8
. There are four requirements for the imposition of an attorney's
charging lien against an attorney's client or former client. First, there must be a valid oral
or written contract between the attorney and the attorney's client or former client. Second,
there must be a judgment or fund that resulted from the attorney's services. Third, the
attorney must have filed notice of his/her intent to assert a charging lien, and such notice
must have been served on the attorney's client or former client against whose interest in
said judgment or fund the lien is sought to be enforced. Fourth, notice of the lien must be
filed before the proceeds of the judgment or fund have been distributed.
9
. “Where an attorney has been discharged, without fault on his part, from
further services in a suit just begun by him under a contract for payment contingent upon
successful prosecution of the suit, his measure of damages is not the contingent fee agreed
upon, but the value of his services rendered; and in the absence of evidence of the
reasonable value of such services, no recovery can be had.” Syllabus, Clayton v. Martin,
108 W. Va. 571, 151 S.E. 855 (1930).
10
When an attorney has properly and timely filed a charging lien in a
particular case, the circuit court must address the charging lien in the final order distributing
the judgment or fund to which the lien will attach.
Davis, Justice: (See footnote 1)
The appellant herein, Gianola, Barnum & Wigal, L.C. (hereinafter referred
to as “GBW”), (See footnote 2) appeals (See footnote 3) from an order entered June 12, 2007, by the Circuit Court of
Monongalia County. In that order, the circuit court denied GBW's motion to reconsider
and amend its earlier February 18, 2004, “Order Enforcing Settlement, Releasing
Defendants and Dismissing Civil Actions” and further denied GBW's motion for attorney's
fees. On appeal to this Court, GBW asserts that the circuit court erred by refusing to award
its requested attorney's fees in violation of W. Va. Code § 30-2-15 (1923) (Repl. Vol.
2007), and this Court's prior holding in Syllabus point 4 of Shaffer v. Charleston Area
Medical Center, Inc., 199 W. Va. 428, 485 S.E.2d 12 (1997). Upon a review of the parties'
arguments, the record designated for appellate consideration, and the pertinent authorities,
we reverse the decision of the Monongalia County Circuit Court and remand this case for
further proceedings consistent with this opinion.
[t]his contract is entered into on December 20, 1994,
between Howard “Jack” Trickett (Client) and Gary Wigal,
Attorney at Law (Attorney).
The Contract for legal services relates to Jack Trickett's
involvement in Monongalia County Civil Action Nos. 91-C-
615 and 90-P-205.[ (See footnote 6) ] The Client authorizes the Attorney to take
any action which is necessary and incidental to the prosecution
of the claim. As consideration for the legal services rendered
by the Attorney, the Client agrees to the following
compensation.
The Client agrees to pay the Attorney a lump sum of
Thirty-three and One Third percent (33 1/3%) of all monies and
things of any value recovered in the claim by compromise,
settlement or verdict after suit. Should the case be appealed by
any party after a verdict, the Client agrees to an additional legal
fee of 10% of any recovery for legal representation in the
appeal.
. . . .
If the Attorney determines, in his sole discretion, before
or after a claim is instituted, that continuing to defend the claim
is not feasible for any reason, the Attorney may withdraw from
the case and may rescind this contract. If the Client terminates
the Attorney, the Client agrees to pay the Attorney his accrued
fees to date, as well as costs and expenses which have been
incurred up to the time.
The Client authorizes the Attorney to withhold and pay
from any recovery resulting from this legal action the
following:
1. Attorney's fees in the amount contained in the
contract;
2. All costs and expenses advanced by the Attorney;
3. Any other monetary obligations owed by the
Client which arise out of the controversy for which the
Attorney was employed.
It is further agreed that if the Attorney negotiates a fair
and equitable settlement of the claim, and the Client refuses to
accept the terms of the settlement, the Attorney can withdraw
from further representation of the Client. If the Attorney
withdraws under these circumstances, the Client agrees to pay
the accrued attorney fees to date, as well as costs and expenses
which have been incurred up to the time of the Attorney's
withdrawal from the case. . . .
