In litigation, there may come a time when, without cause, an attorney withdraws from the case or the client discharges the attorney. At that instance, the attorney is wondering how he is going to get paid the remainder of his legal fee from his client. He may also be wondering what mechanisms may be used to get paid. (Continued.)
New York State provides three different remedies to an attorney discharged by his client without cause, being: (a) the “retaining” lien; (b) the “charging” lien; and (c) an action for breach of contract damages. See, Butler, Fitzgerald & Potter v. Gelmin,235 AD2d 218 (1st Dept. 1997). It is important for the attorney to be familiar with the three different remedies in order to effectively utilize them to get his legal fee paid.
1. The “retaining” lien: The “retaining” lien gives an attorney the right to keep, with certain exceptions, all of the papers, documents, and other personal property of the client which have come into the lawyer’s possession in his professional capacity, as long as those items are related to the subject representation. This type of lien is founded upon physical possession, and an attorney may forfeit his right to a retaining lien by voluntarily giving away any of the items to which the lien may have attached. This type of lien lasts until the attorney’s disbursements have been fully paid and, generally, his legal fee has been determined or set by the court.
2. The “charging” lien: The second remedy available to an attorney for the recovery of his fee is governed by Judiciary Law Section 475, which provides:
From the commencement of an action, special or other proceeding in any court or before any state, municipal or federal department, except a department of labor, or the service of an answer concerning a counterclaim, the attorney who appears for a party has a lien upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, determination, decision, judgment, or final order in his client’s favor, and the proceeds thereof in whatever hands they may come, and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination.
The “charging” lien is predicated on the idea that the attorney has, by his skill and effort, obtained the judgment, and should have a lien thereon for his compensation. Further, enforcement of the charging lien is founded upon the equitable notion that the proceeds of a settlement are within the control of the court.
3. Plenary action against client: The third remedy would be the commencement by the attorney of a “plenary” or separate action against his client for damages for breach of contract. The court will need to determine the reasonable value of the attorney’s services rendered on behalf of the client (colloquially referred to as “quantum meruit”). This case accrues immediately upon an attorney’s discharge, and unlike the retaining lien and charging lien, it may be enforced against all of the client’s assets. In determining the value of the services rendered by the attorney, the court will take into consideration a number of factors, including: the terms of any percentage fee agreement; nature of litigation; difficulty of the case; amounts customarily charged by attorneys for such services; and results achieved.
It is important to note that the attorney may pursue any or all of the three remedies at the same time (the “full court press” method) in order to get the bill paid. The three different remedies are cumulative and not exclusive; the client cannot argue that the attorney “elected” to proceed with one certain remedy versus another remedy.
by Richard A. Klass, Esq.
Copyright 2006
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Why Settle for a Charging Lien? by Richard A. Klass, Esq. is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. For permissions beyond the scope of this license, please contact Mr. Klass (email:RichKlass@CourtStreetLaw.com). Insert the words "reprint permission request" in the subject line of the email.
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