Daily Development for Wednesday, January 13, 2000

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

ATTORNEY/CLIENT; DELIVERY OF DOCUMENTS: A deed of trust is "property" belonging to the beneficiary (through the trustee), does not belong to the trustor, and a lawyer cannot withhold the deed of trust from its owner in a fee dispute.

Defendant A v. Idaho State Bar, 978 P.2d 222 (Idaho 1999).

A, an attorney, was approached by a mother, her son and daughter in law, in connection with a proposed loan to assist with the son's financial difficulties. A drafted a promissory note and deed of trust. Powell paid the fee. Although it is unclear whether A retained the note, A definitely retained the deed of trust following its recordation.

Powell's son and daughterinlaw divorced and the daughterinlaw was awarded the property securing the loan, and consulted A when Powell threatened to foreclose. A billed the daughterinlaw $270 for the consultation, which was not paid. Powell requested from A the original promissory note and deed of trust. A claimed that the deed of trust was the daughterinlaw's property and therefore refused to send her the deed of trust until the $270 was paid. After Powell paid her daughterinlaw's bill, A gave Powell the deed of trust. Powell then filed a complaint with the Idaho State Bar about A's conduct. The Idaho State Bar issued a private reprimand for violation of Idaho Rules of Professional Conduct, which require attorneys promptly to notify and to deliver any funds or other property a client is entitled to receive. A appealed.

The Supreme Court of Idaho upheld the reprimand. A deed of trust under Idaho law is a conveyance of real property that must be delivered in order for it to be a valid conveyance. Therefore, A had a duty to deliver the deed of trust to either the trustee or to Powell as beneficiary of the trust. However, A violated the Rules of Professional Conduct by failing to notify Powell that he had the deed of trust and by refusing to deliver it to her until she had paid another client's bill.

Comment 1: There are all kinds of conflicts issues here that the court does not mention. Presumable, therefore, the court accepted the notion that A, the attorney, represented solely the daughter throughout these events, much as that assumption appears to contradict the reported facts.

Nevertheless, it must be noted that it appears that the lender was not otherwise represented, and the attorney kept the deed of trust (and possibly the note) all suggesting that at best there were ambiguities as to lawyer/client relationships that were the responsbility of the lawyer that walked into this swamp.

Comment 2: Let's set aside the obvious conclusion, reached by the court here, that the lawyer was withholding a document that was the property of a third party in order to extort that party to pay the fees owed by the lawyer's unrelated client. Is there ever a circumstance when a lawyer is entitled to withhold documents in connection with a fee dispute?

The answer is (don't we love it?) "Maybe."

A lawyer is entitled to be paid for the work the lawyer does. If the client refuses to pay, the client should not be entitled to the lawyer's work product.

On the other hand, where the work product is completed, delivered and executed, and the lawyer is holding the documents solely as a custodian, should it matter whether the instrument in question embodies a "delivered" real property interest? The lawyer has no further function to play with respect to these instruments, whether they are deeds, mortgages, leases, or just documentation of a completed agreement. They are the client's "property." The benefits of the lawyer's work, which the lawyer can withhold, have already been delivered. If, expressly or implicitly, the lawyer is holding on to the original copies, the lawyer does so as a trustee, and the client is entitled to instant access, fees paid or not.

If the lawyer already has delivered executed originals of everything to the client, and returned all the documentation provided by the client, it may be (according to UMKC ethics professors, that the lawyer has no obligation to provide additional copies when the client has misplaced its own copies.

All of the above arguments of the lawyer slide, however, when the client might have an economic interest that would be injured by the lawyer's retaining the documents, such as where they are required for a closing, or where the client has retained new counsel. In these cases, the lawyer must pursue the client's interest even when the client hasn't paid, and cooperate in the carrying out of the client's project by providing the documents.

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