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THE ATTORNEY FOR PLAINTIFF IN A PERSONAL INJURY ACTION WAS DISCHARGED WITHOUT CAUSE AFTER A SETTLEMENT HAD BEEN REACHED; THE ATTORNEY SHOULD NOT HAVE BEEN AWARDED A JUDGMENT FOR THE CONTINGENCY FEE; RATHER THE ATTORNEY SHOULD HAVE BEEN AWARDED A CHARGING LIEN PURSUANT TO THE JUDICIARY LAW (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the attorney (Sparrow) who was discharged without cause after a settlement was reached in a personal injury action should have been awarded a charging lien, not a judgment against the former client (Messina):

“An attorney of record who is discharged without cause possesses a charging lien pursuant to Judiciary Law § 475 which constitutes an equitable ownership of the cause of action and attaches to any recovery” … . Thus, under Judiciary Law § 475, “the attorney who appears for a party has a lien upon his or her client’s cause of action, claim or counterclaim, which attaches to a verdict, report, determination, decision, award, settlement, judgment or final order in his or her client’s favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination.”

“Although the amount of a charging lien may be determined and fixed before the outcome of the case, the charging lien does not provide for an immediately enforceable judgment against all assets of the former clients” … . “Rather, the lien is security against a single asset of the client—a judgment or settlement reached in favor of the former client in the underlying matter” … .

Here, since Sparrow specifically sought to establish a charging lien pursuant to Judiciary Law § 475, plus a determination as to the amount of the charging lien, and since, at the time of the hearing, the action remained pending, and, therefore, Messina’s [the former client’s] cause of action had not resulted in an outcome in his favor (see id. § 475), the Supreme Court should not have entered a money judgment against Messina … . Messina v Wedderburn, 2023 NY Slip Op 06360, Second Dept 12-13-23

Practice Point: In a personal injury action where the attorney is to be paid a contingency fee, the attorney who has negotiated a settlement and was discharged without cause has the right to a charging lien, not a judgment, against the former client.

 

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