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Attorneys Lose Lien Dispute When They Fail to Serve the Lien On The Client

Randy M. Brown v. Universal Realty Group, et al. 2010 L 008953, 2014 IL App (1st) 1420241-U.

This is an unpublished opinion by the First District, Sixth Division, affirming a decision of the circuit court of cook county, which adjudicated an attorney’s lien of Brooks, Tarulis & Tibble (BT&T) to zero. Please note that I represented Randy Brown in this appeal.

The Illinois Attorney’s Lien Act, 770 ILCS 5/1 (2012) allows an attorney to place a lien on a client’s claim or cause of action. According to the opinion, Brown operated a Harold’s Chicken Shack restaurant in a building in Broadview, Illinois. The roof of the building collapsed, which destroyed Brown’s store. Brown, represented by Elizabeth Bacon, filed suit against the management company and the owners of the building. Ms. Bacon later joined BT&T. “On December 4, 2012, BT&T, by certified mail, served a notice of attorney’s lien on the attorney representing all defendants in the suit. The notice of attorney’s lien stated that Randy Brown, on or about September 12, 2011, had ‘placed in our hands’ the suit against defendants relating to the collapse of the building on January 15, 2009. ¬†The notice of attorney’s lien further stated plaintiffs had agreed to pay BT&T ‘for all legal services rendered from whatever amount may be recovered,’ and to reimburse BT&T’s costs. The notice of attorney’s lien was served on December 5, 2012, as evidenced by a signed certified mail receipt contained in the record.”

In October 2013, the case settled for $230,000.

So what went wrong?  According to the circuit court, the lien was invalid because it was not served on the defendants themselves. The circuit court, following a long line of cases, ruled that a lien must be served directly on the party holding the funds. Because the lawyers failed to do that, their lien was adjudicated to zero.

On appeal, BT&T raised a novel argument. It claimed that Rule 4.2 of the Illinois Rules of Professional Conduct prohibited it from serving the lien directly on the defendants and required it to serve the defendants’ lawyer.

The Illinois courts have reasoned that a lien must be served directly on the adverse party. The act provides in part: “To enforce such lien, such attorneys shall serve notice in writing, which service may be made by registered or certified mail, upon the party against whom their clients may have such suits, claims or causes of action….” The Appellate Court then cited a series of cases going back to the 1940’s, holding that attorney liens must be served upon the adverse party.

What about Rule 4.2, which provides: “In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order?” The Appellate Court noted that Comment 4 to the rule provides: “a lawyer having independent justification or legal authorization for communicating with a represented person is permitted to do so.” Comment 6 provides: “A lawyer who is uncertain whether a communication with a represented person is permissible may seek a court order.” The Appellate Court held that Rule 4.2 did not apply because BT&T was authorized to serve the lien directly on the opposing party by the Attorney’s Lien Act. Moreover, BT&T did not seek a court order.

The lawyers attempted to impute knowledge of the lien to the defendants on the ground that their lawyer signed pleadings in the circuit court and appeared at the hearing to adjudicate the lien. These arguments were rejected as well because knowledge of a lien is not imputed to a client unless the client is served with the lien.

Comment: The requirements for perfecting an attorney’s lien have been well-settled since 1944. Courts are reluctant to disturb well-settled law to benefit attorneys.