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Child Support Liens in Personal Injury Claims

As practicing attorneys, we are well aware that our legal and ethical duty under the Rules of Professional Conduct is first and foremost to our client. We are to act zealously in our representation, upholding client confidentiality while abiding by our client’s decisions. However, we are also officers of the court and under no circumstance may assist a client in breaking the law or injuring another. When our duty to our client clashes with our duty to the court, we must look to our system of rules to provide guidance.

Recently, our firm was confronted with such a clash: What is the legal obligation of a lawyer in handling settlement funds where there is a potential child support claim asserted? On first glance, the answer seemed easy. Under RPC 5-1.1(e), we have a legal and ethical duty to protect any third-party interest where there is a statutory lien being asserted, in this case, a child support order. Even where the client instructs the attorney not to pay this debt, the attorney may not assist the client in unlawfully avoiding these statutory liens or court orders involving the funds or the attorney will be subject to legal and ethical sanctions.

Acting as the zealous attorney, we must dig a little deeper: How did we become aware of the potential child support claim? Under Florida Statutes section 409.25656, the Florida Department of Revenue (DOR) has the power to levy any credit or personal property, including insurance settlements, for any past due child support owed to custodial parents who have enlisted the aid of the Office of Child Support Enforcement.

Statutory mechanisms have been developed to intercept bodily injury insurance settlements exceeding $3,000.00 by identifying noncustodial parents who owe past due child support and also have a claim with an insurer. The Federal Office of Child Support Enforcement maintains this database via the Child Support Lien Network. If an outstanding child support obligation is matched to a claimant, the Office of Child Support Enforcement must initiate the garnishment process by generating an Income Deduction Notice and mailing it to the owing parent and to the respective insurance company. This places both parties on notice of the statutory lien. Upon settlement of a claim, the insurance company then notifies the attorney of the assertion of the child support lien. Once the attorney receives actual notice of the lien from the insurance company, he is obligated to honor that lien by settling the lien on behalf of the obligated parent.

This seems simple. Where there is a child support lien asserted by the Department of Child Support Enforcement and the lawyer receives actual Notice of Income Deduction, it is a lawyer’s duty to honor this lien whether the client instructs the attorney to do so or not. But what happens in a case where there is not a match but the client has mentioned the possibility of a child support lien during the scope of representation? The Florida Rules of Professional Conduct are not so clear here, nor has the Florida Bar issued a legal ethics opinion that is on point with this issue; thus, we look to a sister state’s legal ethics opinion for guidance.

Virginia Legal Ethics Opinion 1865 requires a lawyer to have actual knowledge of a third party’s lien or claim to the funds held by the lawyer in order to create a duty to secure the funds claimed. Actual notice in this instance would come in the form of the Income Deduction Notice issued by the Department of Child Support Enforcement. The answer is a little hazy where there is not actual notice of a lien. The Virginia opinion states that when an attorney must affirmatively investigate the law and the facts to determine whether there is in fact a lien, he may not be obligated to protect that claim. In this instance, the attorney would be obligated to communicate with the Department of Child Support Enforcement or Clerk of Court to determine if there is a claim and the amount of the claim. By having these communications with the DOR or Clerk or Court the lawyer would be disclosing that the client is seeking a recovery or settlement against a third party. Communication with the DOR could prompt perfection of a lien for which it was unaware. This is a direct violation of RPC 4-1.6, which prohibits a lawyer from revealing information relating to representation of a client unless the client gives informed consent.

So in answer to the original question, what is the legal obligation of a lawyer in handling settlement funds where there is a potential child support claim asserted, it is determined that notice is crucial to the lawyers legal and ethical duty. It can be surmised that the intent of the legislature in developing the Insurance Claim Data Exchange and claim interception power was to relieve the attorney of the duty to investigate every claim settled for potential liens that could conflict with the attorney’s ultimate duty to provide zealous representation to the client. It is the duty of the State to investigate and notify the attorney of any valid child support lien.

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