124 N.J.L.J. 1420 ( 1989)
modified, Matter of ACPE Opinion 635, 125 N.J. 181 (1991);superseded, Notice to the Bar, 136 N.J.L.J. 1638 3 N.J.L. 852 (1994).
Use of Authorization to Endorse
Forms in Personal Injury Matters
A law firm proposes to use an Authorization to Endorse form
which it has prepared. It is proposed to have the clients execute
the form when they come to the law firm's offices to execute a
release and disbursement statement, incident to the settlement of
litigation, in order to permit the attorneys to endorse for deposit
the settlement draft made payable to the client and to deposit the
proceeds in the attorneys' trust account following full disclosure
to the client. This is in response to a client's query as to
whether there is a method whereby the client may avoid the
inconvenience of returning to the law firm's office to endorse the
settlement draft or that of the time lag involved if such
instruments are sent to them by mail, and in that way expedite
disbursement of the settlement proceeds.
Our attention was directed to our Supreme Court's opinion, In the Matter of John S. Conroy, III, 56 N.J. 279 (1970), in which the attorney included in his retainer agreement a provision giving him "full power...to execute any draft or check in (client's) behalf and to make disbursements of the proceeds covering all medical and hospital bills and to retain __% of the total received if settled, and __ % if trial is had."
The Court decided at page 282 of its opinion as follows:
We pause at this point to make clear that we consider employment by members of the bar of the type of retainer and power of attorney described above to be highly improper. The practice of insurance carriers or other settlors in drawing settlement checks in the joint names of the attorney and the claimants is to protect and preserve the interests of all three parties to the transaction. The form of retainer in question facilitates the subversion of that purpose and is unqualifiedly disapproved.
This inquiry presents a different factual situation than that presented in the Conroy matter. Here, the inquirers propose to use the power of attorney, at the request and with the consent of the client, to permit them to endorse the client's name on the check or draft for the amount of settlement and to deposit the check in the attorneys' trust account to facilitate disbursement of the proceeds. The power of attorney authorizing this procedure is to be executed at the request and with the consent and knowledge of the client after settlement has been consummated, and after the client has signed the closing statement as required by R. 1:21-7 or RPC 1.5(c), as the case may be.
R. 1:21-7 relating to contingent fees requires that in matters
where the client's claim for damages is based upon the alleged tortious conduct of another, contingent fee arrangements are required to be in writing in the form prescribed by the Administrative Director of the Courts and signed by both the attorney and client. It also requires that upon the conclusion of the matter, resulting in a recovery, the attorney shall prepare and furnish the client with a signed closing statement, likewise in the form prescribed by the Administrative Director of the Courts.
RPC 1.5(c) in effect extends the contingent fee rule to all other matters with respect to which contingent fees are agreed upon, except it does not provide for percentage limitations on the attorney's fees.
RPC 1.5(b) provides:
When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated in writing to the client before or within a reasonable time after commencing the representation.
In all litigated matters, the attorney who appears in the cause for the party who institutes the action, or maintains the third-party claim, or counterclaim or cross-claim, has a lien for compensation upon his client's action which attaches to a verdict or judgment in his client's favor, which lien is not affected by any settlement between the parties before or after judgment or final order. N.J.S.A. 2A:13-5.
It is because of the attorney's lien that checks or drafts made to satisfy a judgment or to complete a settlement are made jointly payable both to the clients and the attorney who handled the matter. The payor includes the attorney's name on the draft or check to insure that the attorney's lien is satisfied.
The requirements with respect to fee agreements and closing or written statements showing the remittance to the client and the method of its determination make the client aware of the amount of the recovery which the client is entitled to receive. If after that has been done, the client for his own convenience executes a written authorization permitting his attorney to endorse the settlement draft or check received in settlement of the matter or in satisfaction of a judgment and to deposit same in the attorney's trust account for the sole purpose of disbursing the funds in accordance with the closing statements, we see nothing improper in such a procedure.