ETHICS DOCKET NO. 1987-36

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 1987-36

Retaining Liens - Effect under Rules of Professional Conduct

Your letter of inquiry poses the following facts. Your firm was employed by client A after client A dismissed his former lawyer X from a case. You have asked 'x to allow someone from your firm to review and photocopy his file concerning the case. He has refused any access until his outstanding fee has been paid, despite your offer to ""Protect"" it for payment out of funds when they are available. You request a written opinion regarding retaining liens under the new Rules of Professional Conduct.

The Committee addressed the problem of retaining liens by formal opinion on February 24, 1981 In Ethics Docket 81-33. In that opinion we concluded that ""an attorney may property exercise a retaining lien to the entire extent that such a lien exists at law."" The Committee's conclusion was in light of the Maryland Court of Appeals reaffirmation of an attorney's right to exercise a retaining lien in several cases cited therein. In Ethics Docket 81-33 we stated that DR2-110(A)(2), which required the return of all papers and property to which a client Is entitled upon a lawyer's withdrawal, did not restrict a retaining lien since the client Is not ""entitled"" to any of the papers upon which the lien exists. In our view the only limitation on the exercise of a retaining lien arose where such exercise would be prejudicial to the administration of justice in violation of DRI-102(A)(5) and we refer you to that opinion for a more complete discussion of that issue.

Because the applicable Disciplinary Rules remain essentially unmodified we conclude that our formal opinion retains its validity under the Rules of Professional Conduct. Rule 8.4(d) is virtually identical to DR1-102(A)(5). Rule 1.16(d) is substantially identical to DR2-110(A)(2) and 3 and contains a modifying statement that a lawyer may retain papers relating to the client to the extent permitted by other law. A lawyer's right to assert a retaining lien against a client's papers and property in his possession remains unchanged under the new Rules.

Your inquiry, however, raises the question of whether your ""protection"" of lawyer .X's fee should force a release of his lien. We conclude that it does not. (For purposes of this opinion we assume that ""protection"" means your firm's guarantee of payment from any recovery in case; however, we do not consider the source of funds for the future payment controlling. The issue is whether X need accept your ""protection"" in exchange for whatever security gains from his retaining lien.) Nothing in the Disciplinary Rules requires X to accept your guarantee in lieu of the retaining lien. We conclude he would be entitled to assert his lien in lieu of your firm's guarantee as long as he does not fall afoul of Rule 8.4(d) in so doing.

Finally, whether a retaining lien is legally proper in a particular factual situation is a matter of law and must be determined by the terms of the contract between the attorney and the client. It is beyond the charge of this Committee to comment on such matters of law.