Articles

Fund

A solicitor can have a lien over a client’s money and the client’s chattels which, in the course of undertaking business for a client, come into the solicitor’s possession, e.g. a document of title to land; a cheque drawn in favour of the client; and jewellery. It is easier to enforce a solicitors’ lien when there is a fund. In this note, a “fund” is a client’s money and includes a settlement or judgment sum which has been received or is even to be received by a solicitor on behalf of the client.

Notice of Intention to Exercise Lien

When a solicitor receives a fund, and intends to enforce a lien for the solicitor’s costs against it, he or she must give notice to the client of the intention to enforce the lien. It is important to have evidence of the giving of the notice. Solicitors acting for a creditor often avoid telling the solicitors to the party who is liable to pay to the creditor a settlement or judgment sum the amount of the solicitor and client costs payable by their client the creditor because, as a general point, the thinking is that others should not know how much a law firm is paid for its services.

Improper to Ignore Another Solicitor’s Lien

If there is a danger of the party liable (sometimes acting by a solicitor) bypassing a creditor’s solicitor and paying the sum directly to that solicitor’s client, notice of the creditor’s solicitor’s lien for solicitor and client costs, should be given to the liable party’s solicitors. If that party ignores the notice and bypasses the creditor’s solicitor, that party (and perhaps that party’s solicitor too) would be liable to the creditor’s solicitor for the loss suffered by that solicitor as a result. Such notice is more likely to be effective if the sum owing to the creditor’s solicitor too is mentioned in it.
See: Khans Solicitors (a firm) v Chifuntwe and another [2013] 4 All ER 367

The Solicitors’ Accounts Rules 1994

The Solicitors’ Accounts Rules 1994 repeat largely the common law rules regarding solicitors’ liens.

Practical Steps to Take when Exercising a Solicitors’ Lien

There are law firms which, as a last step, transfer from the client account to the office account the amount of costs owing to them by their client. It is necessary
to first give notice to the client: -
5.1. by way of a statement of account, of the sum in the client account in the client’s name;
5.2. usually by way of a bill, of the sum owing by the client as solicitor and client costs;
5.3. of the solicitor’s intention to exercise the lien by drawing out the sum payable as the solicitor’s costs; and
5.4. of the balance sum payable to the client.
If the client were to want payment into a bank account, in order to facilitate a quick reply and early and accurate payment, it would be helpful to ask the client in the notice for the name and number of the bank account to which the sum payable to the client is to be paid. Caution must be exercised if there is a request (it can be a proper one, though) for payment into an account which does not appear to be the client’s.
Preferably, the date of payment into the office account of the sum deducted as the firm’s costs should be a date after the date on which the other steps had been taken. This precaution would help show that the necessary sequence was followed.
However, instead of taking a last step, after the notice and information mentioned above have been given, a solicitor can properly take the “first bite” out of the fund.

A Mistaken Belief that a Client’s Consent is Necessary

It is mistakenly believed by some people that a client’s consent to enforcement of a solicitor’s lien over the client’s money in the hands of the solicitor is necessary. If that were to be the law, and if the client were to refuse to give consent, it would become impossible in many cases to enforce the lien. Only the giving of notice, with sufficient details, is necessary, just like in the case of bankers’ liens.

Misconduct because the Proper Procedure was not Followed

There was a lawyer who was punished for misconduct when he purportedly enforced his lien for costs when it was not yet enforceable. He had not delivered a bill to his client and had not given the necessary notice to the client before transferring from the client account to his office account what he claimed to be the costs owing to him.

Obtaining Payment of Costs and Avoiding Claims and Complaints regarding
Solicitors’ Liens for their Costs

The abovementioned precautions will help in a big way: -
11.1. to assist solicitors to obtain payment of their costs conveniently and without delay; and
11.2. to avoid and to defend succesfully claims and complaints regarding the exercise of socilitor's liens.
Even a successful defence can eat up time and costs and can bring stress. Measures taken so as to avoid such problems occurring will certainly take up time but, in the long run, would be effective in terms of time and costs saved and with possible loss of professional reputation and stress being avoided.

Taxation of Solicitors’ Costs

The exercise of a client’s right to taxation of a solicitor’s bill of costs does notmake the solicitor’s bill ineffective or incapable of being protected by a lien. If after taxation, there is a reduction in the costs, there will be a debt owing by the solicitor to the client.
Taxation of solicitors’ costs is a complex subject which is governed by, inter alia, the common law; the Legal Profession Act 1976; and Order 57 of the Rules of Court 2012, in particular rules 6 and 17. During taxation, the Court may properly take into account any negligence or misconduct of a solicitor which had caused costs to be wasted.
When delivering a bill of costs to a client or when seeking to exercise against a client a lien for costs, a solicitor should be careful not to claim costs arising from especially obvious or admitted negligence or misconduct on the part of the solicitor. Claiming costs without justification when exercising a lien can well lead to a claim for malpractice; a complaint of misconduct; taxation of costs; and proceedings so as to stay enforcement of the lien. There was a case of a bill which was delivered by a hospital for the amputation of the wrong leg of a patient, while the other leg still awaited amputation. It was simply inexcusable.