Robert Ford v. Woodward Tap Inc
332473
| Mich. Ct. App. | Dec 7, 2017Background
- Marko (appellee) worked as an employee of Rasor Law Firm (appellant) and litigated Ford’s underlying personal-injury case while employed there.
- Marko claims a fee-splitting agreement with Rasor giving him 25% on firm clients and 40% on personal clients; he alleges Rasor stopped remitting fees beginning Oct. 1, 2015, and he left the firm.
- After Rasor’s other attorney finished the case and obtained a settlement, Marko asserted a charging lien on the settlement and sought an equitable lien for 40% of Rasor’s net attorney fees.
- Rasor moved to terminate the lien; the trial court denied the motion and awarded Marko an equitable lien on 40% of Rasor’s net attorney fees from the settlement.
- The Court of Appeals reversed, holding Marko had an adequate remedy at law (breach of contract) and therefore was not entitled to an equitable lien, and it further concluded Marko could not claim a charging lien because he lacked a contract-based attorney-client relationship with the plaintiff.
Issues
| Issue | Ford/Marko's Argument | Rasor's Argument | Held |
|---|---|---|---|
| Whether an equitable lien may be imposed on settlement proceeds | Marko: Party agreement and identified fund (settlement) justify an equitable lien to secure his fee share | Rasor: Equitable lien improper because Marko has a contractual remedy against the firm | Reversed: equitable lien improper because Marko has an adequate remedy at law (breach of contract) |
| Whether Marko has an adequate remedy at law | Marko: Contract suit would be costly and Rasor’s financial difficulties make legal remedy inadequate | Rasor: Breach of contract action would afford complete relief | Held: Marko’s remedies at law are adequate; inconvenience or solvency concerns insufficient without insolvency evidence |
| Whether Warren Tool compels an equitable lien here | Marko: Warren Tool supports equitable lien where promised funds secured work | Rasor: Warren Tool is factually different (intentional diversion) | Held: Warren Tool distinguishable; that case involved deliberate extinguishment of a dedicated fund, unlike here |
| Whether Marko is entitled to a charging (attorney) lien on the settlement | Marko: Performed substantial attorney work on the case and seeks lien on recovery | Rasor: Only firm had contractual attorney-client relationship with plaintiff; Marko had no contract with client | Held: No charging lien — charging liens arise from lawyer-client contract and only Rasor had that contract with the plaintiff |
Key Cases Cited
- Warren Tool Co. v. Stephenson, 11 Mich. App. 274 (Mich. Ct. App. 1968) (equitable lien where defendant intentionally diverted funds expressly dedicated as security for plaintiffs’ work)
- Ypsilanti Charter Twp. v. Kircher, 281 Mich. App. 251 (Mich. Ct. App. 2008) (standard of review: whether a lien is authorized is a question of law)
- In re Estate of Moukalled, 269 Mich. App. 708 (Mich. Ct. App. 2006) (equitable lien unavailable if adequate remedy at law exists)
- George v. Sandor M. Gelman, P.C., 201 Mich. App. 474 (Mich. Ct. App. 1993) (distinguishes charging lien from equitable lien; charging lien arises from lawyer-client relationship)
- Plunkett & Cooney, P.C. v. Capitol Bancorp Ltd., 212 Mich. App. 325 (Mich. Ct. App. 1995) (attorney must have contract-based attorney-client relationship to claim entitlement to fees)
- Berke v. Murphy, 280 Mich. 633 (Mich. 1937) (breach of contract recovery for agreed fee-sharing between attorneys)