Authorizes an attorney to attach a lien to awards and settlement proceeds received by his or her client through alternative dispute resolution or settlement

2 Co-sponsors

• Helene Weinstein
• Peter Rivera

BILL NUMBER:A8697

Title of bill

An act to amend the judiciary law, in relation to authorizing an attorney to attach a charging lien to awards and settle- ment proceeds that clients receive through alternative dispute resol- utions and settlement negotiations

Purpose Or General Idea Of Bill: To allow for an attorney's charging lien to become effective upon commencement of alternative dispute resol- ution proceedings.

Summary Of Specific Provisions: This bill would allow an attorney to attach a charging lien to awards and settlement proceeds that clients receive in arbitration or through other forms of alternative dispute resolution.

Effects Of Present Law Which This Bill Would Alter: Present law permits such liens to attach only upon commencement of an action.

Justification: The practice of law has changed tremendously since Section 475 was last revised in 1946 and Section 475-a was adopted in 1955. Since then, alternative dispute resolution, including both arbi- tration and mediation, has become a common, universally-accepted, means of dispute resolution. Such proceedings generally provide clients with a more economical approach to dispute resolution than an action through the courts, due to abbreviated discovery and limited motion practice. Alternative dispute resolution also benefits the court system by taking disputes that are ripe for resolution out of the often overtaxed courts. However, while clients and the court system benefit from the increased use of alternative dispute resolution, attorneys are assuming a substan- tial risk in agreeing to perform legal services for clients, absent the filing of litigation, because, as the Lien Law is currently written, attorneys have no means to secure payment for their services. If the dispute never reaches a court, the attorney cannot obtain a charging lien to secure payment for her fees, and even if the dispute does reach a court, the Law is unclear as to whether the attorney can recover her legal fees incurred prior to the filing of the court proceeding. The public interest would be best served were lawyers not confronted with having to decide between following the best course of action for the client, which may be a form of alternative dispute resolution, and ensuring that the lawyers will be compensated for their services.

New York law is well settled that an attorney may attach a charging lien to settlement proceeds resulting from a court or other proceeding. Accordingly, expansion of the Lien Law to include arbitration, mediation and other forms of alternative dispute resolution would also allow attorneys to file a charging lien against settlement proceeds obtained prior to or during the course of any proceeding, thereby, affording attorneys this added protection for the value of their legal services.

Other states provide attorneys with the opportunity to obtain liens for work done outside of formal court proceedings. For example, the State of

Washington cured this problem by drafting its lien law expressly to authorize liens for compensation for legal services performed "after the commencement" of an "arbitration or mediation." Other states allow the lien to attach for legal services performed for the client "from the time the cause of action arises" or from the "time of employment of the attorney by the client." At least one state has directly addressed this issue through case law.

Prior Legislative History: New bill

Fiscal Implications For State And Local Governments: None

Effective Date: The ninetieth day after it shall have become a law.