Q: Can a lien department hold funds from a client after a settlement?
After settling a case with the law firm, the client disputed the validity of a couple of the medical bills and even hired a third party to dispute the bills in question on their behalf. The lien department has negotiated with those companies to settle the debt without the clients consent. The client asked the lien department not to send the funds for those bills and instead release the money to the client, as they are disputing and will be responsible for the bills.
The lien department refused to release funds to client and said they will hold the money into the trust account until the dispute is resolved. Further more, the client never signed the disbursement of settlement funds.
Legally, can the lien department deny release of those funds even if the client never authorized them to settle with the disputed bills?
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- California
- (916) 704-3009
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- Answered
A:
Under California law, the lien department's actions may be permissible in certain circumstances. When a settlement is reached, funds are typically placed in a trust account, especially when there are outstanding liens or disputed charges. The attorney or lien department handling the settlement has a fiduciary duty to ensure that all valid liens and claims are satisfied before disbursing funds to the client.
If you, as the client, dispute certain charges, the lien department may hold the funds in trust until the dispute is resolved. This is to protect against potential legal complications if the disputed amounts are found to be valid and due. However, it's important that your disagreement with the charges and your instructions regarding the disbursement of funds are clearly communicated to the lien department.
If you have not authorized the lien department to negotiate or settle the disputed bills, this should be explicitly stated. However, the department may still hold the funds if there's a legal obligation to satisfy valid liens. It is advisable to seek a resolution of the disputes as soon as possible to facilitate the release of funds.
Additionally, since you mentioned not signing the disbursement of settlement funds, it's crucial to review the terms of your agreement with the law firm and the lien department. Legal representation and the handling of liens often involve specific agreements that might affect the disbursement process. Consulting with another attorney for a second opinion or representation in this matter could provide clarity and aid in resolving the issue.
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