(Footnote added; emphasis added). Pursuant to this contract, Mr. Wigal pursued litigation
of Mr. Trickett's interests in the aforementioned cases. During such representation, Mr.
Wigal also associated with attorneys Patrick C. McGinley and Robert J. Shostak, as
permitted by his contract with Mr. Trickett.
Thereafter, in 1998, Mr. Trickett terminated Mr. Wigal. (See footnote 7) In accordance with
such termination, Mr. Wigal and Mr. McGinley filed, on August 4, 1999, a response
objecting to Mr. Trickett's motion, filed July 21, 1999, to have them removed as his counsel
and stating that they “believe[d] that justice would not be served if Howard J. Trickett
proceeds pro se in a lawsuit of this complexity and scope.” Mr. Trickett then filed notices
on August 18, 1999, to inform the circuit court that he was dismissing his counsel and
would be appearing pro se. Attorneys Wigal and McGinley, then moved to withdraw on
August 24, 1999. By order entered November 5, 1999, the circuit court granted the
dismissal/withdrawal of Mr. Wigal and Mr. McGinley from their representation as counsel
for Mr. Trickett. By memoranda dated October 18, 1999, and November 9, 1999, Mr.
Trickett requested Mr. Wigal to provide him with a statement of charges. Mr. Wigal
responded by letter on November 16, 1999, informing Mr. Trickett that the balance of
attorney's fees due and owing from services performed by Mr. Wigal, individually, and by
GBW amounted to $21,376.40. (See footnote 8)
Subsequent to these events, Mr. Trickett hired new counsel, which counsel
were subsequently discharged and are not involved in the instant proceedings. In 2000, Mr.
Trickett again hired new counsel, i.e., Allen, Guthrie, McHugh & Thomas (hereinafter
referred to as “AGMT”). (See footnote 9) During the course of AGMT's representation of Mr. Trickett,
a settlement was reached on May 20, 2002, in the approximate amount of $525,000.
Following the reaching of said settlement, Mr. Trickett contested the existence of a
settlement. During the course of such litigation, on July 17, 2002, GBW, (See footnote 10) and its co-
counsel, attorneys McGinley and Shostak, filed a “Petition for Quantum Meruit Attorney
Fees,” (See footnote 11) requesting the court to apportion the attorney's fees resulting from Mr. Trickett's
settlement of his case between Mr. Trickett's former counsel, GBW, and his then-current
counsel, AGMT. GBW, and its co-counsel, then filed a “Notice of Attorneys' Lien” on
September 18, 2003, (See footnote 12) requesting the circuit court stay the disbursement of the
aforementioned settlement proceeds to Mr. Trickett and his counsel, AGMT, until GBW's
attorney's charging lien has been satisfied. GBW based its claim for attorney's fees upon
its contract with Mr. Trickett or, alternatively, upon recovery of its fees in quantum meruit.
On February 18, 2004, the circuit court entered an “Order Enforcing
Settlement, Releasing Defendants and Dismissing Civil Actions.” By this order, the circuit
court approved the settlement reached by the parties on May 20, 2002, and,
correspondingly, released the defendants and dismissed the two civil actions. The circuit
court directed the defendants to disburse the “Settlement Funds” to counsel for Mr.
Trickett (See footnote 13) and further permitted, “[c]onsistent with the West Virginia Rules of Professional
[C]onduct, the said Allen, Guthrie & McHugh may disburse to itself from the Settlement
Proceeds, its fees and costs.” However, the court did not address or rule upon GBW's
petition for quantum meruit attorney's fees or its notice of attorney's charging lien in this
order.
On February 25, 2004, GBW moved the circuit court to reconsider and amend
its February 18, 2004, order insofar as said order did not address or rule upon its claims for
attorney's fees that it had asserted based upon its contract with Mr. Trickett or,
alternatively, in quantum meruit. AGMT responded on April 7, 2004, stating that it never
had a fee sharing arrangement with GBW and did not believe that GBW was entitled to
recover any attorney's fees from Mr. Trickett's settlement proceeds.
