Ethics Opinions
Iowa Supreme Court Board of Professional Ethics and Conduct

Date of Opinion: 06/08/1989

Opinion Number: 88-32

Title: FEES: CLAIM AGAINST ESCROW OR TRUST FUNDS

Opinion: Your client has sent you a cashier's check for payment of an obligation owing to a litigant in a matter in which you represented him. You seek to hold it and to enforce the statutory attorneys' lien against it. You request an opinion as to the propriety of your action.
Iowa Code section 602.10116 (1987) grants an attorney a retaining lien on "[m]oney in the attorney's hands belonging to a client." You rely on this to secure the general balance on your client's account. The universal rule seems to be that funds delivered to and accepted by a lawyer for a designated purpose are not subject to a retaining lien. The principle is summarized by one court as follows:

"It is consistently held in our sister states which recognize retaining liens that an attorney does not acquire such a lien under circumstances which are inconsistent with its enforcement. It is also consistently held that a general retaining lien does not attach to papers, documents, or other property which come into the hands of the attorney as a trustee or for some special purpose . . . ."

Spencer v. Spencer, 60 Cal. Rptr. 747, 754, 252 C.A.2d 683, 693 (1967); accord, e.g., King v. Tyler, 148 Ga. App. 272, 274, 250 S.E.2d 784, 786 (1978); Akers v. Akers, 233 Minn. 133, 141, 46 N.W.2d 87, 92 (1951); Micheller v. Oberfrank, 153 N.J. Super. 34, 36, 378 A.2d 1162, 1164 (1977); 7 Am. Jur.2d Attorneys at Law section 318, at 333 (1980); 7A C.J.S. Attorney and Client section 377, at 745 (1980). You thus appear to have no right to retain the money given to you for the special purpose of satisfying the settlement involved.

It is the opinion of the committee that unless and until found otherwise by the Court, if you were legally entitled to assert the lien, this would not establish the ethical propriety of doing so; See ABA Committee on Professional Ethics and Conduct Informal Opinion 1461, at 3 (1980) ("Mere existence of a legal right does not entitle a lawyer to stand on that right if ethical considerations require that he forego it."); and by keeping the money instead of applying it to the purpose for which you received it, you violate DR 6-101 (A)(3) ("A lawyer shall not . . . [n]eglect a legal matter entrusted to him"), DR 7-101(A)(l), (2), and (3) ("A lawyer shall not intentionally . . .[f]ail to seek the lawful objectives of his client . . ., [f]ail to carry out a contract of employment entered into with a client for professional services . . ., [or p]rejudice or damage his client during the course of the professional relationship . . ."); See National Sales & Service Company Superior Court, 136 Ariz. 544, 546, 667 P. 2d 738, 740 (1983) (where client brings papers to lawyer for delivery to another, assertion of attorney's lien thereon would be inconsistent with lawyer's duty under DR 6-101(A)(l) and (3) to seek his client's lawful objectives and to avoid prejudice or damage to his client), and your action thus is ethically improper.