What is a retaining lien, and how do lawyers get away with it?

Our legal system has its faults, but it is still the best way of resolving differences. At least it’s an improvement over dueling.  Unfortunately, the public’s perception of the ethics and honesty of lawyers is low (although not as low as members of Congress).

While there is not one particular reason why the legal profession is viewed so negatively overall, one of the reasons probably relates to the little-known…. “retaining lien.”

Before I briefly explain what a retaining lien is, let me give you an analogy from medicine: imagine you are the middle of a heart operation (you are the patient), the doctor wakes you up and tells you that things aren’t going so well, but unless you pay the doctor all the money that he or she claims you owe, then and there, the operation will not be completed.

Or, staying with doctors, imagine you just gave birth, but the doctor refuses to let you take your newborn baby home until you pay all the money that the doctor claims you owe (even if you dispute the amount of money).

Of course those are outrageous examples, since such things (hopefully) would never happen in real life. But with only slight modifications, that is essentially what happens when a lawyer uses a “retaining lien” against a former client.

Without going into all the details of this complicated topic, many, if not most states permit lawyers to refuse to turn over a client’s property, or a client’s documents, if the lawyer claims that the client owes the lawyer money.

As one commentator wrote: “except for the fact that a lawyer has a legal right to do so, asserting a retaining lien would be [extortion]”.

Extortion. Blackmail. Yet completely legal in most states.

There are important exceptions to the retaining lien, which I will detail in a future blog, but it is ironic that if the dispute results in litigation (such as filing a malpractice suit against the attorney), the attorney will have to turn over these documents as part of discovery.

Of course, clients should pay their attorneys if the money is actually owed and the attorney has done the work as promised. But having reviewed lawyers’ invoices for many years, a client also has a right dispute a lawyer’s fees. The retaining lien is essentially a way for the legal profession to give itself not only an unfair advantage, but an advantage that is directly contradictory to the ethical obligations lawyers have to protect their clients. The idea behind the retaining lien is to harm clients as a way of forcing them to pay.

There is a way you can protect yourself from retaining liens, at least as far as lawyers holding on to documents that you need, which I will outline in my next blog.

To be continued….

Author: Howard Altschuler

(Click here for a brief summary of my other blog posts on various legal malpractice related issues)

(Disclaimer: Please note that nothing in this blog or website is legal advice, and this post does not create an attorney-client relationship. You should always consult with an attorney for any legal malpractice issues, fee dispute, or ethical concerns that you may have. Thanks!)

Copyright (c) 2014 by Howard Altschuler, All Rights Reserved