This South Carolina case reminds us of our responsibilities when receive money on behalf of a client and are aware that a portion of the proceeds have been assigned to a third party.
The Court found that the lawyer was aware of the assignment and went on to say as follows: "A letter of protection offers one method protecting a creditor’s interest. However, the absence of a letter of protection does not automatically relieve an attorney of a duty under an assignment."
The Court cited several cases in support of its position, as well as these sections from 1.15 of the RPC:
"d) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive . . . .
(e) When in the course of representation a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved. The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute."
The case is Moore v. Weinberg, Opinion No. 4209 (S.C. 2/20/2007). Read the opinion here.