ALBANY, N.Y., June 21 (Reuters) - New York state lawmakers
have approved legislation that would allow attorneys to place
liens on out-of-court settlements and arbitration awards.
Section 475 of the state Judiciary Law, known as the Lien
Law, currently permits attorneys to attach liens in "an action,
special or other proceeding in any court or before any state,
municipal or federal department, except a department of labor."
For at least 50 years, state courts have consistently ruled
that settlements and arbitration are not included in that
definition and that litigation must be initiated in court for an
attorney to attach a lien.
The new legislation, which passed the state Assembly this
week and the state Senate in April, would add to that list "any
means of alternative dispute resolution," including settlements,
arbitration and mediation.
The bill also would allow lawyers to place liens against
their clients' adversaries. It must be signed by Governor Andrew
Cuomo to become law.
Supporters of the measure, including the New York State Bar
Association and New York City Bar Association, say the bill
would fix an inequity in the Lien Law, which was written before
arbitration and mediation became commonplace.
"A client recovery that fairly represents the fruits of
productive attorney labor should be a viable object for an
attorney lien -- even absent the commencement of a court
proceeding," the City Bar wrote in an April memo.
The City Bar was prompted to address the Lien Law several
years ago when a member of the association's Professional
Responsibility Committee learned that his firm was barred from
placing a lien on an arbitration award it had won for a client,
according to Jeffrey Udell, the former chair of the committee.
"We discovered that the Lien Law has grown and been amended
many times, but the last amendments (in 1955) were well before
the rise of arbitration and mediation," said Udell, a partner at
Olshan Frome Wolosky.
Charles Moxley, the chair of the state bar association's
Dispute Resolution section, said the issue is more likely to
affect solo practitioners and small firms because large law
firms are less likely to be paid on contingency.
"When (the bar association was) looking at this bill, people
had horror stories" about not being paid, said Moxley, an
attorney with Kaplan Fox & Kilsheimer.
At least four states -- Washington, Utah, Michigan and
Maryland -- already allow attorneys to place liens on
alternative dispute resolution.
The New York proposal easily passed both houses of the
legislature, with only a single 'no' vote in the Senate. The
bill's sponsors, Senate Minority Leader John Sampson and
assemblymen Matthew Titone and Peter Rivera, are all attorneys.
Cuomo's office does not comment on pending legislation.
(Reporting by Dan Wiessner)
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