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Attorney Liens in Civil Cases in Colorado
Under Colorado law, attorneys have two primary ways of assuring payment for services they render to clients. Those liens are:
– Charging Liens; and
– Retaining Liens
In general, charging liens represent a mechanism to collect on proceeds owed to a client in a particular case while retaining liens refer to the right of the attorney to keep or retain a client’s documents until the attorney is paid. Both of these liens are statutory rights. There are no common law attorney lien rights in Colorado. These two types of liens are discussed in further detail below.
Charging liens represent the right of an attorney to assert payment out of proceeds of a specific lawsuit or settlement that the lawyer was involved in. However, the attorney needs to take particular steps in order to properly effectuate a charging lien. In Colorado, charging liens for attorneys and the requirements for enforcing one are codified at Colorado Revised Statute (“C.R.S.”) § 12-5-119 which provides:
All attorneys- and counselors-at-law shall have a lien on any money, property,
Importantly, since attorney liens are statutory in Colorado, in order to assert a charging lien, the attorney must follow the statute’s requirements. In particular, since the purpose of the lien is to put third parties on notice that the attorney has a claim to all or some of the judgment or settlement at issue in the lawsuit, the attorney should file a notice of his claim into the case and set forth specifically the compensation agreement between the attorney and his client.
However, while filing a lien puts other parties on notice, the lien must be reduced to judgment before it can be enforced. See In re Marriage of Weydert, 703 P.2d 1336 (Colo. App. 1985); In re The Marriage of Smith, 687 P.2d 519 (Colo. App. 1994). Reducing the lien to a judgment can be done by requesting by motion in the underlying lawsuit that the court issue a judgment for the outstanding amount owed, or the attorney may initiate a completely new lawsuit to reduce the lien to judgment.
Additionally, there are restrictions on what types of cases a charging lien may be filed into. Attorneys who do not assist in obtaining proceeds or property for a client may not assert a charging lien. Thus, charging liens may not be filed in criminal cases or other cases where proceeds or property are not obtained on behalf of the client. Additionally, Colorado courts have found that child support cases are also generally exempt from imposition of a charging lien. See Marriage of Etcheverry and Pratt, 921 P.2d 82 (Colo. App. 1996).
Along these same lines, a charging lien is only available for claims and demands in a lawsuit that has actually been filed, as opposed to merely threatened; and only available against the judgments obtained in lawsuits that the attorney worked. That is, an attorney may not assert a charging lien against the same client in a different case which the attorney had no involvement in.
After a lien is reduced to judgment it will then be enforceable. Once an enforceable judgment is obtained, the judgment may then be recorded against the client’s real property by filing it with the Clerk and Recorder’s Office in which the property is located. See People v. Smith, 830 P.2d 1003 (Colo. 1992); Julie M. Walker, End of Representation, 32 Colo.Law. 59 (2003).
Additionally, where a charging lien is properly perfected, reduced to judgment, and recorded against a piece of property, it is considered a “first lien” and takes priority over other perfected security interests, even if the other interests were perfected before the charging lien. See North Valley Bank v. McGloin, Davenport, Severson and Snow, Professional Corp., 251 P.3d 1250 (Colo. App. 2010).
In contrast to charging liens, which seek payment out of a judgment or proceeds from a lawsuit, retaining liens are possessory and allow an attorney to retain a client’s papers until paid for any outstanding services rendered. Like charging liens, retaining liens are also statutory in Colorado. Specifically, C.R.S. § 12-5-120 provides:
An attorney has a lien for a general balance of compensation upon any papers of his client which have come into his possession in the course of his professional employment and upon money due to his client in the hands of the adverse party in an action or proceeding in which the attorney was employed from the time of giving notice of the lien to that party.
Importantly, because client documents can be critical to the progression of a case, retaining liens have certain restrictions on when they can be applied. In particular, in Colorado retaining liens can only be asserted in certain cases where the client has the financial means to pay outstanding fees but fails or refuses to do so. Where the client is unable to pay, a retaining lien may not be asserted.
Further, retaining liens cannot be asserted where (1) there is no legal basis for the assertion of the lien; (2) the lawyer has been suspended or disbarred; (3) the lawyer is guilty of misconduct in the particular matter; (4) the representation is in a contingency fee case prior to completion of the case; (5) the client furnishes adequate security; (6) the client’s papers are essential to the preservation of an important personal liberty interest; (7) the lawyer has withdrawn without just cause or reasonable notice; (8) the lawyer is validly discharged for professional misconduct or conduct prohibited by the Colorado Rules; (9) the client is financially unable to post a bond or pay the fees, unless the client’s inability to pay or post bond is a result of fraud or gross imposition by the client. Julie M. Walker, End of Representation, 32 Colo.Law. 59 (2003).
Notably, the Colorado Supreme Court has elaborated that “all books, papers, securities and money coming into an attorney’s possession in the course of his professional employment are considered a client’s “papers” within the meaning of the statute and, thus, may properly be retained. See In re Attorney G., 2013 CO 27, 302 P.3d 248 (2013).
However, the Colorado Supreme Court has specifically found that U.S. passports are not within the definition of a client’s “papers” and may not properly be retained. Passports, as the Colorado Supreme Court reasoned, are an essential identifying document and ultimate ownership of the passport rests with the U.S. government, not the client. Accordingly, they are not a client’s “papers” and cannot be retained. See id.
© 2016 J.D. Porter, LLC; Jordan Porter. Denver, Colorado.