Attorney charging liens are based on principles of equity, and, as a result, the nature of such a lien and the procedure for enforcing it differ from most other liens. See Minn. Stat. § 481.13.
Pursuant to Minn. Stat. § 481.13 subd. 1(a), with regard to liens for attorney’s fees, the statute provides, in relevant part:
An attorney has a lien for compensation whether the agreement for compensation is express or implied (1) upon the cause of action from the time of the service of the summons in the action, or the commencement of the proceeding, and (2) upon the interest of the attorney’s client in any money or property involved or affected by any action or proceeding in which the attorney may have been employed, from the commencement of the action or proceeding…
While the amount of an attorney’s lien may be summarily determined by the court, Minn. Stat. § 481.13 subd. 1(c), the Minnesota Court of Appeals has held that, “before an attorney’s lien can be granted and enforced, the reasonable amount of the attorney’s services must be fairly litigated.” Gaughan v. Gaughan, 450 N.W. 2d 338, 343 (Minn. Ct. App. 1990) (holding that a former client may litigate the fee in an action to establish an attorney’s lien by cross-examining attorney’s regarding the work billed)(emphasis added); see also Roehrdanz v. Schlink, 368 N.W.2d 409 (Minn. Ct. App. 1985). In fact, the amount of an attorney’s lien cannot be determined until it has been fairly litigated. See Boline v. Doty, 345 N.W.2d 285 (Minn. Ct. App. 1984). This has been a long standing and established rule in Minnesota case law. See Krippner v. Matz, 205 Minn. 497, 287 N.W. 19 (1939).
Application of the attorney-lien statute is a question of law. See Boline v. Doty, 345 N.W.2d 285, 288-90 (Minn. Ct. App. 1984). However, the reasonable value of attorney fees is a question of fact to be determined by the Court. See Ashford v. Interstate Trucking Corp., 524 N.W.2d 500, 502 (Minn. Ct. App. 1994); see also Thomas A. Foster & Associates, LTD v. Paulson, 699 N.W.2d 1 (Minn. Ct. App. 2005).
The central case deciding the reasonable value of attorney’s fees is Thomas A. Foster & Associates v. Paulson. Id. In Paulson, appellant challenged respondent’s motion to establish an attorney’s lien on the grounds that Respondent had committed legal malpractice and breached his fiduciary duties to appellant. Id. The Minnesota Court of Appeals found that, “litigating the number of hours worked, the reasonableness of an hourly fee, or the existence of a contract…is not unduly burdensome in a summary proceeding…”. Id. at 7. However, the summary nature of lien proceedings made the litigation of “complex questions of profession negligence” inappropriate in an action to establish an attorney’s lien. 699 N.W. 2d at 8. Central to the Court’s decision were concerns that the legislative intent providing for a summary proceeding would be thwarted by, “impermissibly transform[ing] a summary-lien proceeding into a lengthy malpractice trial.” Id.
Yet, even accepting that summary proceedings are not the appropriate forum for litigating malpractice claims, the Court of Appeals asserted the notion that, “alleged misconduct may be relevant to calculating attorney’s fees.” Id. at 7 (citing Rice v. Perl, 320 N.W. 2d 407 (Minn. 1982) (for the longstanding doctrine that an attorney may forfeit attorney’s fees for a breach of fiduciary duty). Thus, circumstances may arise when—regardless of a separate malpractice claim—a court may take attorney misconduct into account when determining whether or not to establish an attorney’s lien, or the amount of that lien. Id; see also In re Lee’s Estate, 214 Minn. 448, 460, 9 N.W.2d 245, 251 (1943) (“It is equally well settled that an attorney at law who is unfaithful in the performance of his duties forfeits his right to compensation. An attorney is an officer of the court, sworn to aid in the administration of justice and to act with strict fidelity to both his clients and the courts. Unquestioned fidelity to their real interests is the duty of every attorney to his clients. When a breach of faith occurs, the attorney’s right to compensation is gone”).
Minnesota courts have not directly addressed the issue of determining the value of an attorney’s lien in the presence of misconduct. In typical cases, disputes as to the value attorney’s fees may be resolved, “based on the terms of the fee provisions of the retainer agreement.” 699 N.W. 2d at 6. However, insofar as misconduct is relevant to the calculation of attorney’s fees, it can be inferred that instances of attorney misconduct are not ordinary circumstances. Were the converse true—and cases of misconduct continued to be governed solely by the provisions of the retainer agreement—it would be difficult to understand how a court might take attorney misconduct into account in establishing an attorney’s lien. As such, the value of a lien in these cases cannot likely be determined solely by reference to the retainer agreement. Looking outside typical cases to those without a retainer agreement, “the amount of the lien is to be determined by the reasonable value of the services rendered.” Id.
The only other guidance Minnesota Courts have offered in determining the “reasonable value” of an attorney’s lien have been in the context of dividing contingency fees between multiple firms. See Ashford v. Interstate Trucking Corp. of America, Inc., 524 N.W. 2d 500 (Minn. Ct. App. 1994). While many of the criteria used in dividing contingent fees are not applicable to the current case (e.g. the proportion of funds invested by each firm, the length of time each firm spent on the case), one of the six criteria is particularly on point: “the quality of representation.” Id. at 503. Read together the case law suggests that in the presence of attorney misconduct, a court may look to the “reasonable value of the services rendered.” 699 N.W. 2d at 6. Moreover, to the extent Ashford clarifies the meaning of “reasonable value,” the “quality of representation,” is at least one relevant factor.
In determining the presence of attorney misconduct the Minnesota Rules of Professional Conduct are particularly salient. The Minnesota Rules of Professional Conduct require an attorney to, “provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for representation.” 52 Minn. Stat., Rules of Prof. Conduct, Rule 1.1. Additionally, an attorney must, “act with reasonable diligence and promptness in representing a client.” 52 Minn. Stat., Rules of Prof. Conduct, Rule 1.3.
In the context of family law cases, the Minnesota Supreme Court stated, in dicta, that misconduct in “important family law matters” such as domestic abuse and child custody may constitute a failure to meet the obligations of competence. See In re Reinstatement of Mose, 754 N.W. 2d 357, 363 (Minn. 2008) (denying attorney’s petition for reinstatement on the grounds that he had fail to meet the reinstatement conditions or demonstrate sufficient moral change necessary to reinstatement).
In summary, the law in Minnesota regarding attorney’s liens provides that the Court must determine the quality and reasonable value of the services charged and can only establish such a lien accordingly.