Legal Ethics Opinion #1544

Termination of Representation - Fees - Files: Retention of
Client's File when Costs Have Not Been Paid, and No Fee Has Been
Earned, in a Contingency Case 

You have presented a hypothetical situation in which a client
engages a law firm on a contingent fee basis in a claim based on
perceived negligence of health care providers.  No fee is paid by
the client, and the client does not advance any funds for
litigation costs advanced by the law firm.  The claim is
investigated, and suit is filed.  Eventually, the lawsuit is
dismissed by the court, and there is no recovery for the client.

You indicate that the client does not reimburse the law firm for
any of the approximately $8,000 of litigation costs advanced. 
The client then engages another lawyer to represent him as to any
claim the client may have against the law firm with respect to
the representation of the client in the lawsuit.  The new lawyer,
on behalf of the client, requests "a copy of their [law firm's]
file, including, without limitation, all pleadings; discovery;
correspondence; memoranda; drafts of documents; notes; computer
discs containing information relating to this matter; telephone
message slips; copies of cases, statutes or other research;
medical records and bills; etc."  The new lawyer also asks to
pick up the file.

You have asked the committee to opine under the facts of the
inquiry, (1) whether the client has any right to either copies of
the file documents or the original file documents without first
reimbursing the law firm for the litigation costs, (2) whether
the law firm has a possessory lien on the file documents as
security for reimbursement of the litigation costs, and (3)
whether, if the client reimburses the law firm for the litigation
costs, the client is entitled to either copies of or possession
of the original file documents or any part of them since the
client has never paid the law firm for its services on the
lawsuit.

The appropriate and controlling Disciplinary Rule related to your
inquiry is DR 2-108(D), which states that upon termination of
representation, a lawyer shall take reasonable steps for the
continued protection of a client's interests, including giving
reasonable notice to the client, allowing time for employment of
other counsel, delivering all papers and property to which the
client is entitled, and refunding any advance payment of fee that
has not been earned. The lawyer may retain papers relating to the
client to the extent permitted by applicable law.  Further
guidance is available through DR 2-105(C) and EC 2-22 which
describe the rationale and operation of contingent fee
agreements.

The committee opines on the questions presented as follows:

     1.   Previously rendered Legal Ethics Opinions do not make a
          distinction between the payment of fees and costs under
          DR 2-108(D).  The committee is of the opinion, however,
          that the real question is whether or not the retention
          of file documents would be prejudicial to the former
          client.  If such retention would be prejudicial, the
          firm may not hold the documents for the reimbursement
          of costs.  Although the facts presented are not
          sufficient to make a comprehensive determination of
          possible prejudice to the client, the committee
          believes that the continued protection of the client
          may require return of the file.  Thus, the client would
          be entitled to either copies or originals of the file
          documents.  The committee is of the further opinion
          that the client's file includes the stance of
          information stored in the lawyer's computer system, if
          any.

     2.   The committee has consistently opined that the client,
          and not the lawyer or law firm, owns the file, except
          to the extent that a lien to protect attorney fees is
          permitted by law.  Even where a lien is appropriate,
          the file must be made available to avoid prejudice to
          the client. See LEOs #1171, #1176, #1366, #1403. 

          Whether or not the firm has a valid possessory lien on
          the file documents raises a legal issue the
          determination of which is beyond the purview of the
          committee.  The committee opines, however, that even if
          the law firm has a possessory lien on the file for
          reimbursement of the litigation costs, the file still
          must be made available for the client's review to avoid
          prejudice to the client.  See LEO #l357.

     3.   The committee believes that the fact that the client
          never paid the law firm for services rendered is
          immaterial to the conclusions reached in issue #1
          above.  The committee is of the view that the very
          nature of a contingent fee agreement dictates that, in
          cases where the client does not prevail, no fee will be
          received by the lawyer or law firm.  

          Thus, the committee opines that the paramount concern
          still remains the avoidance of prejudice to the client
          and, therefore, regardless of whether the client
          reimburses the law firm for litigation costs or pays
          the firm for its services, the client is entitled to
          copies of or possession of the original file documents
          if withholding such documents would prove prejudicial
          to the client.

          The committee also reminds the inquirer that the
          Disciplinary Rules do not ethically prohibit a lawyer
          or law firm from bringing an action against a client
          for attorney's fees or, by implication, for costs
          advanced.  See LEO #995.
            
Committee Opinion
October 20, 1993