seCure payMent With a Charging lien
Marital & Family law Section
Chair: Chris Givens - Givens Givens Sparks, PLLC
this equitable
right has been
recognized for
over a century.
T
he attorney’s charging
lien is an equitable
right — recognized for
more than a century —
to have the costs and fees due for
services rendered in an action
secured by the judgment or recovery
in that action. A charging lien need
not be adjudicated or enforced
before entry of the final judgment.
To perfect a charging lien on
judgment proceeds, an attorney
need only give timely notice.
Although an attorney must give
notice to perfect a charging lien,
the interest created by a valid
attorney’s charging lien arises by
operation of law and relates back
to the commencement of the
attorney’s services. So it has priority
over any judgment lien obtained
after commencement of the
attorney’s services. In re Washington,,
242 F.3d 1320, 1323 (11th Cir.
2001) (citing Miles v. Katz, 405
So. 2d 750, 752 (Fla. 4th DCA
1981)). This is significant because
perfection of liens that arise by
operation of law are not subject to
the automatic stay in bankruptcy,
and unlike judicial liens, they cannot
be avoided in bankruptcy either.
The automatic stay under
Bankruptcy Code § 362, which goes
into effect immediately upon the
commencement of a bankruptcy
case, ordinarily bars any act to
perfect a lien against property of
a debtor’s estate. But Bankruptcy
Code § 362(b)(3) provides an
exception for liens that cannot be
avoided in bankruptcy. In other
words, the automatic stay does not
bar an attorney from perfecting a
charging lien after a bankruptcy
case has been filed so long as the
charging lien cannot be avoided
by a trustee in bankruptcy.
Bankruptcy Code § 546 provides
that a trustee in bankruptcy may
not avoid an interest in property
(e.g., an attorney charging lien) if
generally applicable law permits the
perfected lien to be effective against
a previously acquired interest in
the property. Some bankruptcy
courts outside Florida have ruled
that a charging lien does not fall
within § 546 (meaning it can be
avoided and perfection is therefore
subject to the automatic stay)
when a state statute provided for
a charging lien and the statute did
not provided that the lien related
back. In re Hall, 2011 WL 4485774,
at *5 (B.A.P. 9th Cir. Aug. 22, 2011);
In re Veazey, 272 B.R. 486, 492-93
(Bankr. D. Kan. 2002). Because
charging liens in Florida, however,
relate back to the commencement
of the attorney’s services, they
cannot be avoided in bankruptcy,
and perfection of the lien would
not be subject to the automatic stay.
While it is always a better practice
to be paid up front, too often in
family law cases we see assets
dwindle before our eyes. And either
ethical considerations or judges
prevent access to those assets for
payment. Rather than watch
accounts receivable that may never
be collected grow, it is the better
practice to assert a charging lien so
that you can be
paid from the
proceeds of your
work. Take the
time to perfect
a charging lien.
Author: Paul S.
Maney - Paul S.
Maney, P.A.
Are you receiving HcBA’s emAils?
HcBA regularly communicates with members via email. stay in the know
by making sure your email is up-to-date in your member profile at hillsbar.com.
NOV - DEC 2018
|
HCBA LAWYER
41