7th Circuit: Attorney can’t enforce lien against former client

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A lawyer could not enforce an attorney lien against a former client who negotiated a whistleblower settlement on his own, the 7th U.S. Circuit Court of Appeals has ruled in affirming judgment.

The client retained the lawyer to represent him in a whistleblower action against his employer. The lawyer gave the employer notice that he held an attorney lien on any judgment or settlement. The client subsequently discharged the lawyer after rejecting a $375,000 settlement offer. Years later, the client negotiated a $1.3 million settlement without the assistance of counsel.

Upon learning of the settlement, the lawyer sent the employer a request for payment of $34,000 in attorney fees from the client’s settlement.

The client argued that the attorney lien was unenforceable because his retainer agreement gave the lawyer a right to payment only in the event he successfully negotiated a settlement acceptable to and paid to the client.

The 7th Circuit agreed that the lawyer did not hold a valid lien on the client’s settlement.

“The retainer agreement authorized an equitable lien on only the funds ‘secured by us.’ [The lawyer’s] representation put no cash in [the client’s] hands,” the court said.

U.S. Court of Appeals, 7th Circuit. Goyal v. Gas Technology Institute, No. 12-3756.