15. Lien over documents

1. Notwithstanding Rule 14, when a solicitor claims to exercise a lien for unpaid legal costs over client documents which are essential to the client's defence or prosecution of current proceedings:
   1. if another solicitor is acting for the client, the first solicitor must deliver up the documents to the second solicitor:
      1. if the second solicitor undertakes to hold the documents subject to the lien and maintains reasonable security for the unpaid costs; or
      2. if the first solicitor agrees to the second solicitor agreeing to pay, or entering into an agreement with the client to procure payment of, the first solicitor's costs upon completion of the relevant proceedings; or
   2. alternatively, the solicitor, upon receiving reasonable security for the unpaid costs, must deliver the documents to the client.

Commentary

15.1 Lien over client’s documents

Where the documents are essential to the former client’s continuing proceedings, a solicitor who is exercising a lien must still deliver the documents if there is reasonable security for the unpaid costs. Delivery is to a second solicitor who is offering that security (Rule 15.1.1), or otherwise to the client (Rule 15.1.2). For Queensland solicitors refer to Lexon’s insurance checklist on the transfer of a client file.

A retaining lien enables a solicitor to ‘withhold possession of the documents or other personal property of his client or former client’ until their costs are paid: Barratt v Gough-Thomas [1951] Ch 242, 250. The lien exists no matter whether the client discharged the solicitor or the solicitor discharged the client (provided that the solicitor's termination was for 'just cause'). If a solicitor terminates the retainer the solicitor's rights to exercise the lien are qualified. The lien is qualified in the sense that the court can require the solicitor to deliver up the client documents to the new solicitor, who holds subject to the former solicitor’s lien. It prevents a client from "in effect getting solicitors’ work done for nothing by the simple expedient of changing his solicitor as often as he chose, leaving a trail of unpaid costs in his wake and demanding the papers without payment when he had no just cause to complain of the conduct of the solicitors instructed and discarded": Hughes v Hughes [1958] 3 All ER 179, 180-181.

The retaining lien may be exercised over:

• a client’s passport: Xu v Council of the Law Society of NSW [2009] NSWCA 430; and
• monies in a trust account: LPA s 258(1)(a); cf s 31(1) LPA (SA) and the Legal Practitioners (Miscellaneous) Amendment Bill 2013 (SA).

However, a solicitor cannot claim a lien over a will: Hawkins v Clayton (1988) 164 CLR 539, 550.

Reasonable security for essential documents. At common law, the court has discretion to order a solicitor to hand over a file to new solicitors, and will do so to 'save the client's litigation from catastrophe', as contemplated by Rule 15. This is subject to the new solicitor's undertaking 'to preserve the original solicitor's lien and to return the papers to the original solicitor, for what they are worth, after the end of the litigation': Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 WLR 614, 624-5.

"Reasonable security" is "the provision, in lieu of payment, of something of monetary value which would ensure the satisfaction of the possessory lien": Bechara t/as Bechara & Co v Atie [2005] NSWCA 268, [64]. Apart from undertakings, tripartite deeds may be regarded as reasonable security, and have been approved for the purpose by the Law Society of New South Wales. However, where the solicitor has terminated the retainer without good cause, the court can require the solicitor to deliver up the file to the new solicitor, but "the court will not … be overly fastidious to ensure the adequacy of the former solicitor's security for his fees": Stark v Dennett (2008) 2 Qd R 72, [49] per Keane JA.