Authorizes an attorney to attach a lien to awards and settlement proceeds received by his or her client through alternative dispute resolution or settlement negotiations.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5275
SPONSOR: Titone (MS) 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: (2010) A8697 - Referred to Judiciary
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None
EFFECTIVE DATE: The ninetieth day after it shall have become a law.
STATE OF NEW YORK
________________________________________________________________________
5275
2011-2012 Regular Sessions
IN ASSEMBLY
February 15, 2011
___________
Introduced by M. of A. TITONE, P. RIVERA -- read once and referred to
the Committee on Judiciary
AN ACT to amend the judiciary law, in relation to authorizing an attor-
ney to attach a charging lien to awards and settlement proceeds that
clients receive through alternative dispute resolutions and settlement
negotiations
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 475 of the judiciary law, as amended by chapter 105
2 of the laws of 1946, is amended to read as follows:
3 § 475. Attorney's lien in action, special or other proceeding. From
4 the commencement of an action, special or other proceeding in any court
5 or before any state, municipal or federal department, except a depart-
6 ment of labor, or the service of an answer containing a counterclaim, or
7 the initiation of any means of alternative dispute resolution including,
8 but not limited to, mediation or arbitration, or the provision of
9 services in a settlement negotiation at any stage of the dispute, the
10 attorney who appears for a party has a lien upon his or her client's
11 cause of action, claim or counterclaim, which attaches to a verdict,
12 report, determination, decision, award, settlement, judgment or final
13 order in his or her client's favor, and the proceeds thereof in whatever
14 hands they may come; and the lien cannot be affected by any settlement
15 between the parties before or after judgment, final order or determi-
16 nation. The court upon the petition of the client or attorney may
17 determine and enforce the lien.
18 § 2. Section 475-a of the judiciary law, as added by chapter 551 of
19 the laws of 1955, is amended to read as follows:
20 § 475-a. Notice of lien. If prior to the commencement of an action,
21 arbitration, mediation or a form of alternative dispute resolution, or a
22 special or other proceeding, an attorney serves a notice of lien upon
23 the person or persons against whom his or her client has or may have a
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06080-01-1
A. 5275 2
1 claim or cause of action, the attorney has a lien upon the claim or
2 cause of action from the time such notice is given, which attaches to a
3 verdict, report, determination, decision, award, settlement or final
4 order in his or her client's favor of any court, arbitral tribunal or of
5 any state, municipal or federal department, except a department of
6 labor, and to any money or property which may be recovered on account of
7 such claim or cause of action in whatever hands they may come; and the
8 lien cannot be affected by any settlement between the parties after such
9 notice of lien is given. The notice shall, (1) be served by either
10 personal service or registered mail; (2) be in writing; (3) state that
11 the relationship of attorney and client has been established, the nature
12 of the claim or cause of action, and that the attorney claims a lien on
13 such claim or cause of action; (4) be signed by the client, or by a
14 person on his or her behalf whose relationship is shown, and which
15 signature shall also be witnessed by a disinterested person whose
16 address shall also be given; and (5) be signed by the attorney. A lien
17 obtained under this section shall otherwise have the same effect and be
18 enforced in the same manner as a lien obtained under section four
19 hundred seventy-five of this [chapter] article.
20 § 3. This act shall take effect on the ninetieth day after it shall
21 have become a law.
