Chapter 43 - § 43.4 • STATUTORY RETAINING LIEN — C.R.S. § 13-93-115

• Jurisdiction: Colorado

§ 43.4 • STATUTORY RETAINING LIEN — C.R.S. § 13-93-115

The second type of attorney lien is a retaining lien and is governed by C.R.S. § 13-93-115, which provides as follows:

An attorney has a lien for a general balance of compensation upon any papers of his or her client that have come into his or her possession in the course of his or her professional employment and upon money due to his or her client in the hands of the adverse party in an action or proceeding in which the attorney was employed from the time of giving notice of the lien to that party.

A retaining lien allows an attorney to keep a client's papers when the client is financially able to pay the attorney's outstanding fees but fails to do so. CBA Formal Ethics Opinion 82, "Assertion of Attorney's Retaining Lien on Client's Papers" (April 15, 1989, rev. 1995).

§ 43.4.1—Attachment, Notice, and Enforcement

In order for the attorney to assert a retaining lien, the client must owe the attorney a general balance of compensation. People v. Garnett, 725 P.2d 1149, 1154 (Colo. 1986). Once an attorney has completed compensable work, the retaining lien attaches to the client's papers. MacFarlane, 581 P.2d at 718.

A retaining lien may attach to all papers, books, documents, securities, and money coming into an attorney's possession in the course of the attorney's professional employment. In re Oiltech, Inc., 38 B.R. 484, 486 (Bankr. D. Nev. 1984). The attorney has a right to retain them in the attorney's possession until the general balance due to the attorney for legal services is paid, whether such services grew out of the special matters then in the attorney's hands or other legal matters. Substitute collateral may also be posted to replace papers, records, etc., that were the subject of the attorney lien, and the lien attaching to the substitute collateral is equally enforceable. Id.

Unlike the charging lien, the statute does not condition the enforceability of the retaining lien against third parties upon the requirement of notice. "A competing third party creditor would certainly be placed on inquiry notice of any possible lien asserted by an attorney upon the client's files, records, money, or other property in the attorney's possession." Id.

A retaining lien "gives only a right to retain possession of the items placed in the hands of the attorney until he is paid his fees. It does not create an equitable charge which follows the proceeds received in settlement of a claim." Gaudio, 260 F.2d at...