Part II: Upon analysis, where do we stand?

This is the second part of a two-part-long write-up. The second part, titled ‘An Attorney’s Right of Lien – An Ethical and Legal Conundrum‘ can be found here.

In the previous post (Part I: An Attorney’s Right of Lien – An Ethical and Legal conundrum), we discussed the introductory part to this article, the ethical and legal dilemma that Courts face while dealing with an attorney’s right of lien and the approaches taken by different legal systems. We discussed certain opinions in support of this right with ethical justifications. In this post, we will carry forward this discussion, looking into the jurisprudential basis of this right, views in opposition and the need to take a stand on this issue. I shall also discuss in brief, some alternative methods we can adopt to try and place both parties on an equal footing.

According to some scholars, a lien is not a right in the true sense of the term[1]. This is because, unless a third party actually comes forward and claims the thing so retained as a lien, the attorney is not likely to sue the client due to a number of reasons such as a malpractice claim, loss of reputation, a waste of time, money and efforts and so on. In reality, unlike other legal remedies that vest real rights upon a person, such a situation does not exist in the case of an attorney’s lien.

Returning to the views supporting such a right (as often understood), it is argued that such a right is imperative especially because legal aid is often quite expensive and time consuming. A right over papers acts as “an instant sort of protection”[2]. Although various practical issues arise while implementing such a right in statutes, it is nonetheless viewed as a valuable remedy for legal professionals that must not be done away with.

In the English decision of In re Road Rapid Transit Co, A, a solicitor of a company was retained by the liquidator, but later discharged, only to be replaced by another[3]. The liquidator required that A hand over all documents that had come in his possession both before and after winding up of the company. The Court however held, that A had acquired a valid lien over the documents that he had in his possession prior to the winding up order, but not after[4].

On the other hand, critics point out that such a right is often misused by legal professionals who are already in a higher bargaining position. In such a situation, when an attorney retains essential documents, the only option left with the helpless client is to either accept the attorney’s demands and pay up whatever sum is demanded, or abandon his/her papers and try and fight another expensive and time consuming battle in Court, using the services of another attorney[5]. More often than not, clients end up choosing the first option. These critics further argue that such a right goes against professional ethics and public interest. According to them such a right is not a universal benefit of the legal profession. In France and India for instance, no such right is granted at present, and such conduct is even prohibited under law[6].

In the United States, it is seen that although such a right exists, Courts have often relaxed the rules with respect to clients who had an extraordinary need to use the documents or whose financial standing was rather poor[7]. Other exceptions also exist. If the lawyer withdraws herself from the case or is discharged by the client, she has no right of lien[8]. Despite this, lawyers still withhold documents and slippery exceptions have still created legal disputes, thus landing the client in the same position as he was in, without the watered down rule.

Those against this right say that it acts as a window of opportunity for the lawyer to make money by hurting her clients and punishes clients who place their full trust in lawyers. It is argued that “disproportionate harm on the client is not an unwanted by-product of the lien-it is precisely the way the lien is meant to work, as the lawyer generally has no use of the documents withheld and cannot transfer them to anyone else”[9].

In the case of Pecarsky v. Galaxiworld.com Ltd[10], the defendant was a large firm which was allowed to excuse itself from a case without giving any reasons. The lower Court held that the client owed the firm around $500,000 as legal fees and other miscellaneous expenses. The firm exercised the right of lien and withheld the documents of the client. However, this client did not give in and took a couple of months to find a new lawyer for himself. In the meantime, the firm managed to secure a default judgement against the client which the lower Court refused to alter. Somehow, after a long battle, the client managed to get the Court to vacate the default judgement and succeeded. Here, the firm had not even begun putting actual pressure on the client since there was an order in its favour[11].

Unlike most clients who would be less determined, this client did not take the general route and settle the fee claimed by the firm. Unfortunately, most cases do not go this way and the client ends up losing out[12].

No doubt a lawyer is entitled to receive her due fee, but to take the liberty to menace the client is not what the standards of the legal profession agree with. The right of lien is in direct contrast with the ethics and professional behaviour code laid down for legal professionals. On the one hand, lawyers are perceived as guardians of their clients and have to protect their client’s papers and documents. On the other hand, such ethical and moral standards are disregarded when preference is given to the lawyer’s financial interests[13]. A client who is already unable to pay his lawyer’s fee must now find another, and pay his fee in order to get legal aid to help him win against his former lawyer.

