2013 Formal Ethics Opinion 12: Disclosure of Settlement Terms to Former Lawyer Asserting a Claim for Fee Division
View the Formal Ethics Opinion in Full Here
On July 25, 2014, the North Carolina State Bar adopted the 2013 Formal Ethics Opinion 12. This opinion allows for a subsequently hired lawyer in a worker’s compensation case, when the client terminates representation of a former lawyer, to discuss and disclose settlement terms to the former lawyer to resolve a pre-litigation claim for fee division.
Fee division is appropriate in a worker’s compensation claim when a client discharges Lawyer A, and Lawyer A files a motion to withdraw as counsel while reserving his or her right to a legal fee. In such a situation, this opinion allows for Lawyer B to share the settlement details with Lawyer A for the purpose of fee division. Lawyer A and Lawyer B both owe a duty of confidentiality to the client as Lawyer A’s former client, and Lawyer B’s current client. In this situation, Lawyer B must also share with the client Lawyer A’s legal right to quantum meruit recovery from the proceeds of the matter where a contingency fee contract is terminated for, such as in a worker’s compensation claim. It is important to note that only information that is relevant to the determination of the value of Lawyer A’s legal services may be disclosed so as to not infringe on the attorney client relationship between Lawyer B and the client and Lawyer B’s duty of confidentiality.
Therefore, this opinion makes it so that when a client terminates representation in a worker’s compensation case, the subsequently hired lawyer may disclose settlement terms to the former lawyer to resolve a pre-litigation claim for fee division pursuant to an applicable exception to the duty of confidentiality. This opinion would allow a current lawyer to discuss with a former lawyer for the same client in a worker’s compensation case, the terms of a settlement as it relates to the division of fees in a pre-litigation claim. This would be an exception to the duty of confidentiality that an attorney has to his current, former, and prospective clients.