Be sure to define the role of the expert in the fee agreement.

In this legal malpractice litigation, the other side hired a lawyer as their expert witness. That lawyer, several years ago, had represented the client to whom he is now testifying against. The representation was on a totally unrelated matter. Can the expert be precluded?

Samuel C. Stretton.

This question is an interesting one. The bottom line to decide the question would be whether or not the expert is in an attorney/client relationship with the person for whom they are testifying currently. Clearly, if that lawyer is, that could have many consequences, including attorney/client privilege issues and what Rules of Professional Conduct apply.

The traditional view is hiring an expert does not necessarily create an attorney/client relationship. The lawyer is retained as an expert who will testify. If the expert is just a testifying expert, normally there would not be attorney/client issues with additional responsibilities that occur under the Rules of Professional Conduct. But if the expert was hired as a consulting expert, there could be an attorney/client relationship, which could preclude the expert due to the past representation.

Obviously, even if the expert is hired only to testify and not hired as part of the legal team, there still could be some issues that could face a testifying expert witness. The key one would be if the testifying witness, because of the prior representation, had confidential information that would be adverse to the person he or she is testifying against. That would be prohibited, under the Conflict of Interest Rule 1.7(b) and 1.9 (former client conflict of interest rule), and 1.6 (confidentiality rule).

The key, under those circumstances, is to clarify initially the role of the expert. The original agreement should clarify if he or she is a consulting expert or a testifying expert. Sometimes, experts are retained to potentially testify, but more importantly, to consult with the firm that is hiring them. The expert gives background advice, perhaps helps draft pleadings, and things of that nature. If that is the case, the relationship would be more in the attorney/client realm than in the testifying expert realm.

The important thing to remember is the fee agreement with the expert, which should carefully clarify the role of the expert. Are they a testifying expert, or are they going to be part of the team and consult? What is set forth in the fee agreement could have consequences down the line. Every lawyer must remember that if an expert does have a conflict, that conflict, depending on the facts, may impute the conflict to everyone else in the firm, which would not be a desirable situation, and could disqualify the entire legal team. See Rules of Professional Conduct Rule 1.10.

Therefore, to answer the question, if the expert is only hired as a testifying expert, the expert probably can testify if his testimony has nothing to do with their prior representation, and the expert does not misuse any confidential information. The critical point is the role of the expert. If the expert is hired as someone who is going to help, consult and work with the attorneys, the conflict becomes far more serious, and Rule 1.7, Rule 1.9, and Rule 1.6 apply and could disqualify the expert, and also potentially disqualify the legal team. If the expert is hired just to testify, normally, there would not be the same concerns. The important point is to define the role of the expert in the fee agreement.

Keep the monies in the IOLTA account unless the client gives permission to pay the bill directly to the doctor.

I had a case in which there was a chiropractor bill due. I was about to make the payment, but the client said they would make the payment, and insisted I provide the money to the client. Should I do so?

This question is an interesting one. The number of lawyers who have fallen into the trap that this question opens up is surprising. To answer the question, one must look at Rules of Professional Conduct Rule 1.15.

Many attorneys hang their hat on Rule 1.15(e), which requires a lawyer to promptly deliver client funds to the client once the client's monies are being held in the IOLTA account.

Therefore, many lawyers feel if the funds are the clients', and the client demands them, the lawyer has to pay the client. In the facts of this case, that could get a lawyer into big trouble. First, many lawyers, when they are dealing with doctors or chiropractors, give a letter of protection, i.e., that they will protect the fees out of any settlement or judgement. That is done because a doctor wouldn't treat the client otherwise. A letter of protection normally says the lawyer will be responsible for paying the doctor out of the settlement funds. That obviously could create a problem for a lawyer who transmits the monies to the client and then the client doesn't pay the doctor. One wants to think the clients will pay, but most clients are not in great financial shape, and many of them feel that lawyers and doctors have enough money. The lawyer will then be held responsible. The real analysis is under Rule 1.15(f). That rule states as follows: "When in possession of funds or property in which two or more people, one of whom may be the lawyer, claim an interest, a fund or property shall be kept separate by the lawyer until the dispute is resolved." See Rule 1.15(f). Under the same rule, a lawyer can distribute the portion of the funds that are not in dispute. In other words, say there was a settlement and it is undisputed that the client gets 70%. If the dispute is between two lawyers, such as the referral lawyer, then the amount in dispute is withheld in Escrow, but the client can be paid the undisputed portion of the settlement.

This rule is often misunderstood. Yes, under Rule 1.15, if a client demands their money, a lawyer has to pay it, but also under Rule 1.15, if there is a dispute as to whose money it is, i.e., client versus chiropractor or doctor, the monies have to be held in escrow. This is done even if there is no letter of protection by the lawyer to the doctor. A letter of protection enhances the obligation of a lawyer, but the basic obligation of a lawyer is always to hold disputed funds in escrow. It is not for the lawyer to decide the validity or lack of validity of the dispute.

This issue is often seen if there is a dispute on referral fees. If there is, the lawyer can't take the referral fee and use it. They have to hold the referral fees until the dispute is resolved.

There is a Pennsylvania case that says, at least in the referral fee arrangement, if a lawyer takes the referral fee that is disputed, the taking is treated as a conversion, which can have serious attorney license consequences. More importantly, if there is a dispute, the lawyer has to hold the funds. If the lawyer takes the funds, that could be treated as a theft.

If the lawyer pays the client the monies that are due the chiropractor under the misguided assumption that they are the client's monies, and the client has demanded the same, several things are going to happen. First, if the chiropractor goes to the Office of Disciplinary Counsel, the lawyer is going to receive discipline. Second, the lawyer is going to have to pay the chiropractor back unless the client does, which almost never happens. Therefore, the lawyer will be on the hook for paying money to the client and the lawyer may well receive professional discipline also. Professional discipline initially may only be a reprimand of sorts, but if the lawyer has prior discipline, it could be a suspension.

This is a common problem where many good lawyers make the mistake of trusting a client, or just believes they have to give the funds to the client because the client asked. That cannot happen. Some people criticize the Office of Disciplinary Counsel in enforcing this rule by saying they become collection agents for the chiropractors or doctors. The real importance of this rule is to preserve monies until the dispute as to who is entitled to the monies is resolved.

Finally, if the dispute is not resolved in the short-term and if there is a substantial amount of money in the IOLTA account, then the lawyer has to remove the funds out of the IOLTA account because they are no longer qualified funds. Substantial amounts of monies cannot be held in the IOLTA account for more than several weeks. They have to be moved to the non-IOLTA interest-bearing escrow account. See Rules of Professional Conduct Rule 1.15.

Therefore, to answer the question, don't give the monies to the client. Keep the monies in the IOLTA account unless the client gives permission to pay the monies directly to the doctor. If the client does not, the monies should be held until the dispute is resolved.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 47 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 103 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.