Can a lawyer keep a former client's papers as security for unpaid fees when the client needs them for other litigation?

Plain-English summary

The question was whether an attorney could retain a former client's documents and papers, needed by the client in other litigation, when the client had not paid the attorney's bill. The opinion explained that counsel had to first consider whether a valid retaining lien existed, which it described as primarily a question of state contract law; New Mexico recognized the common-law retaining lien for unpaid fees on papers coming into the lawyer's possession through the professional representation (citing Prichard v. Fulmer). The Committee said it did not view its role as determining the validity of any particular lien, but would disapprove of an attempt to enforce an invalid one.

On the scope of the lien, the opinion drew on Pomerantz v. Schandler and Jenkins v. Weinsheink, under which a lawyer could withhold papers until the fee was paid or adequate security posted, subject to an exception where the client showed (1) an urgent need for the papers, (2) prejudice if access was denied, and (3) an inability to pay. The opinion noted the purpose of the retaining lien was to induce payment, that its effectiveness depended on the client's lack of access, and that the lawyer could withhold papers even when needed in other litigation until the client paid or convinced a judge the exception applied; it added that an opposing party might still obtain the papers through discovery if they were not work product.

The opinion stressed that asserting a retaining lien was not ethically absolute, urging review of ABA Informal Opinion 1461 and citing DR 2-110(A)(2), EC 2-23, EC 2-32, and Model Rule 1.16. It reproduced Opinion 1461's balancing of the lawyer's interests against the client's, considering the client's financial situation and sophistication, the reasonableness of the fee, whether the client understood and agreed to the amount, prejudice to important rights, and less stringent alternatives. The Committee concluded that the lawyer should ordinarily forego the lien where it would prejudice a client's defense of a criminal charge or a similarly important liberty, or where the client's failure to pay reflected genuine inability rather than deliberate refusal, but that asserting the lien was justified where a financially able client deliberately refused to pay a fee clearly agreed upon and due. Because the attorney had not supplied enough facts, the Committee gave the three-part conditional answer rather than a clear-cut one.

Currency note

This opinion was issued in 1984, when New Mexico lawyers were governed by the former New Mexico Code of Professional Responsibility, which the State Bar later replaced with the Rules of Professional Conduct; it also predates the State Bar of New Mexico's November 3, 2008 revisions to those Rules (the New Mexico adoption of the ABA Ethics 2000 changes). The Disciplinary Rules and Ethical Considerations it cites are no longer in force. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could a lawyer keep a former client's papers because the client had not paid?

A: Sometimes. The opinion concluded a lawyer could assert a retaining lien and withhold the papers if a valid lien existed, the client did not fall within the urgent-need exceptions, and the ethical limits of ABA Informal Opinion 1461 and Model Rule 1.16 were observed.

Q: When did the opinion say the lawyer should give the papers back even if unpaid?

A: The opinion concluded the lawyer should ordinarily forego the lien where the client showed an urgent need, prejudice if denied access, and an inability to pay, as recognized in Pomerantz and Jenkins, or where the failure to pay reflected genuine financial inability rather than deliberate refusal.

Q: When was asserting the lien justified?

A: The opinion concluded that asserting the lien was ethically justified where a financially able client deliberately refused to pay a fee that was clearly agreed upon and due, which it characterized as gross imposition by the client.

Q: Did the lien stop the other side from getting the papers?

A: Not necessarily. The opinion noted that an opposing party in the other litigation could probably obtain the papers through discovery if they were not protected by the work-product doctrine, notwithstanding the retaining lien.

Background and rules framework

The opinion interpreted the former New Mexico Code of Professional Responsibility on withdrawal and return of client property (DR 2-110(A)(2), EC 2-23, EC 2-32), alongside the common-law retaining lien and the then-new Model Rule 1.16. It relied heavily on ABA Informal Opinion 1461 (1980) and on Pomerantz v. Schandler and Jenkins v. Weinsheink.

Citations and references

Rules of Professional Conduct (former Code and Model Rules):

• Model Code DR 2-110(A)(2) / NM Code Rule 2-110(A)(2) (withdrawal; return of papers)
• Model Code EC 2-23, EC 2-32 (foregoing a lien; protecting client interests on withdrawal)
• Model Rule 1.16 (declining or terminating representation)

Cases:

• Prichard v. Fulmer, 22 N.M. 134, 159 P. 39 (1916).
• Pomerantz v. Schandler, 704 F.2d 681 (2d Cir. 1983).
• Jenkins v. Weinsheink, 670 F.2d 915 (10th Cir. 1982).

Other opinions cited:

• ABA Formal Opinion 209 (1940); ABA Informal Opinion 1461 (1980).

