Liens For Attorney Fees: No Error In Dismissal Of Action Brought By Former Law Firm Against Successor Law Firm For Interference With Its Liens Against Former Clients’ Settlement Proceeds

Former Law Firm Failed To First Have Its Liens Established, Valued, And Enforced In Independent Actions Against The Clients.

            In SL Environmental Law Group v. Robins Borghei, LLP, Case No. A155906 (1^st Dist., Div. 2 May 22, 2020) (unpublished), plaintiff predecessor law firm – specializing in environmental contamination litigation – lost clients it represented in seven separate cases when those clients followed two departing attorneys to their new firm.  Predecessor firm had entered into contingency agreements with each of the clients, and clients had agreed to a lien attached to any recovery obtained in the actions in order to compensate predecessor firm for the value of its work and for costs it had incurred on the client’s behalf.

            Although it filed notices of liens in the clients’ underlying cases, predecessor firm never brought independent actions against the clients to establish the existence, amount and enforceability of its liens.  Instead, predecessor firm jumped straight to filing an action against the successor firm – after the clients’ actions had settled – for interference with it liens.

            In sustaining successor law firm’s demurrer without leave to amend, the trial court determined Mojtahedi v. Vargas, 228 Cal.App.4^th 974 (2014) [discussed in our July 13, 2014 and August 8, 2014 posts] to be directly on point, and found that plaintiff’s failure to establish the existence, amount and enforceability of its liens in a separate action against each of the clients – thus denying the clients an opportunity to assert any defenses they may have against the liens – foreclosed its action against successor firm. 

            On appeal, predecessor firm argued that the trial court had misconstrued Brown v. Superior Court, 116 Cal.App. 4^th 320 (2004) – which predecessor firm claimed held that an attorney was not required to sue its former client to enforce its lien. It also argued that the trial court erroneously relied on Mojtahedi which it claimed was wrongly decided.

            The 1/2 DCA disagreed with predecessor firm’s contentions and affirmed – including in its opinion a detailed discussion of Brown and explaining that Brown does indeed require an attorney seeking to enforce a lien to bring a separate action against the client even if that action is merely a declaratory relief action.