What Happens to My Old Lawyer's Lien When I Switch?

What a lawyer’s lien actually is

A lien is a claim to be paid out of your recovery. When you switch, your former lawyer may send a letter to the insurance company and to your new firm saying they did work on the case and expect to be paid from any settlement or verdict. That letter is a claim. It does not set the amount, and it does not give the old firm control of your case.

The lien also does not stop you from switching. You can hire a new lawyer the same day you end the old relationship. The lien only matters at the end, when there is money to divide.

Do not confuse an attorney lien with medical liens. Hospitals, health plans and Medi-Cal or Medicare may also claim part of a recovery for bills they paid. Those claims stay with the case no matter which lawyer you have, and your new lawyer takes over negotiating them.

California: fair value of the work, paid only if you win

The California Supreme Court decided in Fracasse v. Brent that a client may fire a lawyer at any time, with or without cause. A contingency lawyer who is fired can recover only the reasonable value of the services provided, and that claim exists only if the client recovers. If the case loses, the old lawyer generally gets nothing. The court pointed to the risk that clients would otherwise face “double contingent fees.”

When the case does settle, the lawyers involved share one fee. In Spires v. American Bus Lines, the court held that when one contingent fee is not enough to cover every lawyer’s reasonable-value claim, the fee is divided so the client is not forced to pay twice.

Your former lawyer also cannot simply take money out of your settlement. Under Carroll v. Interstate Brands Corp., a lawyer claiming a lien generally has to bring a separate action to establish and enforce it. While a fee dispute is open, California rule of professional conduct 1.15 requires the disputed amount to stay in a trust account, and the money nobody disputes has to be paid promptly. If the old lawyer’s written fee contract did not meet the requirements of Business and Professions Code section 6147, you can choose to void the contract, and the lawyer is then limited to a reasonable fee. Clients can also ask for fee arbitration through the State Bar program under section 6201.

Texas: the reason you switched matters

Texas courts treat a fired lawyer’s fee differently depending on why the client ended the relationship. In Mandell & Wright v. Thomas, the Texas Supreme Court held that a lawyer fired without good cause can claim the fee in the contract. Later, in Hoover Slovacek LLP v. Walton, the court confirmed that a client may discharge a lawyer “for any reason or no reason at all,” and limited what the lawyer can collect by the rule against unconscionable fees. It struck down a clause that would have given the lawyer a full fee on discharge.

If you had good cause, the picture changes. Under Rocha v. Ahmad, a lawyer fired for good cause cannot collect the contract fee and is limited to the reasonable value of the work done. Good cause in that case meant the lawyer did not act like an ordinarily skilled lawyer would: long delays, poor communication and months without action.

Texas has no general statute creating an attorney’s lien on a recovery, according to the State Bar’s Ethics Opinion 610. Lawyers may have a common-law retaining lien on papers, but Opinion 411 says a lawyer cannot hold the file in a way that causes foreseeable harm to the client. Texas Rule 1.16 says the same about keeping papers when it would prejudice the client.

Because the reason for the switch affects the numbers, our Texas-licensed attorneys, Joyce Ondich and John Efstathiou, review what happened before we take a Texas case. The State Bar of Texas also has a page on fee disagreements.

Washington: a statutory lien capped at the value of the work

Washington gives lawyers a lien by statute. RCW 60.40.010 lets a lawyer claim a lien on the client’s papers, on the case and its proceeds once the case is filed, and on money held by the other side after notice. The lien on the case is limited to the value of the lawyer’s services or the sum due under a special agreement.

What that value is depends on case law. In Ross v. Scannell, the Washington Supreme Court held that a contingency lawyer who is discharged before substantially performing gets the reasonable value of the services, not the contract fee. Barr v. Day applied the same rule: where the contingent fee was not yet earned, the measure is reasonable pay for the work actually done. Ross also recognized an exception: a lawyer who had substantially performed before being fired may still recover under the contingency contract.

Disputed money stays in trust under Washington RPC 1.15A until the dispute is resolved. The Washington State Bar Association does not decide fee disputes; its public page refers people to dispute resolution centers.

How the money gets divided at the end

Most lien claims never turn into a fight. When the case resolves, the settlement funds go into the new firm’s trust account. The old firm’s claim is reviewed against the work it actually did: how long it had the case, what it filed, what records it gathered, whether it moved the case forward. The lawyers then agree on a number, or the disputed portion stays in trust while it is resolved through arbitration or a separate action.

Your share that nobody is arguing about should not sit and wait. In California, rule 1.15 requires undisputed money to be paid promptly. Whatever state you are in, ask the firm holding the money to tell you in writing which amount is disputed and when the rest will be paid.

Here is our promise on fees. Switching to us does not raise your fee. Whatever your former lawyer is owed comes out of our fee, not on top of it. Case costs the former firm advanced, such as filing fees, records and expert charges, are normally repaid from the recovery like costs on any case. And if there is no recovery, you owe us no fees and no costs.

What your old lawyer can and cannot do with a lien

• They can send a written lien notice to the insurer and to your new lawyer.
• They can ask to be paid for the reasonable value of their work, or more in a Texas case where there was no good cause.
• They cannot keep working on your case or negotiate with the insurance company after you end the relationship.
• They cannot hold your file hostage until you pay. California rule 1.16(e)(1) requires them to release your file on request whether or not they were paid.
• They cannot take disputed money for themselves while the dispute is open.

One limit applies no matter who your lawyer is. If you already signed a settlement release and the case settled, we cannot help; a signed release generally ends the claim for good.

What to do if you are worried about a lien

Ask your former lawyer to put any fee or lien claim in writing and send it to your new lawyer. Keep a copy of your fee agreement and any letters about the claim. Do not try to negotiate the lien yourself or agree to a number over the phone.

When you hire us, we send the substitution or notice of new counsel, request your file and deal with the old firm’s fee claim directly, so you do not have to argue with them. You can read more about whether switching means paying two lawyers and how to get your case file. For the overall process, start at our guide to switching lawyers.

Questions about your situation? Contact us for a free review in English or Spanish, or call (310) 552-6959 any time.

Sources

1. Fracasse v. Brent (1972) 6 Cal.3d 784 (scocal.stanford.edu)
2. Spires v. American Bus Lines (1984) 158 Cal.App.3d 211
3. Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168
4. California Rules of Professional Conduct (State Bar of California)
5. Cal. Bus. & Prof. Code § 6147
6. Cal. Bus. & Prof. Code § 6201 (mandatory fee arbitration)
7. Mandell & Wright v. Thomas, 441 S.W.2d 841 (Tex. 1969)
8. Hoover Slovacek LLP v. Walton, 206 S.W.3d 557 (Tex. 2006)
9. Rocha v. Ahmad, 676 S.W.2d 149 (Tex. App.—San Antonio 1984)
10. Professional Ethics Committee for the State Bar of Texas, Opinion 610
11. Professional Ethics Committee for the State Bar of Texas, Opinion 411
12. Texas Disciplinary Rules of Professional Conduct, Rule 1.16
13. State Bar of Texas, Resolving Fee Disagreements
14. RCW 60.40.010
15. Ross v. Scannell, 97 Wn.2d 598 (1982)
16. Barr v. Day, 124 Wn.2d 318 (1994)
17. Washington RPC 1.15A
18. Washington State Bar Association, Concerns about a lawyer