposed R-12-0032 language, equality is restored in that the burden is on the third-party seeking funds to establish their claim. This equality is the basis of our legal system - from writ of attachments to a complaint against a property’s possessor. The proposed ninety (90) day period is fair, reasonable and benefits both sides: (1) it helps the victim/s obtain finality allowing access their much needed financial help, and helps the victim’s lawyer resolve “disputed” claims within that period; and (2) it allows the “disputed” lien holders the opportunity to legitimize their claims.

Times have changes and the rules must reflect the same. This proposal is nothing more than a change in the right direction; a change to maintain fair and equality by and between all.

Thank you for your time.

/s/ Richard A. Cruz, Esq.

Jay L. Ciulla
Ciulla Torralba, PLLC
3030 N. Central Avenue, Suite 608
Phoenix, AZ 85012
Telephone (602) 495-0053 Ext. 103
Facsimile (602) 258-7199
Email: [email protected]
Bar No. 017971

Dear Justices:

I am writing in support of Petition R-12-0032. As an attorney who represents injury clients, I can unequivocally state that current ER 1.15 creates more ethical problems than it seeks to resolve. The current rule unnecessarily places an extrajudicial attachment on client funds and effectively freezes them regardless of the motivation of the lien claimant to seek a resolution. It also puts the attorney in the conflicted position between the interests of our clients to whom we owe fiduciary duties and third party lien claimants. Lastly, the current interpretation of the rule places the burden on the injury client and their attorney to file a lawsuit to force the litigation on the validity of a lien claim, instead of the lien claimant.

The proposed change in R-12-0032 will resolve these problems. Therefore, I request that you adopt it.

Regards,

/s/ Jay L. Ciulla

Maren Hanson
Tobler & Associates, P.C.
1630 S. Stapley Drive
Suite 200
Mesa, AZ 85204
PH: 480-898-9700
FAX: 480-464-1172
[email protected]
Bar No.: 021361

I am writing in support of the change to Ethical Rule 1.15.

I am a personal injury attorney who represents Plaintiffs. Many times after a settlement agreement has been reached, disbursement of settlement funds to an injured client has been significantly held up due to questionable third-party lien claims.

The current requirements of ER 1.5, as stated in Comment 4, seem to require lawyers to "file an action" with the Court to resolve even questionable lien disputes. The cost and time to do such puts the injured claimants at a severe disadvantage, and often forces them to make compromise payments to questionable lien claimants just to see the matter resolved.

The current requirements also put a lawyer at odds with his or her own client. And sometimes, the current rule leaves the lawyer guessing as to his or her ethical obligations.

The new proposed rule changes make explicitly clear what steps a lawyer may take to resolve a lien dispute. Moreover, the changes appropriately place the responsibility of filing a legal action on the third-party who is making the lien claim - as opposed to on the injured plaintiff, who is least likely to be able to bear this burden.

John A. Furlong, Bar No. 018356
General Counsel
State Bar of Arizona
4201 N. 24th St., Suite 100
Phoenix, Arizona 85016-6266
Telephone: (602)252-4804
[email protected]

Geoffrey M. Trachtenberg
Levenbaum Trachtenberg PLC
362 North Third Avenue
Phoenix, Arizona 85003
(602) 271-0183 - voice
(602) 271-4018 - facsimile
[email protected]

Tod Lee Stewart
Stewart & Torgersen, P.A.
1702 E. Highland Avenue, #409
Phoenix, AZ 85016
602-297-9300
[email protected]
State Bar Number 018163

Michael E. Larkin
LAW OFFICE OF MICHAEL E. LARKIN
405 W. Franklin St.
Tucson, Arizona 85701
Fax: 520 620 6702
[email protected]
Bar Number: 009497