Proof of Claim
Posted: Wed May 08, 2013 10:44 am
I have a couple of additional thoughts on this.
1. Did client list a claim against law firm on Schedule B?
If not, then law firm could take the position that funds were fully earned and not subject to dispute (since debtor did not schedule a claim against law firm) and could then rely on Rule of Professional Conduct 4-100(A)(2), which requires withdrawal of the funds from the client trust account at the "earliest reasonable time." Here is the text of the rule: "In the case of funds belonging in part to a client and in part presently or potentially to the member or the law firm, the portion belonging to the member or law firm must be withdrawn at the earliest reasonable time after the member's interest in that portion becomes fixed. However, when the right of the member or law firm to receive a portion of trust funds is disputed by the client, the disputed portion shall not be withdrawn until the dispute is finally resolved."
If debtor did list a claim against law firm on Schedule B, then contact Trustee to see if the Trustee plans to pursue claim against the attorney on behalf of the estate (probably not, if the claim is frivolous or just a dissatisfied client). If so, negotiate with Trustee to settle the estate's claim. If not, then law firm might need to keep the funds in trust "until the dispute is finally resolved."
2. Did credit card company already refund client's money?
If yes, credit card company may have a claim against law firm, but this claim would not be property of debtor's bankruptcy estate. So law firm should be able to take the money in the client trust account, then negotiate directly with credit card company regarding credit card company's claim for reimbursement.
If no, then I doubt credit card company would pursue the investigation further or pay out to client now that client has presumably listed credit card company as a creditor in debtor's case.
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> Since no one replied, I'll give you my quick thoughts.
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> First, if you accept 5k with a credit card, you better out of pocket
> whatever your merchant charges you. The trust account cannot be less than
> 5k.
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> Second, I would file a POC as a secured creditor.
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> I didn't pull out my book, but the holder of cash is secured as to the
> world. Can't file ucc1 on cash!
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> I also don't know how your right to a set off applies, that may be invoked
> in some way.
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> After the bk, if there is a charge back then you sue.
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> I hope this was helpful and D does not find too much wrong!!
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> Sent from my iPhone
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> On Mon, May 6, 2013 at 4:29 PM, Janet wrote:
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> > **
> >
> >
> > Law firm takes credit card payment of $5,000 and provides family law
> > services at an hourly rate, using the full retainer. Client is dissatisfied
> > with the outcome and files a dispute of the payment with credit card
> > company. Client then files Ch 7 asset BK case, listing the law firm as a
> > creditor. (Earned retainer is still in client/trust account.) Can the
> > credit card company continue processing the dispute when the BK closes, and
> > possibly "take back" the $5,000? Does the law firm need to file an Proof of
> > Claim, or can they safely sit back and keep the $5,000?
> >
> > Your comments are appreciated.
> >
> > Janet Mertes
> > Law Offices of Janet L. Mertes
> > 80 Wood Road, Suite 300
> > Camarillo, CA 93010
> > (805) 987-7400
> >
> >
> >
>
The post was migrated from Yahoo.