Ombudsman's casebook
A monthly column of examples from the files of the Legal Services Ombudsman
Exercising a lien
Principle 12.14 of the Guide to the Professional Conduct of Solicitors, 1999, eighth edition permits a solicitor to retain papers and property belonging to a client, pending payment of professional costs owed by that client.
Care must be taken to ensure that a lien is exercised strictly in accordance with the principle.
In particular, that a bill is first delivered to the client or that a client is given sufficient particulars of the outstanding costs in order to calculate the amount due.
As the following recent cases show, operating liens in practice sometimes causes problems for all concerned, not least the Office for the Supervision of Solicitors (OSS).
A lien but no bill
Mr M leased premises from which he ran a fish and chip shop.
He fell into arrears with the rent and the landlord commenced possession proceedings.
Mr M sought the help of L & Co, a firm of solicitors.
Subsequently, Mr M decided to instruct another firm and asked L & Co for his file to be transferred to the new firm.
Unfortunately, in spite of numerous letters chasing transfer of the file and several visits by Mr M to its offices, L & Co failed to respond.
Mr M complained to the OSS.
L & Co told the OSS that it was exercising a lien on the file in light of Mr M's failure to pay its bill.
The solicitors ignored several requests from the OSS for details of the outstanding monies.
Eventually, L & Co told the OSS that Mr M owed it some 500 for a counsel's brief fee, but that it did not intend to charge Mr M for its own professional fees.
It added that it had already given details of the fee to Mr M.
Mr M protested that this was the first he had heard about a counsel's fee.
However, notwithstanding Mr M's position, the OSS decided that the solicitors were exercising a valid lien on the file.
Mr M complained to the ombudsman about the OSS's handling of his complaint about L & Co.
The ombudsman concluded that the OSS's decision was unreasonable and did not reflect the balance of the evidence.
She found that, while the OSS had asked the solicitors for copies of bills rendered to Mr M, none was provided and it was therefore reasonable to conclude that no bills had been delivered.
There was also credible evidence, presented by Mr M, that the solicitors had not, in fact, notified him of the counsel's fee as they had maintained during the OSS investigation.
The ombudsman said the OSS should reconsider Mr M's complaint to establish whether the solicitor's lien had been exercised properly.
Monies held on account
Mr G instructed a solicitor, Mr H, to act for him in divorce and ancillary proceedings.
Towards the end of the proceedings, Mr G agreed to settle matters with a payment to his wife of 160,000, from the sale of some unit trusts.
The payment was to be made within 56 days of the decree absolute being pronounced.
Mr G's barrister advised that the payment could be made directly to Mrs G's solicitors, but Mr H asked that the money be paid directly to him - which Mr G did.
Shortly afterwards, Mr G decided to part company with his solicitor and he instructed Mr H that payment should be made to his wife's solicitors.
However, Mr H did not do so, preferring instead to return the monies to Mr G.
Mr G was also in for another surprise - his solicitor had deducted his own fees from the monies intended for Mrs G.
In a complaint to the OSS, Mr G said that, as a result of the solicitor's actions, which he regarded as a breach of trust, there was not enough money left to pay his wife and so he had to raise additional funds.
This meant that he was unable to meet the court deadline for payment.
The OSS decided that the solicitor's actions did not amount to inadequate professional service because it was usual practice for solicitors to deduct their fees from monies held on account.
Mr G complained to the ombudsman.
The ombudsman was not satisfied with the OSS decision.
She found that the money held in Mr H's client account had been deposited for a specific purpose - payment to Mrs G in accordance with a court order.
The ombudsman considered that the OSS should have questioned whether, in the circumstances, it was professional misconduct for the solicitor to have exercised a lien in the way he had, given that this might have resulted in Mr G being in breach of the court order.
She was also concerned that the OSS had failed to express a view on whether the solicitor had provided an inadequate professional service by failing to follow Mr G's instruction to pay his wife's solicitors.
The ombudsman recommended that the OSS reconsider the complaint.
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