Attorney “Retaining” or “Charging” Liens: A Form of Legalized Extortion?

Disputes over legal bills sometimes can lead to a decision to change lawyers. When this happens, disputes will often arise over the discharged lawyer’s obligatation to surrender the client’s file when there are fees still owed to the discharged lawyer. When this happens, discharged lawyers often engage in a form of legalized extortion by refusing to turn over the client file to the new lawyer until all fees have been paid – even if the client may have already paid 95% of the discharged lawyer’s fees and the non-paid fees are disputed.

How is this possible? ABA Model RPC 1.16(d) provides that upon discharge, a discharged lawyer must “surrender papers and property to which the client is entitled.” ABA Opinion 99-414 adds that this must be done “promptly.”

But, the reason a discharged attorney may withhold surrendering client property is that many states allow an attorney to declare a “retaining” or “charging” lien on all client property in their possession to secure payment of outstanding fees. And since the client’s file is considered the client’s property, this represents a quirk in the law that favor attorneys and acts to thwarts the intent of the RPC.  

As noted, a discharged lawyer can withhold the entire file even though a client many have paid for 95% of the lawyer’s bills and arguably would equitably be entitled to 95% of what is in the file. But it gets even worse. Not only can a discharged attorney retain all of the client’s file, but the attorney may retain all the other client property in the attorney’s possession (such as original deeds, jewelry, etc.) although some courts and states do provide for some exceptions to this.

When a charging or retaining lien has been asserted, the only recourses a client has is to submit to this form of legalized extortion and pay the disputed fees or litigate the disputed fees.  But litigation takes time and time means more money. And while the litigation is proceeding, the client’s file (and any other property) is still with the discharged lawyer.  Thus, most clients usually wind up submitting to this form of legalized extortion in order to get their files into the hands of another lawyer.

Fortunately, there is a saving grace here when submitting to this form of legalized extortion. And that is agreeing to pay disputed fees does not affect the right to subsequently challenge the lawyer’s fees as being unreasonable in court. See ABA Annotated Model Rules of Prof. Conduct (7th ed. 2011), Comments to RPC 1.5 (Fees) at p. 74, Review Always Available (“No matter what the client has agreed to. . .”).  And it would be unethical if the discharged attorney insisted that the client give up this right for a court to review the fees for reasonableness as a condition to client getting possession of the client’s file and other property.

Just how long will this form of legalized extortion continue? In my opinion it will continue until a court is presented with a case involving the proverbial “poor old widow lady” whose property is being withheld by an attorney to whom the widow already paid most of the fees owed. When such a case like this does present itself, you can pace a safe bet that a court will have no hesitancy in relegating the attorney charging lien to its rightful place in history – the judicial dust bin.