Attorney Lien on proceeds of a Civil Case

In Musikoff v. Jay Parrino's The Mint, L.L.C. 172 N.J. 133, 796 A.2d 866. (2002) the Supreme Court held The Attorney's Lien Act (the Act), N.J.S.A. 2A:13-5, does not require an attorney to file a petition to acknowledge and enforce an attorney's lien prior to settlement or judgment in the matter that has given rise to the lien itself.

1. An attorney's right to impress a lien on client property derives from the common law. Generally, our courts have recognized two forms of liens for the collection of fees--the charging or special lien and the retaining lien. The charging lien gives an attorney the right to retain possession of his client's property until the entire balance due him for legal services is paid. The retaining lien attaches to the judgment in the cause for which the services were rendered and does not rest upon possession.

2. The Act not only codifies the common-law special or charging lien, but also expands the common law lien, which had attached only to a judgment. The Act must be viewed in concert with the applicable Rules of Court, however. If a client has requested fee arbitration under the Rules, then the fee arbitration committee will determine the amount of the attorney's lien. If the client does not request fee arbitration, the court will resolve the lien dispute after conducting a plenary hearing.

3. Canons of statutory construction dictate that if the plain language of a statute creates uncertainties or ambiguities, a reviewing court must examine the legislative intent underlying the statute and construe the statute in a way that will best effectuate that intent. Here, the last sentence of the Act refers to a pending action and states: "The court in which the action or other proceeding is pending, upon the petition of the attorney or counselor at law, may determine and enforce the lien." However, the preceding sentence states: "The lien shall not be affected by any settlement between the parties before or after judgment or final order, nor by the entry of satisfaction or cancellation of a judgment on the record." Further, the Act declares that the lien shall attach to "a verdict, report, decision, award, judgment or final order in [the] client's favor." Therefore, the Court is confronted with an ambiguity that requires consideration of extrinsic factors to resolve.

4. First, the Court finds that the Act's language that explicitly refers to any settlement between the parties evinces a legislative intent to permit attorneys to file lien petitions in the aftermath of such settlements. This construction is consistent also with the Act's purpose, which is to protect unpaid attorneys in this setting. Moreover, the main focus of the Act's last sentence is on the court and its explicit authority to determine and enforce the lien. That focus suggests that the drafters were more concerned with identifying the forum in which the lien petition would be evaluated and enforced than with limiting the period during which the petition could be filed.

5. Second, the Court notes the equitable underpinnings of the Act. Here, appellant promptly notified the subsequent attorneys of its claimed lien and diligently followed the progress of the underlying suit. Moreover, the settlement occurred without appellant's knowledge. (Pp. 10-11).

6. Third, decisions reported prior to 1959 generally are consistent with the Court's answer. The more recent New Jersey case law on which Musikoff relies rests on an apparent misinterpretation of H. & H. Ranch Homes, Inc. v. Smith, 54 N.J. Super. 347 (App. Div. 1959). Even if the Appellate Division intended language in H. & H. to mean that an attorney had to file the lien petition prior to the conclusion of the client's underlying action, such an interpretation of the Act would be at odds with its purpose. (Pp. 11-17).

7. The Act is grounded in equitable principles and was designed to protect attorneys who have represented their former clients competently and with diligence, but have gone unpaid. In furtherance of that design, the Act describes the forum in which a lien petition may be brought; it does not limit the period within which the petition must be filed. The Court affirms the basic elements of the process articulated in H. & H., except it does not interpret the process to require an attorney to file and enforce a lien petition prior to settlement or judgment in the underlying action. (Pp. 17).

8. Although the Court declines to express an opinion in respect of the time period in which a petition must be filed, it cautions attorneys that they should not delay in asserting their liens under the Act.

The Attorney's Lien Act provides that an attorney asserting a claim in a suit has a lien upon his client's claim, which attaches "to a verdict, report, decision, award, judgment or final order in his client's favor." N.J.S.A. 2A:13-5. Upon petition by the attorney, the trial court in the underlying action will conduct a plenary hearing to determine the lien. Levine v. Levine, 381 N.J. Super. 1, 9-10 (App. Div. 2005); see N.J.S.A. 2A:13-5 (stating that "[t]he court in which the action or other proceeding is pending, upon the petition of the attorney . . . may determine and enforce the lien").

Therefore, if plaintiff ______ is to receive a recovery in there lawsuit against __________ , an Attorney lien attaches for legal services performed by Kenneth Vercammen & Associates.

PLEASE RETURN TO:

____________________

____________________

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ATTORNEY’S LIEN

_____________, an attorney at law, hereby files this Attorney’s Lien and

claims a lien in the amount of $________ on and against the real property of

____________-,____________ ,______________ , and_________

his clients, said real property being all of Land Lot No._____ in the_______

District and___________ Section of_____________ , County

_________, . Said lien amount of $________being for the legal services

rendered and expenses paid in the suit of __________ vs. _________ ,

____________________County Civil Action File No.__________ ,

which was instituted for said clients in the Superior Court of ________ ,

County, pertaining to said real property. Judgment in said suit was filed on

_______________.

This______ day of___________ , 20___ .

_________________

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