Dealing with Attorneys’ Liens

An attorneys’ lien is the right of an attorney who worked on a matter to a portion of the recovery for a case if the client terminates the original lawyer and hires new counsel to pursue a matter.  Attorneys are entitled to a lien against a recovery to prevent clients from terminating their lawyers and leaving counsel without compensation and to ensure that lawyers get paid for work they have performed for a client.  Dealing with attorneys’ liens can be tricky, but if attorneys and clients keep a few things in mind, it can be easier to handle a case involving an attorneys’ lien.

Common Situations

There are a few common situations in which dealing with attorneys’ liens is a must.  Attorneys’ liens most commonly arise in personal injury cases during which the lawyer does not get paid until a recovery is obtained for a client.  However, other cases in which an attorney works on contingency, and only gets paid after a successful resolution of the matter, can implicate attorneys’ liens since compensation due to the lawyer is deferred until the end of the case.

The most common situation when clients and attorneys need to contend with an attorneys’ lien is when the client terminates the lawyer and hires someone else.  Clients have the power to hire counsel of their choosing, and sometimes, clients wish to hire new counsel because the prior lawyer did not satisfy them or they did not have a connection with the prior attorney.  In such situations, attorneys’ liens help ensure that the outgoing counsel will be compensated even if the termination of the lawyer was amicable.

However, any situation in which a new attorney or law firm takes over for another attorney or law firm can implicate attorneys’ liens.  For instance, sometimes an attorney will pass away during the course of a representation.  A client may need to find new counsel to prosecute a case if the deceased lawyer did not have partners, and this can implicate the attorneys’ lien statute.  If your case fits into any of these situations, you should carefully evaluate whether an attorneys’ fee will attach to any recovery.

Know the Extent of the Lien

Another important thing to keep in mind when dealing with attorneys’ liens is that the nature and extent of attorneys’ liens often differs from state to state.  For instance, some jurisdictions may only enforce attorneys’ liens after litigation is commenced.  This may help alleviate a situation in which multiple lawyers claim that they had an impact on the case and are entitled to an attorneys’ lien, since only one or a few attorneys usually appear on litigation papers.  In addition, the nature and extent of attorneys’ liens that the estate of a deceased lawyer may have over a recovery may differ from state to state.  An experienced lawyer should know whether an attorneys’ lien is implicated in your circumstances and advise accordingly.

Retaining Lien

Another thing to keep in mind when dealing with attorneys’ liens is that the right to a recovery (also called a charging lien) may not be the only lien a lawyer has to a case.  Indeed, many jurisdictions recognize retaining liens that lawyers may have to the file in a matter.  A retaining lien means that an attorney who has outstanding bills for a client can refuse to turn over files and other materials related to a matter.  The theory behind a retaining lien is that the lawyer has a possessory interest to work product that was not paid for by the client that can remain in the lawyer’s possession until payment is furnished.  Depending on the case, it can be very difficult to prosecute a matter without the prior lawyer’s files since these materials convey valuable information about a case.  As such, attorneys and their clients should make sure that retaining liens are contended with whenever possible so incoming counsel can receive all information related to the cases they handle.

Consequences

Dealing with attorneys’ liens is important because there can be substantial consequences if attorneys’ liens are not dealt with appropriately.  Insurance companies and defendants may not wish to pay out a settlement until attorneys’ liens are resolved between the parties.  This is because the defendant or insurance company does not want to get into trouble if a prior lawyer has a claim for an attorneys’ lien that was not satisfied before payment was made in a case.  In addition, failing to come to a mutual agreement about attorneys’ liens can lead to litigation and other action between attorneys and their client.  It is oftentimes a painstaking process to pore over the work done on a case and decide how much money an attorney is due, so it is far easier for parties to agree to a fee division without judicial intervention.  Moreover, failing to consider the retaining lien an attorney has over their materials can lead to delays and missteps in litigation causes by a lack of information and the resources needed to properly prosecute a matter.

The Rothman Law Firm has substantial experience dealing with attorneys’ liens and related matters that often arise during litigation.  If you are looking for an experienced New York and New Jersey attorney to handle your attorneys’ lien matter or other legal issue, please feel free to contact The Rothman Law Firm to request a free consultation.