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Statement of the New York City Bar Association on Amendment to the Lien Law

The New York City Bar Association applauds the Legislature for passing, and the Governor for signing into law, Bill Number A.5275/S.1546, which will afford attorneys the same fee protections in cases resolved through alternative dispute resolution or pre-litigation settlements as are available to attorneys in court-filed cases.  Expanding the Lien Law to include both out-of-court settlements and ADR gives attorneys a commonsense added protection, avoids attorney fee disputes, closes an outdated loophole, encourages ADR as a means to resolve both contingency fee and hourly cases, and aids the overburdened court system.

The bill was proposed by the Association’s Professional Responsibility Committee and supported by its Committees on Arbitration and Alternative Dispute Resolution, and was sponsored by Assembly Member Matthew Titone and Senator John Sampson. It also received support from the New York State Bar Association.

The law addresses a deficiency in Judiciary Law Sections 475 and 475-a, known as the Lien Law, which govern an attorney’s ability to attach a charging lien to a client’s monetary recovery.  Prior to enactment of the new law, the Lien Law only permitted an attorney to attach a charging lien to a client’s recovery in an “action, special or other proceeding in any court or before any state, municipal or federal department, except a department of labor.”  New York courts consistently interpreted the Lien Law to exclude alternative dispute resolution and out-of-court settlements from the definition of “other proceedings.”  Under the new law, an attorney may now attach a lien to the proceeds of any recovery obtained as the result of arbitration, mediation, or any pre-litigation negotiated settlement.

Alternative dispute resolution is a widely practiced and respected method of resolving disputes.  It is cost-effective and efficient and lightens court dockets. When attorneys represent parties in ADR, they no longer have to assume a greater risk of not getting paid for their services.

The law will take effect on January 1, 2013.  It will have no impact on the Rules of Professional Conduct that currently govern an attorney’s ethical obligations in all cases of attorney representation, including regarding fees.

 

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