Legal Definitions - charging lien

A charging lien is a legal claim that an attorney can place on the financial proceeds of a lawsuit, judgment, or settlement that they have successfully obtained for a client. This type of lien allows the attorney to secure payment for their legal services directly from any money the client receives as a result of the case, particularly if the client has not paid their legal fees as agreed. Essentially, it gives the lawyer a right to a portion of the judgment or settlement funds before those funds are fully disbursed to the client.

Here are some examples to illustrate how a charging lien works:

• Example 1: Personal Injury Settlement

  Imagine a client hires an attorney after a serious car accident. The attorney works diligently, negotiating with insurance companies and ultimately securing a substantial settlement for the client's injuries and damages. However, after the settlement funds are received by the attorney in their trust account, the client suddenly disputes the attorney's agreed-upon contingency fee or outstanding hourly charges and refuses to authorize payment. In this situation, the attorney could assert a charging lien on the settlement funds. This lien would allow the attorney to legally claim their earned fees directly from the settlement money before the remaining balance is disbursed to the client, ensuring they are compensated for the legal work that produced the settlement.

• Example 2: Business Contract Dispute

  Consider a small manufacturing company that hires a lawyer to sue a supplier for breach of contract, claiming significant financial losses due to defective materials. The lawyer successfully represents the company, and a court issues a judgment awarding the company a large sum in damages. The company, facing other financial pressures, then attempts to use the entire judgment amount to cover other operational debts, neglecting to pay the lawyer's final invoices for the extensive work performed on the case. The lawyer could file a charging lien against the judgment proceeds. This lien would attach to the money awarded by the court, allowing the lawyer to recover their outstanding fees directly from those funds before the company receives its portion, thereby securing payment for their services.

• Example 3: Real Estate Litigation

  Suppose a property owner hires an attorney to resolve a complex dispute over a property boundary that prevents the sale of their land. The attorney successfully litigates the matter, resulting in a court order that clarifies the boundary and allows the property to be sold for a significant profit. After the sale, the client, pleased with the outcome but now feeling the legal fees are too high, refuses to pay the remaining balance of the attorney's bill. The attorney could then assert a charging lien on the proceeds from the sale of the property that were directly enabled by their legal work. This lien would ensure the attorney's fees are paid from the specific funds the client is receiving, which the attorney helped secure through the successful litigation.