New Model Rule of Professional Conduct – Rule 1.15 (I) Safekeeping Property-General

 In Georgia State Bar Grievances


Late last year, the Georgia Supreme Court revised some of the Model Rules of Professional Conduct which govern lawyers in Georgia. You probably read about the changes, but I wanted to highlight one specific modification to Rule 1.15(I) as it relates to medical providers’ and insurance companies’ demands for payment. The good news is that the new Rule better defines our client and third party responsibilities. But we still need to proceed with caution.

Bringing certainty to attorneys in the Catch-22 of multiple payment demands

Those of you who work with healthcare providers are familiar with the common request to sign a protection letter that promises to reimburse medical payments from settlement proceeds. Our clients need the treatment, but protection letters or other agreements can put us in a tough spot when clients and third parties demand the same settlement money. The parties who don’t receive the money may take further action, including the filing of Bar Grievances.

Real world example

Here’s an example of this Catch-22 situation. While the old Rule 1.15 (I) was in effect, I represented a personal injury lawyer who signed a protection letter for a client’s chiropractor. When the suit settled and both the client and chiropractor demanded the settlement proceeds, the lawyer paid the client, believing that his obligation to his client was paramount to the chiropractor’s repayment demand. The chiropractor promptly filed a Bar Grievance, and the lawyer received a (confidential) Formal Letter of Admonition despite abiding by his client’s demand for the settlement money.

You can click here to view the new Rule 1.15(I). It now more clearly states that we have to honor a 3rd party’s interest in funds if we know about a lien, judgment, or written agreement, UNLESS we reasonably conclude that there is a valid defense. So a client’s defenses to a claim or lien may now be asserted with confidence. That doesn’t give us carte blanch to ignore third party demands, as Ken Nugent learned after a recent court order. Notwithstanding the risks, this new Rule is now friendlier to lawyers than most other states’ Rules and allows lawyers to assert valid defenses without the fear of a Bar grievance.

Even with a better defined Rule 1.15(I) which more clearly defines lawyers’ obligations, there are still some lessons to be learned:

  • Know the ethical Rules which govern you. Ask if you need an interpretation.
  • Wherever possible, don’t contractually bind yourself or your clients to repayment. Let the provider or carrier make their claims and file their liens.
  • Don’t fear a Bar Grievance or Bar Disciplinary Action just because you dispute and challenge the enforceability of a claim by one of these companies.

This modification effort took several years of hard work and patient persistence from a number of esteemed Georgia Bar members, including Ken Shigley and Charles Cork. Thank you.

Douglas Chandler

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