By order entered June 12, 2007, the circuit court denied GBW's motion for
reconsideration and to amend its order of February 18, 2004, and further denied GBW's
motion for attorney's fees based upon its contract with Mr. Trickett or in quantum meruit. (See footnote 14)
In rendering its ruling, the circuit court explained that
[a] valid contract existed between the plaintiffs and
GBW, setting forth the remedies available to the parties in the
event of a dispute. Specifically, the contract called for any
payment of attorney's fees following the dissolution of the
attorney-client relationship to be paid by the client, and as such,
there is no basis for a recovery or sharing of such fees from
funds received by plaintiffs' subsequent counsel.
From this adverse ruling, GBW appeals to this Court.
[i]n reviewing challenges to the findings and conclusions of the circuit court, we apply a two-prong deferential standard of review. We review the final order and the ultimate disposition under an abuse of discretion standard, and we review the circuit court's underlying factual findings under a clearly erroneous standard. Questions of law are subject to de novo review.
Syl. pt. 2, Walker v. West Virginia Ethics Comm'n, 201 W. Va. 108, 492 S.E.2d 167 (1997).
With specific respect to the questions of law presented by the instant appeal,
we previously have held that “[w]here the issue on an appeal from the circuit court is
clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review.” Syl. pt. 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d
415 (1995). Accord Syl. pt. 1, Appalachian Power Co. v. State Tax Dep't of West Virginia,
195 W. Va. 573, 466 S.E.2d 424 (1995) (“Interpreting a statute or an administrative rule or
regulation presents a purely legal question subject to de novo review.”).
Mindful of these standards, we proceed to consider the assignments of error
herein raised.
An attorney has a lien, on a judgment obtained by him
for his client, for his services in the case, the amount whereof
is fixed by special contract, although payment thereof cannot
be had under the terms of the contract until the money is
actually recovered, and no money can be had under an
execution on the judgment.
Syl. pt. 1, Fisher v. Mylius, 62 W. Va. 19, 57 S.E. 276 (1907). Accord Syl. pt. 4, in part,
Shaffer v. Charleston Area Med. Ctr., Inc., 199 W. Va. 428, 485 S.E.2d 12 (1997) (“A
charging lien is the equitable right of an attorney to have fees and costs due the attorney for
services in a particular action secured by the judgment or recovery in such action.”); Syl.
pt. 2, in part, State ex rel. Showen v. O'Brien, 89 W. Va. 634, 109 S.E. 830 (1921) (“An
attorney, who prosecutes or assists in the prosecution of a . . . proceeding to final judgment
in favor of [his/her client], upon an agreement with [his/her client] or [his/her client's] next
friend for an interest in the amount of the recovery, has a lien on the judgment for fees for
services rendered by [the attorney] in [his/her client's] behalf.”). See also W. Va. R. Prof'l
Conduct 1.8(j)(1) (“A lawyer shall not acquire a proprietary interest in the cause of action
or subject matter of litigation the lawyer is conducting for a client, except that the lawyer
may: (1) acquire a lien granted by law to secure the lawyer's fee or expenses[.]”); Showen,
89 W. Va. at 636-37, 109 S.E. at 831 (“In this jurisdiction there is and can be no question
as to the equitable right of an attorney to claim and have his fees secured to him out of a
judgment or recovery he has been instrumental in securing for his client in a particular suit,
he, to that extent, being regarded as an equitable assignee of the judgment or decree. . . .
If the client does not obstruct the prosecution of the action or suit, and a judgment or decree
in his favor results, the attorney, generally, may readily protect the lien for his services.”
(citations omitted)).
The rationale for permitting an attorney to bring an attorney's charging lien
is simple: “Parties to a suit accepting the services of an attorney, with knowledge thereof,
as the services are performed from time to time, and in the absence of any agreement for
gratuitous service and circumstances from which gratuitous service would be implied in
law, are liable therefor.” Syl. pt. 1, Cecil v. Clark, 69 W. Va. 641, 72 S.E. 737 (1911). See
also Syl. pt. 2, in part, Security Nat'l Bank & Trust Co. v. Willim, 155 W. Va. 1, 180 S.E.2d
46 (1971) (“The general rule is that the creation of a relationship of attorney and client by
contract, expressed or implied, is essential to the right of an attorney to recover
compensation from one for whose benefit the attorney claims to have rendered legal
services.”). As such, “[a]n attorney's charging lien for his fee is confined to the judgment
or fund recovered by him as attorney[.]” Syl. pt. 2, in part, Hazeltine v. Keenan, 54 W. Va.
