The Treatment of Attorney's Liens in Colorado
| Jurisdiction | Colorado,United States |
| Citation | Vol. 16 No. 4 Pg. 623 |
| Pages | 623 |
| Publication year | 1987 |
1987, April, Pg. 623. The Treatment of Attorney's Liens in Colorado
This article discusses the nature, perfection and enforcement of attorney's liens under Colorado law. The treatment of attorney's liens in the context of competing interests in bankruptcy is then examined. The article is directed toward bankruptcy practitioners and practitioners in other fields who may encounter a bankruptcy in the process of creation, perfection and enforcement of attorney's liens.
In Colorado, there is no common law attorney's lien, and no lien exists except under the statute.(fn1) CRS §§ 12-5-119 and 12-5-120 provide two types of liens: a "charging" lien and a "retaining" lien, each being attributable and peculiar to the attorney's relationship to the client in a given case. The statutes have been criticized for blurring the distinction between the two types of liens. However, case law clearly preserves and protects attorney's lien rights under each.(fn2)
CRS § 12-5-119 is considered the "charging" lien statute, while § 12-5-120 is considered the "retaining" lien statute. Section 12-5-119 confers a lien on money, property, choses in action or claims and demands in the attorney's hands and, as such, requires possession of these things (however intangible they may be) by the attorney in order for the lien to attach. The attorney has the right to "charge" against these things as long as they are in the attorney's possession until the general balance of fees due from the client is paid, whether the fees arise out of the particular matter in the lawyer's hands or other legal matters.(fn3)
Once the claim, chose in action, demand, money or property is surrendered by the attorney, the attorney must look to the fruits of any judgment for payment of fees, or protect the interest in any judgment which may be obtained in the future from claims and demands the attorney has already placed "in suit." Perfection of the lien by notice to third parties then becomes crucial, but even then, the fees to be recovered under CRS § 12-5-119 must relate to services performed in that action only, and cannot be for services performed in unrelated matters of a general balance of fees due from the client.(fn4)
The term "any judgment" was interpreted by the Colorado Supreme Court in the early case of Fillmore v. Wells to mean " . . .all kinds of judgments, regardless of the subject matter to which they relate."(fn5) Fillmore upheld the attorney's right to seek enforcement of his lien under the statute against real estate. The client's interest in the real estate had been preserved by the lawsuit.
Another Colorado case held that the attorney who obtained a nullification of an encumbrance against the client's real estate was entitled to the fruits of that judgment---the client's equity in the property---for his lien.(fn6) Regardless of the fruits, the fact that a judgment has been obtained is essential to the operation of this part of CRS § 12-5-119.(fn7)
CRS § 12-5-119 also grants the attorney a charging lien on "any and all claims and demands in suit" for any fees or balance of fees due or which may become due from any client. Merely preparatory services are insufficient to confer a charging lien on the attorney under this portion of the statute.(fn8)
To be "in suit," a claim must be before a court of justice in a proceeding whereby an individual pursues legal remedies.(fn9) In In Re Forrest A. Heath Co.,(fn10) although a summons and complaint had been prepared, the claim was settled before the action was instituted. The attorneys for the borrower who effected the settlement later claimed a charging lien on the assets
To enforce a charging lien against claims and demands in suit and against judgments obtained in whole or in part by any attorney, the attorney should file with the clerk of the court where the matter is pending a notice of the attorney's claim as lienor. The notice should set forth the agreement of compensation between the attorney and the client in the case. Although there are no statutory dictates governing other information that should be provided, it is recommended that the following information be included: (1) a statement of fees then owing and unpaid(fn11); (2) that the fees arise out of the instant case for services rendered by the attorney; and (3) that the attorney has not previously waived the right to assert the lien.(fn12)
Although the statute does not specify the time within which a "proper civil action" must be brought to enforce the lien or reduce it to judgment, the action may be...
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