This opinion has been questioned and modified in ethics opinion R-19, effective August 4, 2000.

CI-758

May 13, 1982

SYLLABUS

A lawyer shall promptly pay or deliver to the client as requested by a client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to received, and such obligation survives termination of the lawyer-client relationship.

A client is entitled to receive from the lawyer, upon request, what has been paid for, what has been delivered to the lawyer, and any other item which could reasonably be anticipated to be useful to the client, and this entitlement survives termination of the lawyer-client relationship. If the agreement between the lawyer and the client provided for costs to be reimbursed as they are incurred, the lawyer may, subject to some ethical limitations, retain materials until the costs attributable to them are paid.

A retaining lien is a right granted by law, but a lawyer's exercise of the lien is subject to ethical limitations and is not absolute.

A charging lien against a recovery is a matter of law, but a lawyer's exercise of the lien is subject to ethical limitations.

References: MCPR DR 2-107(A)(2) and (3), DR 2-110(A)(2), DR 4-101(C), DR 9-102(B)(4); CI-623, CI-746, CI-737; ABA i1376; Ambrose v. Detroit Edison Co., 65 Mich App 484 (***); Kysor Industrial Corp. v. DM Liquidating Co., 11 Mich App 483 (***).

TEXT

A client retains a lawyer for a personal injury matter and executes a written contingent fee agreement. Negotiations are begun between counsel and the insurance carrier in question, but an offer of settlement is declined by the client. The client then retains other counsel and demands that the file be turned over to successor counsel. The discharged lawyer asks:

1. Is he entitled to 1/3 of the settlement offered by the insurer if the discharge was without cause?
2. If he has advanced the costs necessary to obtain medical reports, is he required to turn the documents over to successor counsel when successor counsel can request a second set of records from the hospitals and doctors?
3. May he send a lien letter to the insurer advising he has a lien on any settlement, judgment or verdict?

The first question is a question of law, which is beyond the jurisdiction of the Committee. Nonetheless, and for guidance, it is suggested the likelihood that the lawyer cannot be entitled to the maximum fee permissible under GCR 928 on the amount of the rejected settlement, since payment of the maximum fee on a settlement implies not only that the amount was available but that it was acceptable to the client. The lawyer is also referred to CI-746, which states:

"In a case where a client enters into a contingent fee arrangement with a lawyer and during the pendency of the matter the client changes lawyers and enters into a 1/3 contingency fee agreement with successor counsel, the question of the predecessor lawyer's right to the payment of legal fees is a legal question and not an ethical one, with the exception that the total fee paid by the client may not be excessive, and the ultimate division of fees between the lawyers must be made in proportion to the services performed and the responsibility assumed by each. MCPR DR 2-107(A)(2) and (3)."

As to the second question, MCPR DR 2-110(A)(2) and DR 9-102(B)(4) state:

"In any event, a lawyer shall not withdraw from employment until reasonable steps have been taken to avoid foreseeable prejudice to the rights of the client, including giving due notice to the client, allowing time for employment of other counsel, delivering to the client all papers and property to which the client is entitled, and complying with applicable laws and rules."

"A lawyer shall promptly pay or deliver to the client as requested by a client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive."

The duty to deliver papers and property to which the client is entitled survives termination of the lawyer client relationship. CI-737. What papers the client is entitled to, and what is the client's "property," are questions of law. See ABA i1376:

"It must be kept in mind that questions of the law cannot be answered. In the gray areas, what is the lawyer's property and what is the client's property in a particular case are questions of law governed by the law of the applicable jurisdiction. The ethical principles involved are simple. The client is entitled to receive what has been paid for and to the return of what the client has delivered to the lawyer. Beyond that, the conscientious lawyer should not withhold from the client any item which it could reasonably be anticipated would be useful to the client. How these principles are to be applied in individual cases is, of course not easy. The respective interests of lawyer and client can be protected by court order in an adversary proceeding or by private agreement if the parties can agree."

The fact that items to which the client may be entitled are available from another source is immaterial. Nor does the client's nonpayment of the costs of the medical records change the lawyer's duty. If the client agreed to reimburse costs as incurred, the attorney would be entitled to retain the record until payment is received, subject to the ethical limitations noted below regarding assertion of a lien. If the agreement provided that the lawyer advance costs against ultimate recovery, the lawyer would not be so entitled. See CI-623.

Pursuant to MCPR DR 9-102(B)(4), papers and items of property should be turned over upon request of the client. It is noted, however, that no litigation has been commenced and the lawyer has been asked to turn over file materials to successor counsel who is not a counsel of record and whose relationship with the client may or may not be clear. MCPR DR 4-101(C) would require the lawyer to get specific authorization from the client, preferably in writing, as to which papers may be disclosed.

CI-623 specifically addressed the question of a retaining lien to secure costs, not a fee, when litigation was underway. Neither of those distinctions renders the general principles of that opinion inapplicable to this inquiry. The right to retain client property pursuant to a lien is not absolute, but is subject to ethical limitations.

The third question involves a lawyer's so-called "charging lien." See Ambrose v. Detroit Edison Co., 65 Mich App 484 (***); Kysor Industrial Corp. v. DM Liquidating Co., 11 Mich App 438 (***). Whether the lawyer would be entitled to a charging lien is a question of law. MCPR DR 1-102(A) prohibits "conduct involving dishonesty, fraud, deceit, or misrepresentation," and "any other conduct that adversely reflects on fitness to practice law." If the lawyer has a lien, the lawyer may ethically furnish a claim of lien to the insurer. But no claim of lien should be made unless the lawyer's right is clear, and then only for an amount to which the lawyer is clearly entitled.

Under the facts provided, any claim of lien provided to the insurer should be limited to a statement of facts, and a statement that if a sum is owing the lawyer will assert any legally available claim against the recovery. CI-623 noted:

"It is improper for a lawyer to condition the release of client files which pertain to pending litigation are currently within the lawyer's possession, upon the immediate payment of costs advanced on behalf of the client when the facts suggest no gross imposition by the client (i.e., failure to pay is due to inability to pay and not unjustified deliberate refusal)."