600, 46 S.E. 609 (1904). Correspondingly, “[a]n attorney has no lien upon a fund which
he is not instrumental in creating, and which never came to his hands.” Syl. pt. 4, Schmertz
& Co. v. Hammond, 51 W. Va. 408, 41 S.E. 184 (1902).
From these authorities, it is clear that GBW had the right to file an attorney's
charging lien against Mr. Trickett's settlement proceeds to recover its unpaid attorney's fees
that were incurred before Mr. Trickett discharged Mr. Wigal as his counsel. Given the
lengthy and convoluted procedural history of the underlying lawsuits, it is apparent that Mr.
Wigal's representation of Mr. Trickett contributed in some measure to the ultimate
settlement of those actions, which settlement the circuit court ultimately accepted in its
February 18, 2004, enforcement and dismissal order. The question remains, however, as
to whether GBW was permitted to bring said charging lien in the underlying litigation, as
it attempted to do, or whether GBW was required to file its lien in a separate proceeding,
as found by the circuit court.
In Syllabus point 4 of Shaffer v. Charleston Area Medical Center, Inc., 199
W. Va. 428, 485 S.E.2d 12 (1997), we answered this very question by explaining in what
type of litigation an attorney's charging lien may be filed:
A charging lien is the equitable right of an attorney to
have fees and costs due the attorney for services in a particular
action secured by the judgment or recovery in such action. A
charging lien by an attorney against another attorney, involving
a case in which each worked, may be premised upon an oral or
written fee sharing agreement between the attorneys. A
charging lien brought against another attorney may proceed in
a separate suit or the underlying action in which the attorneys
had formerly worked on together.
Our holding explains that, when two attorneys have a fee sharing agreement, the attorney
bringing a charging lien may do so either in the underlying litigation in which the shared
fee was earned or in a separate proceeding. Such compensation agreements are not unique
to attorneys sharing fees, however. Attorneys routinely enter into contracts with their
clients to fix the attorney's compensation for such representation: “[a]n attorney may
contract with his client for the rendition of professional services, and in such contract may
fix the amount of the compensation to be paid for such services.” Syl. pt. 2, Hubbard v.
George, 81 W. Va. 538, 94 S.E. 974 (1918). Thus, the same reasoning we applied in Shaffer to determine that a charging lien could be properly brought in either the underlying
litigation or in a separate action applies with equal force to cases such as the instant
proceeding in which recovery of legal fees is sought not from another attorney but from the
client, him/herself. Accordingly, we hold that an attorney may bring a charging lien against
his/her client or former client premised upon an oral or written contract between the
attorney and his/her client or former client which provides for the attorney's compensation.
A charging lien brought against an attorney's client or former client may proceed in a
separate suit or in the underlying action in which the judgment sought to be attached was
obtained. Because GBW brought its charging lien against Mr. Trickett in the underlying
litigation in which the judgment sought to be attached had been obtained, the circuit court's
order rejecting GBW's claim and requiring it to recoup its expenses in a separate action was
erroneous. Therefore, we reverse the circuit court's order.
Although we have concluded that GBW was permitted to bring its attorney's
charging lien in the underlying litigation, we still must determine whether GBW is entitled
to relief and in what amount. Another court that has addressed the propriety of asserting
a charging lien in a particular case considered four factors to be determinative:
“[T]here are four requirements for the imposition of an attorney
charging lien.” . . . First, there must be a valid contract
between the attorney and the client, although the contract need
not be express. . . . Second, there must be a judgment, or
“fund,” that resulted from the attorney's services. . . . Third,
the attorney must have given clear and unequivocal notice that
he intends to assert a lien, and notice must be given to the
“appropriate parties.” . . . Finally, the lien must be
timely_notice of the lien must be given “before the proceeds
[from] the judgment have been distributed.”
