An association has decided to change its legal counsel and transfer all existing matters to its new lawyer. The management company sends the request to the prior law firm only to be told that a retaining lien has been asserted. Until the lien is satisfied, the law firm refuses to transfer the files. Is that legal? Can the lawyer really do that? In short, you bet they can. A Florida attorney can enforce their rights to be paid before transferring the association’s files through asserting a retaining lien, a charging lien or both under the right circumstances.
A retaining lien is a passive lien and rests entirely on the right of an attorney to retain possession of the association’s documents, money and files as security for payment of the fees and costs earned by the law firm. A retaining lien covers the balance due for all legal work done on behalf of the client, regardless of whether the property is related to the matter for which the money is owed to the attorney. Further, a retaining lien cannot be impaired by the client securing the right to inspect and copy the papers or compelling their production by subpoena.
An attorney’s retaining lien was the subject of a recent condominium association case in Florida’s Third District Court of Appeal in the case of Conde & Cohen, P.L. v. Grandview Palace Condominium Association, Inc., 2015 WL 4637285 (Fla. 3d DCA 2015). In Conde & Cohen, the law firm was retained by the association over a period of years to represent it in a number of matters. Following a change in the association’s board of directors, new counsel was retained to represent the association. Upon learning of this action, the law firm asserted retaining liens in five lawsuits. Unable to convince the law firm to release its files in these five cases, the association filed an action against the law firm seeking injunctive relief and a declaration that the law firm’s retaining liens were invalid and that the association’s new counsel should be allowed to copy the law firm’s files.
The Court, squashing the order of the trial court which held in favor of the association, held that an attorney has a right to a retaining lien on all of the client’s property in the attorney’s possession, whether related to only one specific matter, until the attorney is paid where a valid retaining lien has been asserted. The attorney asserted it may retain the property subject to the lien until that attorney has been paid, or, if the client can demonstrate a pressing need for the property, then they can be required to post adequate security, such as a bond, for the amount in controversy. In this case, because the association did not provide any evidence as to the requisite showing of pressing necessity and did not post adequate security, the court held that the trial court’s order compelling the law firm to hand over its files was improper.
A different type of lien is referred to as a charging lien which attaches onto any monetary recovery due to the client at the conclusion of a lawsuit. Unless the client pays what is owed to the attorney prior to the conclusion of the lawsuit, the attorney will be entitled to recover such amounts from any monetary recovery received by the client in the lawsuit. To impose such a charging lien, the attorney must show the following four requirements:
- An express or implied contract between the attorney and the client (in the case of a community association, this requirement will more likely than not be satisfied because Florida Statutes requires that all association contracts for services must be in writing);
- An express or implied understanding for payment of the attorney’s fees out of the recovery;
- Either an avoidance of payment or a dispute as to the amount of fees; and
- Timely notice.
Often times a charging lien is asserted in a personal injury case where the client changes lawyers mid-stream. Because in this type of case, the attorney’s fees are typically only received when the client receives a settlement or wins at trial, if the client changes lawyers, the previous lawyer wants to be paid for their efforts. So, they assert the charging lien. In the context of a community association, a charging lien could result should the attorney prevail in one or more assessment collection cases, and they remain unpaid.
The easiest way to avoid a retaining lien and/or charging lien is to be sure to ask if any legal fees are due as a part of the attorney transfer process.
Jeffrey Rembaum, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. He is a regular columnist for The Condo News, a biweekly publication and was inducted into the 2012, 2013 & 2014 Florida Super Lawyers. He can be reached at 561-241-4462.