Ethics Docket No. 1990-21

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 1990-21

Retaining Lien - obligation to prior lawyer when discharged from case

Your letter of inquiry poses the following facts: Client fired Attorney A and asked you, Attorney B, to represent him in two (2) accident cases Attorney A has previously handled on behalf of Client. Client showed Attorney B a letter Attorney A had sent to Client explaining that Attorney A would not release the file unless he/she was reimbursed and compensated for time and expenses. The bill was approximately Seven Hundred Dollars ($700.00). Attorney B negotiated an agreement with Attorney A, with Client's approval, whereby Attorney A would release the file to Attorney B in exchange for Attorney B's protection of Attorney A's fee out of the proceeds of a settlement. After two (2) weeks, Client fired Attorney B. Client and Client's new attorney, Attorney C, then contacted Attorney B and requested the file. Besides the fact that Attorney B had not been compensated for his/her time and expenses, Attorney A advised Attorney B that he/she was not authorizing Attorney B to release the file because Attorney A's fee remained outstanding. Attorney B notified Attorney C to make arrangements with Attorney A in connection with his fee. Attorney C argued that the file belongs to Client and, if Attorney B did not release the file, Client would possibly file a grievance against Attorney B. Because you feel obligations to release the file to Client and to protect Attorney A's fee as agreed, you are unsure how to ethically proceed.

The Committee has previously considered, on numerous occasions, the issues involved with an attorney's right to retain a clients file. In Docket 89-11, the Committee stated the following:

The ethical right of a Maryland attorney to retain a client's file after withdrawal from service is controlled by Model Rule 1.16(d) of the Maryland Rules of Professional Conduct. This rule states that "[u]pon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as...surrendering papers and property to which the client is entitled...The lawyer may retain pacers relating to the client to the extent permitted by other law." (emphasis added).

The right of an attorney to exercise a retaining lien has been recognized judicially in Maryland. Ashman v. Schecter, 196 Md. 168, 76 A.2d 139 (1950); Attorney Grievance Commission of Maryland v. Mclntire, 285 Md. 87, 405 A2d 273 (1979). In addition, the right of an attorney to place a lien on funds previously advanced to the attorney has also been adopted by statute. Md. Ann. Code, Art. 10, Sec. 46 (1987). In both instances, the lien is expressly dependent on the client's nonpayment of fees and compensation to which the attorney may be owed. Both the retaining lien and the statutory attorney's lien are passive in nature.

[Note: Md. Ann. Code, Art. 10, Sec. 46 (1987) has been repealed and replaced with Md. Ann. Code, Business Occupations and Professions, Art.10, Sec. 10-501 (1989).]

The issues confronting the Committee are twofold: (1) whether Attorney B may ethically retain the files because he/she has not been paid his/her fees and expenses rightfully due from Client; and (2) whether Attorney A may ethically retain the files because of a contractual obligation he/she entered into with Attorney A.

The Committee is sensitive to the fact that attorneys seek interpretative language and guidelines with respect to the Rules of Professional Conduct. Unfortunately, with respect to the application of retaining and statutory attorney's liens, the Committee cannot opine because these are matters of law and are determined by the contractual agreement between the client and the attorney, and in this case, a former attorney as well. Thus, in each instance, the Committee believes that, in accordance with Rule 1.16(d), Attorney B may retain Client's files to the extent Attorney B is permitted by other law, most importantly the common law right to a retaining lien and the alleged existence of contractual obligations between the client and Attorney A and B.

For a more detailed and historical analysis of the ethical and practical sides of these issues, we again call your attention to Docket Number 81-33.