May a California lawyer take a contractual lien on a client's recovery in one case to secure unpaid hourly fees owed in an unrelated case?

Currency note

This opinion was issued in 1998, before California's November 1, 2018 adoption of the renumbered Rules of Professional Conduct. Former Rule 3-300 corresponds to current Rules 1.7 and 1.8.1 (business transactions and acquisitions adverse to a client). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

View original opinion

Plain-English summary

The committee analyzed a law firm that represented the same plaintiff client in multiple unrelated civil rights matters under 42 U.S.C. section 1983, billing hourly. Because clients often could not pay current balances during the pendency of any one case, the firm proposed including in the prospective fee agreement a priority lien against the recovery in a particular civil rights case sufficient to satisfy unpaid fees in other matters.

The committee distinguished a prospective lien negotiated at the outset of a new engagement from a unilateral modification of an existing fee agreement. Citing Berk v. Twenty-Nine Palms Ranchos and Ramirez v. Sturdevant, the committee identified the prospective fee agreement as an arms-length negotiation in which no fiduciary duties yet attach.

The committee concluded that former Rule 3-300 was not per se applicable to the initial retainer agreement. Citing the comment to Rule 3-300 and Hawk v. State Bar, the committee identified the "adverse" element as the lawyer's ability to "summarily" extinguish the client's interest in property. Because an attorney holding a contractual lien must bring an independent action to enforce the lien and the client may oppose existence, amount, or enforceability (Valenta v. Regents; Epstein v. Abrams), the lien provision is not "adverse" within Rule 3-300.

The committee distinguished its conclusion from cases where the client has not consented. Citing LACBA Opinion 438 and In the Matter of Fonte, the committee identified unilateral diversion of trust funds to pay unrelated fees as an ethical violation regardless of whether fees were earned, and identified In the Matter of Respondent K as confirming the duty to hold disputed earned fees in trust pending resolution.

The committee concluded the lien is permissible if (1) the terms are fully explained and the client gives informed consent, (2) the written fee agreement specifies how the lien attaches, and (3) the agreement complies with Business and Professions Code section 6147 or 6148.

Common questions

Q: Can a California lawyer take a lien on the client's recovery in one case to secure unpaid fees in another case for the same client?

A: Per the opinion, yes, when the lien is negotiated at the outset of a new engagement and the client receives full disclosure, gives informed consent, and the written fee agreement specifies the lien terms and complies with Business and Professions Code sections 6147 or 6148.

Q: Does former Rule 3-300 apply to such a lien?

A: Per the opinion, no. The committee identified the contractual lien as not "adverse" to the client within Rule 3-300 because the lawyer cannot summarily extinguish the client's interest; the lawyer must bring an independent action to enforce, in which the client may contest the lien.

Q: Can a lawyer unilaterally satisfy a lien from client funds in trust without the client's consent?

A: Per the opinion, no. The committee identified that absent client consent, an attorney is ethically precluded from satisfying a lien for fees in one matter against a recovery in an unrelated matter. The opinion suggested holding disputed funds in trust until any objection is resolved.

Q: What if the firm wants to add a lien provision to an existing fee agreement rather than negotiate it at the outset?

A: The committee identified this as outside the inquiry's scope but observed that the preexistence of fiduciary duties to an existing client would preclude unilateral modification by the attorney.

Background and rules framework

The opinion interprets former California Rule of Professional Conduct 3-300 (business transactions adverse to client, including acquisition of pecuniary interest), former Rule 4-200(B) (unconscionable fees), former Rule 5-101 (predecessor to 3-300), and Business and Professions Code sections 6147 and 6148 (written fee agreement requirements). The committee distinguished the prospective lien at issue from a unilateral modification of an existing fee arrangement.

Citations and references

Rules of Professional Conduct (former):

• California Rule 3-300 (business transactions and acquisitions adverse to client)
• California Rule 4-200(B) (unconscionable fees)
• California Rule 5-101 (predecessor to Rule 3-300)

Statutes:

• 42 U.S.C. sections 1983, 1988
• California Business and Professions Code sections 6147, 6148
• California Civil Code section 2881 (creation of lien by contract)
• California Probate Code section 16004 and 16004(c)

Cases:

• Bandy v. Mt. Diablo Unified School District, 56 Cal.App.3d 230 (1976), attorney-client lien as equitable assignment
• Baron v. Mare, 47 Cal.App.3d 304 (1975), no fiduciary duties before retention
• Berk v. Twenty-Nine Palms Ranchos, Inc., 201 Cal.App.2d 625 (1962), arms-length pre-retention negotiation
• Cetenko v. United California Bank, 30 Cal.3d 528 (Cal. 1982), lien viable in hourly fee contract
• Epstein v. Abrams, 57 Cal.App.4th 1159 (1997), no summary extinguishment of client interest
• Gelfand, Greer, Popko & Miller v. Shivener, 30 Cal.App.3d 364 (1973), enforceability of contractual lien
• Grossman v. State Bar, 34 Cal.3d 73 (Cal. 1983), full disclosure and informed consent
• Haupt v. Charlie's Kosher Market, 17 Cal.2d 843 (Cal. 1941), enforceability of attorney lien
• Hawk v. State Bar, 45 Cal.3d 589 (Cal. 1988), "adverse" turns on summary extinguishment
• In the Matter of Feldsott, 3 Cal. State Bar Ct. Rptr. 754 (Rev. Dept. 1997)
• In the Matter of Fonte, 2 Cal. State Bar Ct. Rptr. 752 (Rev. Dept. 1994)
• In the Matter of Respondent F, 2 Cal. State Bar Ct. Rptr. 17 (Rev. Dept. 1992)
• In the Matter of Respondent K, 2 Cal. State Bar Ct. Rptr. 335 (Rev. Dept. 1993)
• Ramirez v. Sturdevant, 21 Cal.App.4th 904 (1994), general rule on attorney-negotiated terms
• Setzer v. Robinson, 57 Cal.2d 213 (Cal. 1962)
• Severson & Werson v. Bolinger, 235 Cal.App.3d 1569 (1991)
• Valenta v. Regents of University of California, 231 Cal.App.3d 1465 (1991), independent action to enforce lien
• Walton v. Broglio, 52 Cal.App.3d 400 (1975), trustee/beneficiary exemption inapplicable
• Weiss v. Marcus, 51 Cal.App.3d 590 (1975), enforceability of contractual lien

Other opinions cited:

• LACBA Opinion 438 (unilateral trust diversion)
• LACBA Opinion 458 (written fee agreement requirements)
• LACBA Opinion 479 (disclosure and informed consent)
• LACBA Opinion 492 (Rule 3-300 not per se applicable to initial retainer)
• Bar Association of San Francisco Opinion 1989-1

See also

• LACBA Opinion 492: Security Interest in Real Property to Ensure Payment of Fees
• LACBA Opinion 499: Interest on Costs Advanced Requires Written Fee Agreement
• LACBA Opinion 478: Medical Liens and Disbursement of Client Funds

Source

• Landing page: https://lacba.org/?pg=ethics-opinions
• Original PDF: https://lacba.org/docDownload/2010614