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Where am I now? Lawlink > Office of the Legal Services Commissioner > Fact Sheets > Fact Sheet 12
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Fact Sheet 12
LIENS
A lien is a legal practitioner’s right to keep a client’s property until the client has paid the legal practitioner’s fees and disbursements. Unless the client and the legal practitioner have come to some other agreement, a lien can be exercised at any time if the practitioner’s bill has not been paid.
What things can a solicitor hold under a lien?
If a client owes a legal practitioner money, the practitioner can hold a lien over all papers, files, documents and deeds that belong to the client and that the solicitor received while representing the client. This can include files and documents relating to other matters which have been completed and which the client has already paid for.
A practitioner can also hold a lien over money that the practitioner is holding on behalf of a client. For example, after a legal case a solicitor might receive a cheque for the client. The cheque will generally be banked into the solicitor’s trust account. The solicitor will then prepare a bill to the client, and either:
- ask for the client’s authority to pay the bill with money from the trust account, or
- give the client time to object to paying the bill out of the trust account.
If the client refuses to authorise payment or objects to payment, the solicitor can hold in the trust account enough money to pay the bill – but not more. This does not prevent the client from having the costs assessed by a court appointed assessor. (See the OLSC Fact Sheet on Costs Disputes.)
Are there things that cannot be held under a lien?
A practitioner cannot hold a lien over the title deeds of property which has passed to another owner. Other documents which cannot be the subject of a lien include wills. Wills cannot be held under a lien because a solicitor holds a will for a client as a custodian, and after the client’s death the will must be produced to show entitlement to property.
What happens if I change solicitors?
Liens become an issue most often when either the client or the legal practitioner has terminated the practitioner’s retainer and the client wishes to retain a new lawyer. (See the OLSC Fact Sheet on Hiring a Legal Practitioner.)
If the client terminated the retainer, the practitioner is entitled to a general retaining lien over the client’s documents until the client has paid the practitioner’s bill in full.
If the legal practitioner terminated the retainer, he or she only has a qualified lien and should make the client’s documents available upon payment, receipts or satisfactory security so that another practitioner can continue the client’s current court proceedings.
The client might have to provide some kind of promise or security for the practitioner’s costs, and the documents would have to be returned to the practitioner at the conclusion of the court proceedings if the costs remained unpaid.
In many cases, a client’s file might be released after the former solicitor, the new solicitor and the client have signed a three party agreement which covers the payment of the former solicitor’s costs. This usually involves the new solicitor agreeing to ensure that the former solicitor is paid or gets the file back at the end of the legal matter. The Law Society of NSW has drafted a model agreement for use in these situations.
In workers compensation matters under NSW legislation, the solicitor’s costs are paid by the employer’s insurance company. If a client transfers the case to a new solicitor, the former solicitor usually sends a bill for his or her costs to the new solicitor. The new solicitor usually agrees to pay the former solicitor’s costs, as ordered or assessed, when the insurer pays the new solicitor. In these circumstances the former solicitor might release the client’s papers to the new solicitor.
In other personal injury matters, costs are usually paid out of settlement or court-awarded money at the conclusion of the case. If the client transfers the case to a new solicitor, the former solicitor might release the file to the new solicitor if the new solicitor agrees to pay the former solicitor’s costs as agreed or assessed. Usually the client has to give the new solicitor an irrevocable authority to pay the former solicitor’s assessed or agreed costs out of any settlement or verdict monies, and to return the file to the former solicitor if the new solicitor’s retainer is terminated.
What if the practitioner won’t release my file?
There are three ways of having a file released from a lien.
First, pay the costs.
Second, under Section 728 of the Legal Profession Act 2004, a client can apply to the Supreme Court for the court to order the release of the client’s documents. This power relates only to practitioners hired by the client directly, not practitioners hired for the client by another practitioner (such as barristers).
Third, the Commissioner can discharge a lien where he is satisfied that the solicitor will be found guilty of unsatisfactory professional conduct and this form of compensation order deals most appropriately with the client’s direct loss.
May 2011
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