Attorney fee liens: Protecting your right to be paid

Attorneys for clients who have suffered harm are entitled to be paid for their work. Sometimes that work is handling a case from beginning to end. But what happens when you are replaced by a different attorney or if circumstances require that you withdraw from a case? This article explores your right to be paid and when you might lose that right.  

Attorney's rights after being discharged

"It is well settled that a contingency fee lawyer discharged prior to settlement may recover in quantum meruit for the reasonable value of services rendered up to the time of discharge." (Mardirossian & Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 272.) The right to a share of the attorney fees does not accrue until the happening of the contingency, namely, the recovery of money. (Kroff v. Larson (1985) 167 Cal.App.3d 857.)

Protecting rights after discharge

Although the lien is created by contract, and a discharged attorney has a right to sue if the lien isn't honored, the best practice is to give prompt written notice of lien to the client, successor counsel, the defense attorneys and the payor (defendant or insurer). (Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1172.) It is also advisable to file the notice of lien in the pending lawsuit, even though the trial court has no jurisdiction to enforce or resolve the lien claim. (Bandy v. Mt. Diablo Unified Sch. Dist. (1976) 56 Cal.App.3d 230, 234.) Filing the notice with proof of service is evidence that notice was given. (Carroll, supra at p.1174.) Because an insurance company can be held liable to the discharged attorney if the settlement money is disbursed, it may insist on issuing a settlement check that lists the discharged attorney as one of the payees. (Fletcher v. Davis (2004) 33 Cal.4th 61, 69.)

If the discharged and successor attorneys can't reach agreement regarding the division of fees, a separate, independent action must be filed to establish the existence of the lien, to determine the amount of the lien and to enforce it. This lawsuit must include the client because the contract was with the client, who is the obligor under the lien. (Mojtahedi v. Vargas (2014) 228 Cal.App.4th 974, 978.) Although Mojtahedi held that the existence of the lien must first be established before the court can allocate the attorney fees, only one lawsuit need be filed that names the successor attorney and the client. The cause of action is for declaratory relief. (Jacobs v. Papez (2026) 119 Cal.App.5th 123, 130-131.) If the successor attorney distributed all of the settlement proceeds, the causes of action against that attorney and the client could also include: money had and received; conversion; constructive trust; and intentional interference with contractual relationship. (Weiss v. Marcus (1975) 51 Cal.App.3d 590, 594.) 

Allocating the fees between the lawyers

In general, the division of fees between the original and successor attorney is based on the number of hours that each devoted to the case. (Spires v. American Bus Lines (1984) 158 Cal.App.3d 211, 216.) "However, providing evidence as to the number of hours worked and rates claimed is not the end of the analysis in such a quantum meruit action. The party seeking fees must also show the total fees incurred were reasonable."  (Mardirossian, supra, 153 Cal.App.4th 257, 272.) There is no requirement that a contingent fee attorney keep a record of the hours devoted to the case, and expert testimony may be used to estimate the number of hours devoted and the reasonableness factors. (Id.)

Lien rights after withdrawal

An attorney representing a client on a contingent fee basis can withdraw on the basis of a lack of confidence in a favorable outcome, but has no right to attorney fees if the case ultimately yields a monetary recovery. That was the situation in Hensel v. Cohen (1984) 155 Cal.App.3d 563, where the attorney described the case in his motion to withdraw as "a dead-blank loser."

An attorney who claims to be "ethically bound" to withdraw because the client refused advice to accept a settlement similarly has no lien and no right to claim attorney fees. In Estate of Falco (1987) 188 Cal.App.3d 1004, the court held that permissive withdrawal was appropriate because of a breakdown in the attorney-client relationship, but denied the former attorney's claim for a share of attorney fees because a client's right to reject a settlement was superior to the attorney's claim for the value his work.

Rule 1.16 of the California Rules of Professional Conduct (RPC) specifies the grounds for mandatory and permissive withdrawal. If a withdrawal is mandatory rather than permissive, lien rights are preserved. Withdrawal because of a breakdown in communications with a problematic client is not mandatory and will result in a denial of an attorney's fee claim. (Rus, Miliband & Smith v. Conkle & Olesten (2003) 113 Cal.App.4th 656.) However, a refusal to honor contract terms requiring that costs be advanced or promptly reimbursed is a breach of contract. Although such a breach is grounds for permissive withdrawal, it might also preserve lien rights. (See, e.g., Southern California Gas Co. v. Flannery (2016) 5 Cal.App.5th 476, 497.)

Final thoughts

This overview does not discuss the many variations of attorney fee lien rights. But it provides the basics to keep in mind when contemplating withdrawal or after being replaced.