See also

• NM Ethics Op. 2005-1: Destruction of Closed Files
• NM Ethics Op. 1983-3: Disposition of Client Trust Funds

Source

• Landing page: https://www.sbnm.org/Leadership/Committees/Ethics-Advisory-Committee/Ethics-Advisory-Opinions
• Original PDF: https://www.sbnm.org/Portals/NMBAR/AboutUs/committees/Ethics/1984/1984-4.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion 1984-4
The question presented to the Advisory opinions Committee is whether an attorney may retain documents and papers of a former client when the documents and papers are needed in other litigation by that client, but the client has not paid his account with the attorney.
Counsel should first consider whether he has a valid lien on the client's papers. This is primarily a question of contract to be determined by state law. ABA Formal Opinion 209 (1940). In some circumstances, New Mexico recognizes the common law right of an attorney to claim a retaining lien for outstanding unpaid fees on the papers and documents which come into the lawyer's possession as a result of his professional representation of the client. See Prichard v. Fulmer, 22 N.M. 134, 159 P. 39 (1916); Restatement of Securities § 62B (1941). In analyzing whether the lien is valid, counsel should consider whether possession of the documents and papers was obtained in his professional capacity (e.g. papers given expressly to the attorney by the client in connection with the professional services being rendered for the client and for which professional services were actually rendered), or through other means such as an unauthorized request, another person's unauthorized act, accident, mistake or in an unrelated matter. The Committee does not view its role as determining the validity of the lien. It would disapprove, though, of any attempt to enforce an invalid lien.
A second consideration concerns the scope of the lien and the rights of the attorney and client thereunder. A situation similar to the one presented here arose in Pomerantz v. Schandler, 704 F.2d 681 (2d Cir. 1983) and Jenkins v. Weinsheink, 670 F.2d 915 (10th Cir. 1982). In Pomerantz an attorney withdrew from representation of a litigant and claimed a lien on the litigant's documents for payment of his fees. The litigant requested release of the documents, but the attorney refused unless his account was paid or adequate security for payment was posted. Although the attorney had no absolute right to assert his lien, the court held under the facts of the case that the attorney may withhold the papers until the fee was paid or adequate security for payment was posted. The court, however, recognized an exception to withholding when the client can show: (1) an urgent need for the papers; (2) prejudice if access is denied; and (3) an inability to pay the fee.
The purpose of the retaining lien is to cause the client to pay his bill. The effectiveness of the lien depends on the client's inability to gain access to the papers. It therefore follows that the lawyer may withhold the papers even if needed in other litigation until the client pays the bill or is able to convince a judge that the Pomerantz exception applies. Although in Pomerantz the other litigation involved a criminal prosecution, the rule may also be applicable in certain civil litigations where important personal liberties and rights are at stake. See Jenkins v. Weinsheink, supra. Counsel should note that the opposing party in the other lawsuit probably can gain access to the papers through discovery if the papers are not protected by work product notwithstanding the retaining lien. Jenkins v. Weinsheink, supra.
The ethical propriety of asserting a retaining lien is not absolute either under the Model Code. Counsel is strongly urged to review ABA Informal opinion 1461 (1980) carefully; see Model Rules of Professional Conduct 1.16 (1983). A proper sense of the regard for the nature of the profession should lead a lawyer to evaluate his financial interests in light of the interests of the client when making his decision to invoke an attorney's lien to which he may be entitled under law. Informal opinion 1461 points out that the mere existence of a legal right to a retaining lien does not entitle a lawyer to stand on that right if ethical considerations require that he forego it. See DR 2-110(A)(2); EC 2-23; EC 2-32. In relevant part Opinion 1461 states that the attorney must
evaluate his or her interests against interests of the client and of others who would be substantially and adversely affected by assertion of the lien. The lawyer should take into account the financial situation of the client, the sophistication of the client in dealing with lawyers, whether the fee is reasonable, whether the client clearly understood and agreed to pay the amount now owing, whether imposition of the retaining lien would prejudice important rights or interests of the client or of other parties, whether failure to impose the lien would result in fraud or gross imposition by the client, and whether there are less stringent means by which the matter can be resolved or by which the amount owing can be secured. Even though a lawyer may be justified in declining to devote further time and expense in behalf of a non-paying client, it does not follow in all cases that he is ethically justified in exercising an attorney's lien.
If, for example, exercise of the retaining lien would prejudice the client's ability to defend against a criminal charge, or to assert or defend a similarly important personal liberty, the lawyer should ordinarily forego the lien. Similarly, if the court or other parties or the public interest would be adversely and seriously affected by the lien, the lawyer should be hesitant to invoke it. Financial inability of the client to pay the amount owing should also cause the lawyer to forego the lien because the failure to pay the fee is not deliberate and thus does not constitute fraud or gross imposition by the client. The lawyer should forego the lien if he knew the client's financial inability at the beginning or if he failed to assure agreement as to the amount or method of calculating the fee.
Assertion of the lien would be ethically justified when the client is financially able but deliberately refuses to pay a fee that was clearly agreed upon and is due, since this conduct would constitute gross imposition by the client.
The attorney has not provided the Committee with enough facts to permit a clear cut answer. It would be helpful to know if the client asserts that the attorney's efforts were improper, inadequate or contrary to instructions; that the fee billings were excessive or contrary to agreement; whether the client claims a present inability to pay; and whether the client discharged the attorney or the attorney withdrew without just cause or reasonable notice. See Jenkins v. Weinsheink, supra; Informal Opinion 1461.
The Committee concludes that the attorney may assert a retaining lien and withhold the papers and documents notwithstanding other litigation if: (1) a valid lien exists; (2) the client does not fall within the exceptions set out in Pomerantz and Jenkins; and (3) the ethical considerations raised in ABA Informal opinion 1461, the cites therein and Model Rule 1.16 are not breached.