When can a Colorado lawyer assert a charging lien for unpaid fees, and what must the lawyer do to take a security interest in a client's property?
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This page answers the general question as of 2002. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion 110 (adopted January 19, 2002; amended May 19, 2002) addresses two ways a lawyer secures payment: asserting a charging lien, and taking a security interest in client property. On charging liens, the opinion concludes that Rule 1.8(j) permits a lawyer to acquire a lien granted by law to secure fees or expenses, and that in Colorado the right to a charging lien arises by statute only (C.R.S. section 12-5-119), with no common law right, so strict compliance with the statute is required. A lawyer may ethically assert a charging lien for legal services the lawyer has rendered against money, property, or judgments the lawyer obtained or assisted in obtaining.
The opinion identifies several limits drawn from Colorado disciplinary cases. A lawyer may not assert a charging lien for services unrelated to the matter in which the lawyer represents the client, or against proceeds from something that was not the basis of the cause of action, and an unfounded or improper assertion violates the rules. Lawyers who do not help obtain proceeds or property, such as a guardian ad litem or a criminal defense lawyer whose matter does not involve obtaining property, may not assert a charging lien, and child support is generally exempt as a matter of public policy. Until the lien is reduced to judgment, funds the lawyer holds remain the client's property; a lawyer holding funds subject to another lawyer's charging lien may not disburse them without making provision for that lien (Rule 1.15). Because mere filing of a lien is neither a business transaction with a client nor the acquisition of a security interest in the subject matter, the Committee concludes that filing the lien does not require compliance with Rule 1.8(a).
On security interests, the opinion concludes that a lawyer may take a security interest in client property for payment of past or future fees or a retainer only by complying with Rule 1.8(a): the transaction terms must be fair, reasonable, and fully disclosed in writing in a manner the client can understand; the client must be informed that the use of independent counsel may be advisable and given a reasonable opportunity to seek it; and the client must consent in writing. If the security exceeds the fees actually earned (for example, a retainer that is not fully earned), the lawyer must release or credit the excess so the property is not encumbered for more than the earned fees. The opinion stresses that even when Rule 1.8(a) or Rule 1.8(j) is satisfied, the lawyer must still comply with Rule 1.7(b): the lawyer's interest in being paid must not adversely affect the representation, and a lawyer who tries to enforce a lien or foreclose on security during the representation may have to withdraw under Rule 1.16.
In practice
Under the Colorado rules as they stood at the time of the opinion, the analysis turns on the source of the lien right and on Rule 1.8's protections for clients. The opinion holds that a charging lien is available only as the statute allows and only for fees tied to property the lawyer helped obtain in that matter, with strict statutory compliance required; that taking a security interest in client property requires full Rule 1.8(a) compliance and release of any security beyond earned fees; and that Rule 1.7(b) overlays both, so a lawyer whose payment interest materially limits the representation may need to withdraw under Rule 1.16. Because the rules and the lien statute (then C.R.S. section 12-5-119) may have been amended or renumbered since 2002, confirm the current rule and statute text before relying on the specifics.
Common questions
Q: Can I put a charging lien on whatever my client owns to make sure I get paid?
A: No. The opinion concludes a charging lien reaches only money, property, or judgments the lawyer obtained or assisted in obtaining in that matter, arises by statute (C.R.S. section 12-5-119) requiring strict compliance, and may not be asserted for services unrelated to the matter.
Q: If my representation does not produce any property or proceeds, can I still assert a charging lien?
A: Generally no. The opinion concludes that lawyers who do not assist in obtaining proceeds or property, such as a guardian ad litem or a criminal defense lawyer whose matter does not involve obtaining property, may not assert a charging lien.
Q: What do I have to do to take a security interest in my client's property for my fees?
A: Comply with Rule 1.8(a). The opinion requires fair, reasonable terms fully disclosed in writing, advising the client that independent counsel may be advisable and giving an opportunity to consult it, and obtaining the client's written consent; security beyond the earned fees must be released.
Q: Can I enforce the lien or foreclose while I am still representing the client?
A: The opinion cautions against it. It concludes that Rule 1.7(b) requires that the lawyer's interest in payment not adversely affect the representation, and that a lawyer enforcing a lien or foreclosing during the representation may have to withdraw under Rule 1.16.
Background and rules framework
The opinion interprets Colo. RPC 1.8(j) (a lawyer may acquire a lien authorized by law to secure fees) together with the Colorado charging-lien statute, C.R.S. section 12-5-119; Colo. RPC 1.8(a) (business transactions with, and security interests adverse to, a client); Colo. RPC 1.5 (the lien amount must satisfy the reasonable-fee requirement); Colo. RPC 1.7(b) (the lawyer's own interest must not adversely affect the representation); Colo. RPC 1.15 (safekeeping property when a third party claims an interest); and Colo. RPC 1.16 (withdrawal).
Citations and references
Rules of Professional Conduct:
- Colo. RPC 1.8(j) / Model Rule 1.8 (lien authorized by law to secure fees)
- Colo. RPC 1.8(a) / Model Rule 1.8 (business transactions and security interests adverse to a client)
- Colo. RPC 1.7(b) / Model Rule 1.7 (own-interest conflicts)
- Colo. RPC 1.5 / Model Rule 1.5 (reasonable fees)
- Colo. RPC 1.15 / Model Rule 1.15 (safekeeping disputed property)
- Colo. RPC 1.16 / Model Rule 1.16 (declining or terminating representation)
Statutes:
- C.R.S. section 12-5-119 (Colorado attorney's charging-lien statute)
Cases:
- People v. Brown, 840 P.2d 1085 (Colo. 1992), the charging-lien right is statutory, with no common law right
- People v. Smith, 830 P.2d 1003 (Colo. 1992), an attorney may not record a lien when not entitled to it
- People v. Mills, 861 P.2d 708 (Colo. 1993), no charging lien for services unrelated to the case
- People v. Mason, 938 P.2d 133 (Colo. 1997), taking property in lieu of fees and then representing the client in suit on it violates Rules 1.8(j) and 1.7(b)
See also
- CBA Formal Op. 109: Taking an Ownership Stake in a Client
- ABA Formal Op. 00-416: Buying a Client's Receivables
- CA Op. 2009-177: Charging Lien, Joint Settlement Check
Source
- Landing page: https://www.cobar.org/ethicsopinions
- Original PDF: https://www.cobar.org/Portals/COBAR/repository/ethicsOpinions/FormalEthicsOpinion_110_2011.pdf
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