Ethics FAQs - Liens & Duties to Clients
If a client owes you costs on any one matter you will have a general lien over all files of all matters for that client until all your costs are paid (or in some circumstances, until you receive some form of security for your costs).
Your lien covers all deeds, papers or other personal property which belong to your client, and which you have obtained with your client’s consent while acting as their solicitor. The lien also includes trust monies you hold beneficially for your client, rather than for a particular purpose or for the benefit of a third party. But the lien is only for the amount of your costs and not the whole of the trust funds.
There are also certain documents on your file that belong to you and you have a right to retain them. Your client is not entitled to them.
Further reading
- Lewis & Kyrou, Handy Hints on Legal Practice, 3rd Edition, 2004, pp 109-110.
- G E Dal Pont, ‘The Retaining Lien’, Law of Costs, 2nd Edition, 2009, Chapter 26.
In some circumstances you will have to hand over the documents.
Sections 7 and 23 of the Solicitors Rule 2007 are subject to contrary court order, with Section 7 generally about ownership of client documents on termination of a retainer, and s 23 on instances where another solicitor takes over the matter.
Both sections have similar terms and state your duty to hand over the client’s documents unless you claim a lien on them. Where the client has terminated the retainer and instructed another solicitor, you can keep them until you are paid.
Where you have terminated the retainer, you must either:
- provide them to the client if you receive satisfactory security, or
- provide them to the client’s new solicitor if:
- the new solicitor holds them subject to your lien and also provides reasonable security for payment of your costs; or
- you, the new solicitor and client enter into an agreement to procure payment of your costs on completion of the proceedings.
Further reading
- He who terminates is lost - the limits of the security offered by a solicitor's possessory lien Proctor August 2008
- Stark v Dennett [2007] QSC 171
- Bechara v Atie [2005] NSWCA 268
- NSW Law Society Tri-partite Deed.
No. Your lien extends to all documents and information from the file, and so the client has no right to inspect the file, or to have copies of documents from the file, or to any information from you about the contents of the file, or to any information within your knowledge.
No. The client is not liable to pay you anything, as you will be paid by Legal Aid Queensland. However, if the client owes you a contribution or some private costs for the matter, the position may be different.
In December 2009, the New South Wales Court of Appeal’s decision in Xu v Council of the Law Society of NSW established that you can have a lien on a client’s passport, against the client but not against the Commonwealth government – see judgment of Handley JA at paragraphs 52-57.
A court may order you to deliver the passport if it is required in the granting of bail. You may not be entitled to assert a lien where the client’s right to travel outside of Australia would be restricted - see minority judgment of Basten JA at paragraphs 18-20.
For New Zealand passports you may not have a lien, as unlike the Australian position, New Zealand has a statutory provision which prohibits use of a passport as a security, pledge or deposit – see paragraphs 17 and 51 of the Xu case, s 33 of the Passports Act 1992 (NZ) and Vallant Hooker & Partners v Proceedings Commissioner [2001] 2 NZLR 357 at 363 (HC) (case report available from Supreme Court Library: Send a Research Request).
No, neither before nor after the testator’s death.
The authority for this principle is the High Court of Australia case Hawkins v Clayton [1988] HCA 15 - see paragraph 6 of the judgment of Brennan J.
Instructions from third parties
Yes, but there are steps to be taken and issues to consider.
Section 2.2 of The Solicitors Rule 2007 states that the client’s instructions should be confirmed in writing to the client unless valid reasons exist for this not to occur.
The Guidelines to Section 2.2 of the Rule suggest that where instructions are received from a third party on behalf of the client, written or verbal confirmation of the instructions should be obtained directly from the client.
It is recommended that you meet with a client face to face at the beginning of a matter, unless they are known. Be cautious about accepting instructions from someone who has not been met.
To ensure that there is no undue influence on the client, particularly if the client’s instructions appear to favour the third party, it is advisable to see them on their own. This is the case even (or especially) if the third party is a relative of the client.
A client may provide specific authority to receive instructions from a third party on their behalf. Ensure this authority is in writing, genuine and freely given. Preferably, it should be in a power of attorney. In some circumstances an attorney may also be a client – see ‘Who is the client?’ (following the Commentary to section 2.2 of the Rule).
Be clear who you are acting for. Detailed case law can be found after s 2.2, titled ‘Who is a client?’. To avoid disputes about who is being represented, a written retainer/costs agreement with the client is best practice.
The duty of confidentiality is always to the client, which may prevent any information from being disclosed to the third party. The client may authorise dealings with the third party and this authority may include disclosure of confidential details or documents to the third party. Ensure this authority is in writing.
In some cases it must be clearly stated to the third party that they are not being acted for, advised, and are owed no duties. This includes:
- no duty of confidentiality as against your client
- no duty to act in their best interests or to protect their interests as a third party
To ensure that there is no misunderstanding, especially if the third party is not the client but is paying the fees, a written costs agreement should be established with them. They will be an ‘associated third party payer’ - see Legal Profession Act 2007 sections 301 and 322(1)(d). You might also recommend that they obtain their own legal advice from another solicitor. It is advisable to put all this in writing to them in a letter or in the costs agreement with them if there is one, especially if they appear not to understand the position or to be unwilling to accept it.
For details of a contested court case involving these issues in an intra-family context, see the article ‘The dangers of acting in an intra-family transaction’ from QLSI St Paul’s Insurance Newsletter February 2004 pp 12-13.
The decisions in Tyneside Property Management Pty Ltd & Ors v Hammersmith Management Pty Ltd & Ors (Tyneside Property) [2011] NSWSC 156 and Hall v Donlon (Hall) [2011] NSWSC 1088 are reminders of the principles you need to consider when a former client issues a subpoena to produce the client file over which you assert a lien.
Full details are outlined in the article – The subpoena to produce, the former client and the lien (PDF, 57KB).
Not without the clients’ consent. Many of the papers on the file will belong to the client and you may not destroy their property without their permission. For a further discussion, and suggestions for obtaining consent, read the Proctor article Destroying client files? Not without proper instructions!