Computer One, Inc. v. Grisham & Lawless P.A., 144 N.M. 424, ___, 188 P.3d 1175, 1180
(2008) (quoting Sowder v. Sowder, 127 N.M. 114, 117-18, 977 P.2d 1034, 1037-38 (Ct.
App. 1999)) (additional internal citations omitted). See also Shawzin v. Donald J. Sasser,
P.A., 658 So. 2d 1148, 1150 (Fla. Dist. Ct. App. 1995) (“The requirements for imposition
of a charging lien are: (1) In order for a charging lien to be imposed, there must first be a
contract between the attorney and the client. (2) There must also be an understanding,
express or implied, between the parties that the payment is either dependent upon recovery
or that payment will come from the recovery. (3) The remedy is available where there has
been an attempt to avoid the payment of fees or a dispute as to the amount involved. (4)
There are no requirements for perfecting a charging lien beyond timely notice.” (citations
omitted)). We find these considerations to be consistent with our body of statutory and case
law regarding attorney's charging liens, and, thus, similarly hold that there are four
requirements for the imposition of an attorney's charging lien against an attorney's client
or former client. First, there must be a valid oral or written contract between the attorney
and the attorney's client or former client. Second, there must be a judgment or fund that
resulted from the attorney's services. Third, the attorney must have filed notice of his/her
intent to assert a charging lien, and such notice must have been served on the attorney's
client or former client against whose interest in said judgment or fund the lien is sought to
be enforced. Fourth, notice of the lien must be filed before the proceeds of the judgment
or fund have been distributed.
In this case, GBW has satisfied all of the aforementioned criteria requisite to
its assertion of a charging lien. First, Mr. Wigal and Mr. Trickett had a valid “Contract for
Legal Services” defining the scope of Mr. Wigal's representation and detailing how Mr.
Trickett would compensate him for such legal services. Second, there exists a fund, and
corresponding judgment, that resulted, to some degree, from Mr. Wigal's services: the
settlement ultimately reached between the parties in the underlying litigation. Third, GBW
filed its “Notice of Attorneys' Lien” on September 18, 2003; it sought to attach Mr.
Trickett's interest in the settlement proceeds and served said notice of lien upon him on
September 16, 2003. Fourth, GBW filed its “Notice of Attorneys' Lien” approximately five
months before the circuit court's February 18, 2004, order enforcing the parties' settlement,
entering judgment in accordance therewith, and distributing the proceeds thereof. Thus,
GBW has demonstrated its entitlement to an attorney's charging lien in this case.
Because the circuit court did not fully consider the merits of GBW's request
for a charging lien, however, the parties have not been afforded a full and fair opportunity
to present evidence in this regard. Specifically, Mr. Trickett objects to GBW's claim for
relief based upon his belief that he worked more diligently on his case than did Mr. Wigal
or his co-counsel, and he asserts that he has not yet been afforded an opportunity to raise
his objections.
When a former client challenges the right to attorney fees or disputes the amount of fees claimed, a trial court cannot summarily award attorney fees. The trial court must first make a determination that the attorney fees are reasonable and such determination can only be made through the evidentiary process. . . . The former client is entitled to offer evidence of any credits, counterclaims, or defenses as well as to challenge whether or not the attorney helped to create the monetary judgment.
First Bank of Marietta v. Roslovic & Partners, Inc., 138 Ohio App. 3d 533, 545, 741 N.E.2d
917, 926 (2000) (citation omitted). Insofar as the circuit court denied GBW's request for
a charging lien without a full consideration of the merits of its claim, no determination has
been made regarding the extent to which Mr. Wigal's legal services contributed to the
ultimate settlement of the underlying actions or the exact amount of the charging lien
attributable thereto. Therefore, having determined that GBW properly asserted its charging
lien in the underlying litigation and that said lien was properly and timely filed, we find that
it is necessary to remand this case to the circuit court (1) for a full evidentiary hearing to
determine the role that Mr. Wigal and his co-counsel had in obtaining the settlement of the
underlying actions and the precise amount of GBW's charging lien and (2) for the entry of
a judgment in that amount.
