Didn’t Help that Settling Client Got $100,000 in Cash in a Black Briefcase--None of Which Went to Attorney.
As co-contributor Mike is prone to say, “You can’t make this stuff up.” (Or something quite close to it.) Well, here is one with interesting facts and a result that is not all that surprising.
Little v. Amber Hotel Co., Case No. B227518 (2d Dist., Div. 4 Dec. 22, 2011) (certified for publication) involved an attorney who successfully defended his client in an action with a fees clause and who negotiated a specialized attorney’s lien giving him the benefit of a fee award recovery given clients’ cash flow problems. The fee award was never appealed; however, unbeknownst to attorney with the lien, his clients settled out with the adverse parties but waived recovery of the fee award. One of the settling clients did meet with one of the adverse parties after a nighttime drive to Malibu, with settling client’s chauffeur confirming that the client returned with a black briefcase and was “real joyful” after looking inside the bag. (He should have been; it had $100,000 cash inside, a “quiet” settlement stash--none of which went to client’s attorney.) Attorney was obviously disturbed, suing for contractual interference against the adverse settling party given that he did give notice of his attorney’s lien much earlier. Attorney won a nice compensatory award, prompting an appeal by the adverse party losing the interference claim.
Appellant claimed that clients could effectively settle a case out from an attorney’s lien with impunity. Not so, said the appellate court in a much more eloquent way. Because attorney agreed to provide services on a deferred basis (and possibly unrecovered basis if no fee award was obtained), it would be unwise policy to hold otherwise. The parties had all the leeway in the world in how they chose to settle, but clients still had to honor their contractual duties to attorney concerning his lien rights.
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