Difference Between Retaining Lien & Charging Lien - Order Denying Injunction Reversed

In Brickell Place Condo Association, Inc., et al. v. Joseph H. Ganguzza & Associates, P.A. (3D09-1963), the Third District held that the attorneys asserting a retaining lien did not have a right to do so because:

we find that the fee arrangement for collection and foreclosure matters was, in reality, a contingent fee arrangement and a law firm may not assert a retaining lien for fees owed in a contingency fee case until the contingency has occurred, we find that the retaining lien was unlawful.

The court stated:

At the hearing on the Associations’ motion, the Associations argued that for collection and foreclosure matters, the Associations and the law firm operated under a contingency fee arrangement. The Associations, therefore, claimed that the law firm, could only recover the reasonable value for its services, limited by the maximum contract fee, upon the successful occurrence of the contingency. Because the contingency upon which the services were based has not yet occurred (the collection of the delinquent unit owners’ fees), the law firm is not yet entitled to be paid for its services and the retaining lien filed by the law firm cannot be legally or ethically maintained. We agree.

A retaining lien differs from a charging lien. A charging lien is placed on any monetary recovery due the client at the conclusion of the lawsuit...On the other hand, a retaining lien is a passive lien and rests entirely on the right of an attorney to retain possession of his client’s papers, money, securities, and files as security for payment of the fees and costs earned by the law firm to that point.

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Because the contingency has not occurred, the law firm could not assert a retaining lien for fees it contends it is owed on collection matters that were still pending when it was discharged. If the law firm believes it is owed money for services it rendered in the collection of delinquent unit owner fees, it may file a charging lien and is entitled to the reasonable value of its services on the basis of quantum meruit, limited by the contract flat fee the parties agreed to.