In determining the amount of GBW's lien, our prior decision in the sole Syllabus point of Clayton v. Martin, 108 W. Va. 571, 151 S.E. 855 (1930), is instructive:
Where an attorney has been discharged, without fault on
his part, from further services in a suit just begun by him under
a contract for payment contingent upon successful prosecution
of the suit, his measure of damages is not the contingent fee
agreed upon, but the value of his services rendered; and in the
absence of evidence of the reasonable value of such services,
no recovery can be had.
Accord Syl. pt. 2, in part, Polsley & Son v. Anderson, 7 W. Va. 202 (1874) (“That
[attorneys] are not necessarily entitled . . . in addition to the [sum] certain, named in the
contract, to recover the whole amount of the contingent fee therein specified; but for breach
of said contract, by [their client], may recover such damages, by way of compensation for
their time, labor and attention, as these are reasonably worth; as well, also, for any loss or
injury they may have sustained; provided the whole recovery shall not exceed the entire
amount stipulated in the contract.”). In the case sub judice, the parties' “Contract for Legal
Services,” though essentially a contingent fee contract, is consistent with this Court's
holding in Clayton because it specifically requires Mr. Trickett to pay Mr. Wigal for “his
services rendered,” Syl., in part, 108 W. Va. 571, 151 S.E. 855, upon Mr. Wigal's
termination prior to the completion of the contemplated litigation: “If the Client [Mr.
Trickett] terminates the Attorney [Mr. Wigal], the Client agrees to pay the Attorney his
accrued fees to date, as well as costs and expenses which have been incurred up to the
time.” Therefore, the circuit court, on remand, should consider Mr. Wigal's fees, costs, and
expenses incurred in his representation of Mr. Trickett in determining the amount of
GBW's charging lien.
Finally, we reiterate that an attorney's charging lien is not an attachment of
the client's individual assets but rather “[a]n attorney's charging lien for his fee is confined
to the judgment or fund recovered by him as attorney[.]” Syl. pt. 2, in part, Hazeltine v.
Keenan, 54 W. Va. 600, 46 S.E. 609. As such, courts should be vigilant in safeguarding
such proceeds when an attorney requests a charging lien to attach such proceeds. Thus, we
find the prudent course for courts to follow in such instances to be, and accordingly hold,
that when an attorney has properly and timely filed a charging lien in a particular case, the
circuit court must address the charging lien in the final order distributing the judgment or
fund to which the lien will attach. Inclusion of the charging lien in said final order will
safeguard the attorney's claim by providing notice to other potential creditors of the
attorney's interest in such proceeds.
Although an attorney's charging lien typically is an attachment of the client's
“judgment or fund recovered by” the attorney asserting the lien, Syl. pt. 2, in part, Hazeltine, 54 W. Va. 600, 46 S.E. 609, where, as here, the judgment proceeds sought to be
attached have been disbursed before the court has resolved the attorney's claim for a
charging lien, the lien “follows the proceeds, wherever they may be found.” Tunick v.
Shaw, 842 N.Y.S.2d 395, 397, 45 A.D.3d 145, 148 (2007) (citation omitted). Permitting
the attorney's charging lien to follow the proceeds of the judgment or fund sought to be
attached is premised upon
the general rule . . . that a lien upon property attaches to whatever the property is converted into and is not destroyed by changing the nature of the subject . . . [.] It follows its subject and cannot be shaken off by a change of form or substance. It clings to any property or money into which the subject can be traced . . . [.]
Tunick, 842 N.Y.S.2d at 397, 45 A.D.3d at 148-49 (internal quotations and citation
omitted). In the case sub judice, the circuit court disbursed the settlement proceeds to Mr.
Trickett before it resolved GBW's claim for an attorney's charging lien. Thus, GBW may,
upon entry of judgment by the circuit court on remand, enforce its charging lien against
whatever property said proceeds may now have become. The facts of the case sub judice make it apparent, then, just how imperative it is that courts presented with charging liens
address and resolve those matters in conjunction with the entry of the final order disbursing
the judgment or fund sought to be attached in order to safeguard the property and resources
of the clients who are parties to such proceedings.