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Lawyering 101: Always put a fee agreement in writing. That’s the lesson taught Thursday by the California Supreme Court in a ruling against a Los Angeles lawyer whose client orally agreed to a lien against future judgments or settlements in order to secure payment of hourly legal fees and costs. The court unanimously held that such a transaction violated State Bar Rule of Professional Conduct 3-300, which requires a client’s informed, written consent for any action that could be adverse. “A charging lien grants the attorney considerable authority to detain all or part of the client’s recovery whenever a dispute arises over the lien’s existence or its scope,” Justice Marvin Baxter wrote. “That would unquestionably be detrimental to the client.” According to the ruling, Master Washer & Stamping Co. hired solo practitioner Freddie Fletcher in the mid-1990s to defend the company against a breach-of-lease action, and to cross complain with a conversion action for damages. In lieu of a cash retainer, the company agreed to grant Fletcher a lien on any future recovery. Master Washer and its president, William Scallon, later discharged Fletcher and retained Joseph Fischbach, a partner in Beverly Hills’ Fischbach & Fischbach. Eventually, the cross complaints were resolved with all but about $8,000 of the proceeds disbursed to the feuding parties, allegedly without Fletcher’s knowledge. Fletcher sued, claiming that Master Washer and Fischbach were on notice of the lien when they disbursed the more than $600,000 in proceeds. Los Angeles County Superior Court Judge Richard Fruin Jr. ruled against Fletcher, saying he had violated Rule 3-300. But the Second District Court of Appeal reversed, saying that Fletcher’s lien agreement did not have to be in writing. In overruling the appeal court Thursday, Justice Baxter said it was “reasonably foreseeable” that Fletcher’s lien could become detrimental to Master Washer, thereby violating Rule 3-300. “Although a charging lien does not grant an attorney the power to summarily extinguish the client’s interest in any recovery,” he wrote, “a charging lien could significantly impair the client’s interest by delaying payment of the recovery or settlement proceeds until any disputes over the lien can be resolved.” Baxter said the court’s ruling doesn’t bar attorneys from obtaining liens on future recoveries, but merely requires lawyers “to explain the transaction fully, to offer fair and reasonable terms, to provide a copy of the agreement, to give the client an opportunity to seek independent legal advice, and to secure the client’s written consent. “This is not a great deal more than is now required for most fee agreements,” Baxter continued. “Attorneys are required, with limited exceptions, to put most fee agreements in writing and explain fully the terms of the agreement.” Fletcher and Fischbach argued the case themselves.

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