In Re Haar
1995 WL 717155, 667 A.2d 1350 (1995)
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Rule of Law:
An attorney may not withdraw funds from a client trust account for legal fees if the client disputes the attorney's right to receive them. Any disagreement by the client constitutes a 'dispute' under the rule, regardless of whether the attorney is objectively or legally entitled to the funds.
Facts:
- In June 1988, Krishna Baldew hired Respondent to represent her in an employment dispute without a written fee agreement.
- The parties disagreed on the fee structure; Respondent claimed a $150/hour rate plus a $1000 retainer, while Baldew claimed the initial $1000 covered early work and the rate for subsequent work was $120/hour.
- Respondent secured a $20,000 settlement for Baldew and subsequently sent her a final bill for $12,921.75.
- In a letter dated February 21, 1989, Baldew disputed the bill and offered to 'settle... at U.S. $4,000' as a full and final payment.
- The parties met on March 30, 1989, but did not reach an agreement on the fees.
- On May 17, 1989, after receiving the settlement funds, Respondent notified Baldew, who was in Suriname, that he 'will' withdraw $4,000 as a partial payment, citing her offer as proof the amount was undisputed.
- Baldew did not respond to the May 17 letter.
- On May 24, 1989, Respondent withdrew $4,000 from the trust account containing Baldew's settlement funds.
Procedural Posture:
- Bar Counsel charged Respondent with violating Disciplinary Rule 9-103(A)(2) regarding improper withdrawal from a client trust account.
- A hearing committee found, by a 2-1 vote, that Respondent had violated the rule.
- The Board on Professional Responsibility rejected the hearing committee’s conclusion, finding that no 'genuine' dispute existed between the parties.
- Bar Counsel filed an exception to the Board's determination, bringing the case before the District of Columbia Court of Appeals for review.
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Issue:
Does an attorney violate Disciplinary Rule 9-103(A)(2) by withdrawing a portion of settlement funds from a client trust account as payment for fees when the client has not agreed to the withdrawal, but previously offered to settle the entire fee dispute for that same amount?
Opinions:
Majority - King, Associate Judge
Yes, the attorney's withdrawal violates Disciplinary Rule 9-103(A)(2). The rule unambiguously prohibits an attorney from withdrawing funds from a client's trust account when the attorney's right to receive that portion is 'disputed' by the client. The court rejected the Board on Professional Responsibility's interpretation that the dispute must be 'genuine' or objectively reasonable. The proper test is simply whether there was, in fact, a disagreement between the parties concerning the attorney's entitlement to the amount withdrawn at the time of the withdrawal. Here, a dispute clearly existed: Baldew's offer to pay $4,000 was for a full and final settlement, not an admission that Respondent was entitled to that amount as a partial payment. An offer of compromise does not constitute an admission of liability. Furthermore, the client's silence in response to the attorney's notice of intent to withdraw funds cannot be construed as consent. The attorney, as a fiduciary, had a duty to obtain clear and unequivocal agreement from the client before withdrawing any funds, rather than resorting to self-help based on a self-serving assumption.
Analysis:
This decision establishes a strict, client-protective standard for attorney withdrawals from client trust accounts. It clarifies that any subjective dispute by a client over a fee, regardless of its objective merits, is sufficient to bar an attorney from withdrawing the contested funds. The ruling places the burden squarely on the attorney to secure explicit, affirmative client consent before taking fees, rejecting theories of implied consent from silence or by construing settlement offers as admissions. This precedent serves as a significant warning to practitioners about the importance of clear communication and the high fiduciary duty owed to clients regarding their funds.
