Obtaining an Attorney’s Lien in California: The Basics Behind Enforcing an Attorney’s Right to be Paid

Everyone desires to have an amicable attorney-client relationship.  The common attorney-client relationship in its simplest form is: the potential client signs a fee agreement retaining the attorney, the attorney performs the requested work, the client achieves an end result, and the attorney gets paid.  The unfortunate reality, however, is that sometimes a retained client fail to pay its attorney for some (or all) of the legal work that the attorney performed.  When this occurs, the attorney is left in a difficult divide between complying with the attorney’s ethical obligations and enforcing the attorney’s right to be paid.  So how can the attorney ethically enforce its right to be paid while still complying with the Professional Rules all attorneys are bound by?  Is it even possible?  The answer is in one small word “liens.”

An attorney’s lien (also termed a “charging lien”) is a lien that secures an attorney’s compensation “upon the fund or judgment” recovered by the attorney for the client.  Unlike most jurisdictions, where an attorney’s lien is established by operation of law in favor of an attorney to satisfy attorney fees and expenses out of the proceeds of a prospective judgment, in California, an attorney’s lien can only be created by contract.

An attorney’s lien is created and takes effect at the time the fee agreement is executed, and may be created without even using the word “lien” at all.  The determinative question is “whether the parties have contracted that the lawyer is to look to the judgment he may obtain as security for his fee.”  Although a notice of lien is not necessary to “perfect” an attorney’s lien, filing a notice of attorney’s lien “has become commonplace, and the courts have endorsed the practice.”

While an attorney’s lien may be used to secure either an hourly fee agreement or a contingency fee agreement, hourly fee agreements purporting to create an attorney’s lien must comply with Rule 1.8.1 of the California Rules of Professional Conduct.  Rule 1.8.1 requires that:

(a) the transaction or acquisition and its terms are fair and reasonable to the client and the terms and the lawyer’s role in the transaction or acquisition are fully disclosed and transmitted in writing to the client in a manner that should reasonably have been understood by the client;

(b) the client either is represented in the transaction or acquisition by an independent lawyer of the client’s choice or the client is advised in writing to seek the advice of an independent lawyer of the client’s choice and is given a reasonable opportunity to seek that advice; and

(c) the client thereafter provides informed written consent to the terms of the transaction or acquisition, and the lawyer’s role in it.

Cal. R. Prof’l Conduct. R. 1.8.1 (emphasis added).

An attorney must bring a separate action against the client to: (1) establish the existence of the lien, (2) determine the amount of the lien, and (3) enforce it.

Takeaway: If an attorney wants to create a valid attorney’s lien under California law, the attorney will need to: (1) have an express provision in the fee agreement regarding the lien (express), or (2) have language in the fee agreement providing that the attorney will be paid for services rendered from the judgment itself (implication).  Should the attorney fail to do so, the attorney may essentially “miss the chance” to obtain one later on in the future should the relationship go awry.

The following cases were used in creating this blog, and are an excellent starting point for individuals wanting to learn more on the subject:

  • Fletcher v. Davis, 90 P.3d 1216, 1219 (Cal. 2004).
  • Mojtahedi v. Vargas, 176 Cal. Rptr. 3d 313, 315–16 (Cal. Ct. App. 2014).
  • Carroll v. Interstate Brands Corp., 121 Cal. Rptr. 2d 532, 534 (Cal. Ct. App. 2002).
  • Gelfand, Greer, Popko & Miller v. Shivener, 105 Cal. Rptr. 445, 450 (Cal. Ct. App. 1973).
  • In re Modtech Holdings, Inc., 505 F. App’x 668, 669 (9th Cir. 2013).
  • Plummer v. Day/Eisenberg, LLP, 108 Cal. Rptr. 3d 455, 464 (Cal. 2010).

 

*NOTICE: This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.