What does a lawyer need to do if they hold disputed funds in a contingency case?

In situations where a lawyer holds disputed funds in a contingency case, it is essential to manage the funds according to ethical rules and professional responsibility standards. The correct approach requires the lawyer to send only the undisputed portion of the funds to the client while keeping the disputed amount in a trust account. This ensures that the client receives what they are entitled to without jeopardizing the lawyer’s ethical obligations regarding the disputed funds.

Holding the disputed funds in trust protects both the client's interests and the lawyer's professional integrity. It allows the dispute over those funds to be resolved without the lawyer placing themselves in a position of impropriety or taking sides. By segregating the funds this way, the lawyer maintains compliance with the rules governing client funds and mitigates potential conflicts or claims from either party involved in the dispute.

In this context, other options do not align with required professional conduct. Returning all funds immediately would not respect the lawyer’s responsibility to hold onto disputed amounts. Depositing all funds into the client’s operating account would lack the necessary segregation of funds and could lead to ethical violations. Lastly, refusing to hold any funds until a court decision is reached would be impractical and unhelpful, as it does not fulfill the lawyer's duty to manage client funds responsibly