Opinion ID: 1173983
Heading Depth: 1
Heading Rank: 4

Heading: Withdrawal of Trust Funds

Text: (2) The review department, contrary to the conclusion of the hearing panel, concluded that petitioner withdrew disputed funds from his client trust account in violation of rule 8-101(A)(2), which in relevant part provides: when the right of the member of the State Bar ... to receive a portion of trust funds is disputed by the client, the disputed portion shall not be withdrawn until the dispute is finally resolved. (Italics added.) The review department did not specify which acts it relied on for this finding, and we conclude that its conclusion is unsupported by the record. Rule 8-101 requires an attorney to retain funds in his client trust account only if their ownership is disputed by a client. The funds at issue here, being those remaining in the trust account after disbursement to the client of her share, were claimed by another attorney, not the client, and the client had not directed their disbursement in a particular manner. Accordingly, this case does not fall within the proscription of the rule. The State Bar argues that petitioner indirectly violated rule 8-101 on the theory that he intentionally failed to communicate the fee dispute [between himself and Shiffman] to Ms. S. in order to deprive her of the opportunity to object to his withdrawal of all but $200 of the attorney fees from his trust account. The State Bar asserts that, given such knowledge, S. might well have requested petitioner to retain sufficient funds in his trust account to satisfy any liability on her part to Shiffman in the event Shiffman prevailed at trial. Petitioner, however, improperly failed to communicate only the fact that S. had been named a party defendant in Shiffman's fee dispute. Even had petitioner dutifully and promptly so informed S., alerting her to the continuing dispute, the information would have come too late to allow S. effectively to freeze the trust funds, for petitioner had disbursed all of the settlement funds before Shiffman filed his suit. We conclude, accordingly, that the review department erred in finding that petitioner violated rule 8-101.