THE RECORD - New York City Bar Association

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A M O R E E Q U I T A B L E R E T A I N I N G L I E N client. 27 Indeed, the retaining lien has explicitly been applied to key client documents that constitute direct evidence in the ongoing litigation. 28 The only limitation is that, according to most courts, the documents or other property over which the lien is asserted must be in the attorney’s possession; an attorney cannot use the lien to restrain property being held by third parties. 29 The broad approach to the retaining lien taken by New York state courts stands in marked contrast to the approach sometimes taken by the federal courts sitting in this state. In Resolution Trust Corp. v. Elman, 30 the Second Circuit made clear that attorneys may not assert a retaining lien based on New York common law in litigations involving the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”), 31 holding that attorneys’ rights to be paid had to give way before the strong federal policy to resolve quickly claims against insolvent financial institutions. 32 Another court went even further, stating that attorneys representing plaintiffs in lawsuits brought under federal civil rights statutes with fee award and/or fee shifting provisions waived their rights “to obstruct the course of the litigation” by seeking to enforce retaining liens. 33 Based on these examples, federal courts seem unafraid to limit the retaining lien 27. See Bronx Jewish Boys v. Uniglobe, Inc., 166 Misc. 2d 347, 633 N.Y.S.2d 711, 713 (Sup. Ct. N.Y. County 1995) (retaining lien covers all client files, including documents which belong to client). 28. Tri-Ex Enterprises, Inc. v. Morgan Guaranty Trust Co., 583 F. Supp. 1116, 1117-18 (S.D.N.Y. 1984) (requiring attorney who had asserted lien to turn over documents to former client’s adversary, but prohibiting former client from seeing them until fee issue resolved); Manfred & Sons, Inc. v. Mortillaro, 69 A.D.2d 1019, 416 N.Y.S.2d 156, 157 (4th Dep’t 1979) (requiring attorney to produce client documents called for in another litigation upon client posting adequate security for unpaid fees); Yaron v. Yaron, 58 A.D.2d 752, 396 N.Y.S.2d 225, 226(1st Dep’t 1977)(applying retaining lien to certain exhibits). 29. First National Bank & Trust Co. v. Hyman Novick Realty Corp., 72 A.D.2d 858, 421 N.Y.S.2d 733, 734 (3d Dep’t 1979) (“[a] retaining lien is dependent upon the attorney’s physical possession of the client’s property”); but see Rivkin, 1996 WL 633217 at *4 (raising possibility of enforcing lien with respect to copies held by third parties). 30. 949 F.2d 624, 627 (2d Cir. 1991). 31. 12 U.S.C. § 1821 et seq. 32. See In re First City National Bank & Trust Co., 759 F. Supp. 1048, 1053 (S.D.N.Y. 1991); (“[p]ermitting attorneys to enforce retaining or charging liens in the courts in derogation of FIRREA’s administrative procedures would work considerable prejudice to [the] public interest”) 33. Misek-Falkoff, 829 F. Supp. at 664. T H E R E C O R D 186
P R O F E S S I O N A L R E S P O N S I B I L I T Y A N D P R O F E S S I O N A L D I S C I P L I N E in “federal question” cases, where a strong countervailing federal policy can be invoked. ABUSE OF THE LIEN The lien can be used by attorneys to gain unfair advantage over clients with whom they have a dispute. First, there is nothing to regulate when the lien may be enforced, apart from the requirement, discussed below, that the attorney asserting the lien no longer be acting as counsel for the client. Thus an attorney may assert the lien even though the attorney’s position with respect to the fees owing is unreasonable or in bad faith. Furthermore, the attorney may arguably enforce the lien on the entire client file no matter how small the disputed amount in relation to the total fees paid. Second, there is no readily available avenue for the client to seek redress against the attorney for improper withholding of the files. This problem is particularly acute when the representation is on a contingent fee basis and the client lacks sufficient funds to hire a new attorney to prosecute the underlying action and to litigate the lien with the former attorney. In fact, a client lacking any documents may be unable to find any new attorney to take the case on a contingency. Third, an attorney asserting a retaining lien may withhold from the client items that are personal to the client and that may not be closely related to the services provided by the attorney to the client, as in the case of an immigration lawyer’s holding a client’s birth certificate or a criminal lawyer’s holding a client’s passport. Such items may have come to the attorney incidentally or, perhaps, unnecessarily. Fourth, in some lawsuits, the delay caused by the dispute over the retaining lien may cause the client’s interests grave, perhaps irreparable, harm. As seen in the case law cited above, courts often hold hearings with respect to the enforcement of retaining liens. It is unclear, however, what damage an attorney unreasonably enforcing the retaining lien may do before the dispute is heard or, in the case of a client without funds to pay for such a hearing or who capitulates by paying an undeserved fee, if the dispute is never heard. THE ATTORNEY’S OBLIGATIONS As noted above, the retaining lien pits the attorney against the client in the course of litigation. The attorney through the retaining lien attempts to hinder the litigation effort. Such behavior by the attorney in M A R C H / A P R I L 1 9 9 9 ◆ V O L. 5 4, N O. 2 187
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THE RECORD OF THE ASSOCIATION OF TH
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MICHAEL A. COOPER President EDITORI
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N E W M E M B E R S Abigail Everett
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N E W M E M B E R S Robert Stein 14
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N E W M E M B E R S Evan Michael Ma
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THE RECORD - New York City Bar Association

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