Lawyers have rights to hold the client’s file or other property as security for payment. Here the lawyer held on to a former divorce client’s file indefinitely. The client eventually sued the lawyer for legal malpractice – under the theory that the lawyer had no right to hold the file. Had the case been decided on that issue, it would have been an important case. However, the court dismissed the case on statute of limitations grounds, based on the three-year Arkansas statute of limitations.
What is an attorney’s possessory lien? It is a lien that an attorney can use to block the client from access to the file. The attorney, however, cannot enforce the lien in court. In a recent unpublished decision the Illinois Appellate Court held that a law firm can assert a possessory lien over a computer database held by a document management firm. The case is captioned Cronin & Company, Ltd. v. Richie Capital Management, LLC., 2014 IL App (1st) 131892-U. Cronin is a law firm that represented Richie Capital (and other parties) in litigation, in which Richie Capital was attempting to recover investment losses incurred when it invested in a Ponzi scheme.
In 2012, Richie authorized Cronin to retain a third-party vendor, Flex Discovery, LLC (d/b/a Landmark Legal Solutions). Landmark was retained to provide a hosting program “that would enable attorneys to access electronic databases containing documents produced in connection with the subject litigation.” ¶ 4.
In January or February 2013, the attorney-client relationship broke down and was terminated. There was a dispute over legal fees between Cronin and Richie Capital. Cronin asked Landmark to “‘hibernate’ the database it was hosting (take it off-line), so it could not be accessed. Cronin claimed it was asserting a retaining lien over its former client’s litigation file, which it argued included the database.” ¶ 5.
This case is from Connecticut and, obviously, is not binding in Illinois. It holds that a divorce attorney cannot assert an equitable lien on marital property in a marital dissolution action.
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This is an unpublished opinion by the First District, Sixth Division, affirming a decision of the circuit court of cook county, which adjudicated an attorney’s lien of Brooks,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.”
The Seventh Circuit sanctioned an attorney for asserting an attorney lien long after the lawyer was terminated.
The Illinois Attorney Lien Act of 1909 (yes, that is not a typo) provides that an attorney can place al lien on a claim that his client places with him for collection. Liens are typically asserted in contingent fee cases. A lawyer who is paid by the hour usually does not have a lien because he has already been fully compensated.
The typical lien situation is one where a claimant hires a lawyer to sue someone. Filing suit is not enough for an attorney lien. Instead, the lawyer must serve the party “against whom” the client has a claim. That means that the lawyer must serve the adverse party with a copy of the lien. There is no requirement that the lawyer serve his own client with the lien.
This is a dispute between an attorney and a client concerning an attorney lien. Such disputes are common. This case illustrates the correct way to protect a disputed legal fee with an attorney lien.
The Sixth Circuit has affirmed a legal fee award of $1.4 million to a lawyer who brought proceedings to enforce an attorney lien. The underlying dispute was a software licensing dispute between two companies, which occurred in the federal district court. Infocon was to receive a $5 million settlement from Exact Software, Inc. Just before the settlement was finalized, Infocon fired its lawyer, J Fox DeMoisey. DeMoisey placed a charging lien on the proceeds of the litigation. The district court froze the disputed portion of the settlement ($1.2 million) pending the outcome of litigation.