Wednesday, March 27, 2013

Common law retaining liens barred by NJ Supreme Court

The New Jersey Law Journal reports that in a March 25, 2013 Notice to the Bar the New Jersey Supreme Court abrogated the attorney's common law retaining lien, as urged by its Advisory Committee on Professional Ethics (of which I am a member).  The Law Journal explains:
As of April 1, lawyers no longer will be able to hold onto client files and papers to collect fees.
An amendment to Rule of Professional Conduct 1.16(d), effective that date, states flatly, "No lawyer shall assert the common law retaining lien."
The state Supreme Court on Monday ordered abolition of the lien, which dates back to 18th century England and is still allowed in many states, at the suggestion of the Advisory Committee on Professional Ethics.
Last November, the ACPE proposed replacing a clause in the RPC stating, "The lawyer may retain papers relating to the client to the extent permitted by other law."
The ACPE cited the need to protect clients, the potential for attorney overreaching and breach of fiduciary duty, and the concern that assertion of the lien could exert pressure on a client disproportionate to the size or validity of the lawyer's fee claim.
The lien is most effective in coercing payment when the client is in acute need of the documents held, but resorting to it in such circumstances "is unduly destructive of the lawyer-client relationship and impairs public confidence in the Bar and in the judicial system," the ACPE said.
During the more than 60-day comment period that ended on Jan. 31, three comments in opposition and one in favor were submitted.
The State Bar Association wanted to keep the lien and clarify the ability to use it by adding a reference to "the common law retaining lien, as a means of securing payment for legal services rendered."

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