New York Law Review

Tag: attorney’s lien

  • Cohen v. Grainger, Tesoriero & Bell, 75 N.Y.2d 720 (1989): Attorney’s Lien on Settlement Proceeds After Discharge

    Cohen v. Grainger, Tesoriero & Bell, 75 N.Y.2d 720 (1989)

    A discharged attorney has a statutory lien on the client’s cause of action, attaching to any ultimate recovery, regardless of whether the recovery is obtained in the same court where the attorney initially filed the action; absent explicit election of quantum meruit, the attorney is presumed to desire a contingent fee based on their contribution.

    Summary

    This case addresses whether a discharged attorney who initiated a personal injury action in state court has a lien on a settlement obtained by successor counsel in federal court, and when a discharged attorney must elect their method of fee computation. The Court of Appeals held that the attorney’s lien attaches to the cause of action itself, regardless of where the recovery is ultimately obtained. Furthermore, the Court established a presumption that a discharged attorney intends to pursue a contingent fee based on their pro rata share of the work unless they explicitly elect to receive immediate compensation based on quantum meruit.

    Facts

    Attorney Cohen was retained by Staffer on a contingency basis to represent him in a personal injury claim against his employer. Cohen commenced an action in New York State Supreme Court. Staffer discharged Cohen and retained a new firm, Wertheimer, P.C., who then filed a separate action in U.S. District Court based on the same claim. Wertheimer eventually obtained a judgment for Staffer. Cohen, upon learning of the federal judgment, initiated a proceeding to enforce his attorney’s lien.

    Procedural History

    The Supreme Court initially ruled that Cohen’s lien was limited because the recovery occurred in federal court where Cohen was not the attorney of record, awarding him a fee based on quantum meruit. The Appellate Division modified the judgment by increasing the fee, but otherwise affirmed. The New York Court of Appeals granted further review.

    Issue(s)

    1. Whether a discharged attorney who commenced a personal injury action in state court has a statutory lien on a recovery obtained by successor counsel on the same claim in federal court?

    2. Whether attorney Cohen lost his right to a contingent fee by failing to promptly elect that method of computing his fee?

    Holding

    1. Yes, because the attorney’s lien attaches to the client’s cause of action and follows the proceeds, regardless of where the recovery is obtained.

    2. No, because absent an explicit election of quantum meruit, a discharged attorney is presumed to desire a contingent fee based on their proportionate share of the work performed.

    Court’s Reasoning

    The Court reasoned that Judiciary Law § 475 creates a lien on the client’s cause of action from the commencement of the action, which attaches to any judgment or proceeds, “in whatever hands they may come.” This lien cannot be affected by any settlement between the parties. The Court adopted the prevailing view of the Appellate Division that the lien follows the cause of action, even if recovery occurs in a different action or court. To hold otherwise would allow clients and successor attorneys to easily circumvent the statute’s purpose.

    Regarding the fee election, the Court acknowledged the general rule that a client can discharge an attorney at any time, and the discharged attorney is generally entitled to the fair and reasonable value of their services (quantum meruit). However, when the dispute is between attorneys, the discharged attorney can elect either immediate compensation based on quantum meruit or a contingent percentage fee based on their proportionate share of the work.

    The Court established a presumption that if a discharged attorney doesn’t explicitly elect quantum meruit, they are presumed to want a contingent fee. This presumption serves practical purposes, as quantum meruit is best determined at discharge, while a contingent fee is better calculated at the litigation’s conclusion. This presumption also prevents a discharged attorney from claiming a quantum meruit fee even if the litigation is ultimately unsuccessful.

    The Court emphasized that “[w]here an election is not made or sought at the time of discharge, the presumption should be that a contingent fee has been chosen.” This approach avoids belated claims when proof of services is difficult to rebut and prevents the inequity of allowing an attorney to wait until the case is lost and then demand a quantum meruit fee. The Court reversed the Appellate Division’s order and remitted the matter for further proceedings to determine Cohen’s pro rata share of the contingent fee.

  • Rodriguez v. City of New York, 66 N.Y.2d 825 (1985): Attorney’s Lien Limited to Attorney of Record

    Rodriguez v. City of New York, 66 N.Y.2d 825 (1985)

    An attorney’s charging lien under Judiciary Law § 475 is available only to the attorney of record in a case, meaning the attorney whose name appears on the pleadings and other formal court documents.

    Summary

    This case addresses whether an attorney who referred a case to another attorney “of counsel” and shared fees is entitled to an attorney’s lien under Judiciary Law § 475, even though his name did not appear on any court documents. The Court of Appeals held that the statutory charging lien is available only to the attorney of record—the attorney whose name appears on the pleadings, motions, and other papers filed with the court. Since the referring attorney was not the attorney of record, he could not assert a lien under § 475 and instead would have to pursue a plenary action to enforce any rights he may have.

    Facts

    The plaintiff retained an attorney (movant) to represent her in a wrongful death action. Due to his age and limited practice, the movant then retained another attorney (respondent) to act “of counsel” and agreed to split the legal fee evenly. The respondent handled the case, and the plaintiff ultimately obtained a judgment in her favor. The movant then filed a notice of attorney’s lien, claiming entitlement to a portion of the fees.

    Procedural History

    The Supreme Court initially denied the movant’s claim for attorney’s fees. The Appellate Division reversed, holding that the movant was entitled to a lien. The Court of Appeals reversed the Appellate Division’s order and reinstated the Supreme Court’s original order, denying the lien.

    Issue(s)

    Whether an attorney who is not the attorney of record in a case, but who referred the case to another attorney and shared fees, is entitled to assert an attorney’s charging lien under Judiciary Law § 475.

    Holding

    No, because Section 475 grants a lien only to the attorney of record, meaning the attorney who appears for a party and whose name appears on the pleadings and other papers filed with the court.

    Court’s Reasoning

    The Court of Appeals based its decision on the language of Judiciary Law § 475, which states that “the attorney who appears for a party has a lien upon his client’s cause of action.” The court emphasized that this language has consistently been interpreted to grant a lien only to the attorney of record. The court noted that it was undisputed that the movant’s name never appeared on any of the pleadings, motion papers, affidavits, briefs, or records in the plaintiff’s action. The court dismissed the argument that the movant’s inclusion on a retainer statement filed with the Judicial Conference was sufficient to establish him as the attorney of record, clarifying that such statements are regulatory in nature and do not determine an attorney’s status as the attorney of record. The court stated, “[t]hey are designed for the supervision of attorneys rather than to determine their status as the attorney of record.” Finally, the court rejected the argument that the respondent should be estopped from denying the movant’s status, noting evidence that the movant had reviewed and approved the pleadings without requesting that his name be added. Therefore, the movant was not entitled to a lien under Judiciary Law § 475, but could pursue his claim for fees in a separate plenary action. As the Court stated, section 475 “provides that ‘[f]rom the commencement of an action * * * the attorney who appears for a party has a lien upon his client’s cause of action * * * which attaches to a verdict * * * judgment or final order in his client’s favor, and the proceeds thereof in whatever hands they may come * * * The court upon the petition of the client or attorney may determine and enforce the lien.’ (Emphasis added.) The emphasized language has consistently been held to grant a lien to the attorney of record”.