MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS

Ethics Docket 1991-27

Retaining lien on funds which include child support payments

Your letter, attached to which were 14 exhibits, set forth a detailed factual scenario concerning your representation of client X in domestic proceedings.  As a result of the proceedings, you obtained a $3,000 judgment against your client’s former husband, $2,000 of which was designated for child support and $1,000 of which was designated for attorney’s fees.  Your client has been attempting to pay off your bill for attorney’s fees, but finds that her monthly payments barely reduce your fees since most of the payments are allocated to monthly interest charges assessed by you (your inquiry does not raise the issue as to the propriety and/or reasonableness of the interest charged on your fees, and the Committee expresses no opinion as to this issue).  Price to the current dispute with your client, you had succeeded in various garnishment proceedings in obtaining checks payable to you and your client, which checks you forwarded to your client, who then signed and returned them to you, after which you endorsed the checks and applied the amounts to past due fees.  However, when a dispute arose with your client concerning fees, she refused to endorse and return to you some of the checks.

You are now holding, as a result of successful garnishment proceedings, three checks payable to you and your client.  Because of the dispute with your client, you do not want to deliver the checks to her because you do not believe that she will endorse them and return them to you.  The question posed by you to this Committee is whether you may assert a retaining lien against these checks pursuant to Section 10-501 of the Business Occupation Article of the Maryland Annotated Code, which grants an attorney a lien on “a judgment or award that a client receives as a result of legal services that the attorney at law performs.”  Section 10-501(a)(2).  The Attorney Grievance Commission has questioned you as to the propriety of a retaining lien in your situation because of the fact that $2,000 of the $3,000 judgment which you obtained was attributable to child support.

This Committee believes that the dispute between you and the Attorney Grievance Commission represents more of a legal issue rather than an ethical issue, and, therefore, consistent with the past practice of this Committee, we will not opine on questions of law.  The Committee believes that it is a legal question as to whether or not it is against public policy to assert an attorney’s lien on a judgment, where all or part of the judgment represents an award for child support.

Although not raised specifically in your inquiry or in the letter from the Attorney Grievance Commission which is attached to your inquiry, we direct your attention to those provisions of Rule 1.15(b) and (c) of the Maryland Rules of Professional Conduct, which deal with the issue of an attorney’s obligation to safekeep property coming into his possession, even when there is a dispute between the lawyer and the client as to who is entitled to the property.  The Comment to Rule 1.15 states as follows:

 “Lawyers often receive funds from third parties 
from which the lawyer’s fee will be paid.  If there is 
risk that the client may divert the funds without paying 
the fee, the lawyer is not required to remit the portion 
from which the fee is to be paid.  However, a lawyer may 
not hold funds to coerce a client into accepting the lawyer’s 
contention.  The disputed portion of the funds should be kept 
in trust and the lawyer should suggest means for prompt resolution 
of the dispute, such as arbitration.  The undisputed portion of 
the funds shall be promptly distributed.”

You are now holding three checks payable to you and your client.  Based on Rule 1.15 and the foregoing Comment, it is not unethical for you to refuse to send the checks to your client because of your present dispute and because of the past situations where your client has failed to return the checks to you.  However, as the Comment states you “should suggest means for prompt resolution of the dispute”, whether by arbitration, an interpleader action, or some other proceeding.  The need for a “prompt” resolution is accentuated to the extent that you are holding checks, which, after a certain period of time, may not be negotiable.