“Much lawyer and judicial rhetoric emphasizes the importance of encouraging clients to share their knowledge with lawyers in order to obtain sound advice and adequate representation”[14]. This begs the question regarding the breach of a client’s confidence when he trusts his lawyer with all his documents. When lawyers begin to use this right frequently, it affects their fiduciary relationship clients. A client is forced to view her lawyer as an opposing party, rather than someone on the same team[15]. It must not be forgotten that unlike other non-professionals who often invoke liens, doctors and lawyers occupy a unique position.

Critics point out that unlike a retaining lien, charging a lien is a handy tool as it only permits attorneys to attach funds which they recover for the client and which is due to them[16]. If this fee comes directly into the hands of a lawyer, she can retain the amount due, while if it goes to the Court, the attorney can recover it from the Court itself. Although problems could crop up, the harmful effects of this type of lien are far less.

From the above discussions, it is clear that the right of attorney’s lien is more unfair than fair. Given that in status quo, an attorney is already in a much higher bargaining position, such a right may further complicate matters. What could be a possible solution? One solution, that is not found in many legal systems is fee regulation, rather than lien regulation[17]. Periodic payments as per a contract, or even hourly payments might help mitigate losses on both sides, in advance. The concept of a contingent fee, where a lawyer is paid based on the outcome of the case, or based on how much the client recovers. In such a situation, when the both the parties are aware of the arrangements, clients will approach attorneys who voluntarily take up the case and still remain protected. Today, there are concepts such as alternative fee arrangements (AFAs) being adopted which provide more options for both parties to choose from[18]. Moreover, speaking about fee regulation or even drafting an agreement for the same prior to the trial can ensure more transparency and can help reduce losses.

In conclusion, it is important for the law to take a stand on an attorney’s right of lien based on the particular circumstances that prevail in every legal system. If not, this right of a retaining lien may prove to be disastrous and self-contradictory, in comparison to the ends sought. Keeping in mind the various ethical and legal considerations, there are other less damaging ways in which an attorney can recover her fee. Opting for these alternative methods, can perhaps help prevent the attorney from taking unfair advantage of her client, and can simultaneously protect the trust and confidence that a client has placed in her.

[1] supra note 4, at 86.

[2] Id.

[3] In re Road Rapid Transit Co L. R, I Ch. Div. 96 (1909).

[4] Id.

[5] John Leubsdorf, Against Lawyer Retaining Liens, 72 Fordham L. Rev. 849, 849 (2004).

[6] JACQUES HAMELIN & ANDRE DAMIEN, RULES OF THE PROFESSION OF LAWYER 373 (8th ed., 1995).

[7] P.C. v. Shelton, 69 P.3d 1210 (Okla. Civ. App. 2003).

[8] Jenkins v. Weinshienk, 670 F.2d 915 (10th Cir. 1982).

[9] Attorney Grievance Comm. v. Sheridan, 741 A.2d 1143 (Md. 1999).

[10] Pecarsky v. Galaxiworld.com Ltd  249 F.3d 167 (2d Cir. 2001).

[11] Id.

[12] supra note 33, at 856.

[13]American Bar Association Model Rules of Professional Conduct, Rules 1.8(j) & 1.15(b) (2000).

[14] supra note 33, at 861.

[15] Jonathan M. Hyman, Trial Advocacy and Methods of Negotiation: Can Good Trial Advocates Be Wise Negotiators?, 34 U.C.L.A. L. Rev. 863 (1987).

[16] supra note 33, at 866.

[17] supra note 33, at 868.

[18] For more information, visit https://legaltrek.com/blog/2015/09/alternative-fee-arrangements-a-comprehensive-law-firm-guide/ & https://www.lexisnexis.com/communities/corporatecounselnewsletter/b/newsletter/archive/2017/05/18/alternative-fee-s-arrangements-the-antidote-to-the-poisonous-hourly-rate-paradigm.aspx.


ABOUT THE AUTHOR

Ashna D

Ashna photo

Ashna D is a third-year law undergraduate at the National University of Advanced Legal Studies (NUALS), Kochi. She is passionate about criminal law, human rights law, and family law, and writes mostly at the intersection of law and social issues.

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