OPINION
{1} A lеgal malpractice claim against a chent’s former attorneys was barred when the court ruled that, as a compulsory counterclaim, the allegations of legal malpractice had to be filed in response to an attorney charging lien previously filed by those same attorneys. Relying upon Bennett v. Kisluk,
BACKGROUND
{2} Computer One was awarded a contract to supply computer equipment and training to Sandia Corporation (Sandia). After Computer One entered into the contract, Sandia began to request less equipment and training than it had indicated in the request for bid proposals. Eventually, Computer One filed a lawsuit against Sandia alleging breach of contract and misrepresentation.
{3} Computer One was represented by Grisham & Lawless, P.A. (the Firm), who are the defendants in this appeal. 1 In that litigation, the Firm entered into a settlement agreement with Sandia on Computer One’s behalf. Computer One refused to ratify the settlement agreement and maintained that it had not authorized the Firm to enter into the settlement agreement. The Firm then withdrew from representing Computer One, and on February 21, 2001, filed a notice of an attorney charging lien against the settlement proceeds in the amount of its attorney fees owed and unpaid.
{4} Sandia filed a motion in district court to enforce the settlement. The court held an evidentiary hearing on Sandia’s motion on June 5, 2001, to determine whether the Firm had the authority to enter into the settlement agreement. In July 2001, the district court found that Computer One had given the Firm sufficient authority, and the court оrdered the settlement agreement enforced.
{5} During the July 2001 proceedings, the district court held an ancillary hearing to attempt to resolve a dispute regarding the form of the order for disbursement of the settlement funds. During that hearing, Computer One indicated that it believed that the Firm’s charging lien might not be enforceable. The court suggested that Computer One file objections to the charging lien and that Computer One file a motion asking the court to determine the reasonableness of the fees.
{6} After the Firm amended its charging hen to add accrued interest, Computer One filed its objections to the сharging lien and argued that the fees were “unreasonable and excessive.” In its objections, Computer One renewed its argument that the Firm had acted without authority in entering the settlement agreement. Computer One also argued that the Firm’s fees were unreasonable and inflated. Finally, Computer One contended that the charging hen was void because the contingency fee agreement upon which the charging hen was based did not comply with the procedural requirements of Rule 16-105(C) NMRA, which controls contingency fee agreements. Computer One asked the court to disallow the charging hen оr reduce the amount of fees payable to the Firm from the settlement proceeds.
{7} In response, the Firm argued that Computer One’s objections “[were] nothing more than an attempt to relitigate matters that have already been litigated;” namely, the Firm’s authority to negotiate the settlement with Sandia. The district court held a hearing on February 11, 2002, in which it entertained argument from ah counsel. The court rejected Computer One’s objections as untimely filed. 2 Shortly thereafter, the court ordered disbursement of the settlement funds including payment of the Firm’s charging hen.
{8} A year and a half later, in November 2003, Computer One brought a legal malpractice claim against the Firm, arguing that the Firm had been negligent in the manner in which it had evaluated Computer One’s claims against Sandia and their potential settlement value. Responding, the Firm moved for summary judgment and characterized the malpractice claim as a compulsory counterclaim that Computer One had failed to assert against its charging lien and was, therefore, precluded from raising it in a separate lawsuit. The district court denied summary judgment on August 30, 2004.
{9} In November 2004, the Firm again moved for summary -judgment. The Firm pointed out to the court that Computer One hаd filed formal objections to their charging lien and those objections were “in large part the same objections which are the subject of [the] legal malpractice suit.” In other words, the substance of the malpractice claims had already been litigated and lost by Computer One. Computer One disagreed, arguing that its objections to the charging lien only challenged the Firm’s authority to enter into the settlement agreement with Sandia, while the malpractice claim challenged the quality of the legal representation actually provided. Persuaded that the legal malpraсtice claim had to be brought as a compulsory counterclaim to the charging lien, the district court granted the second motion for summary judgment in the Firm’s favor, thereby barring Computer One from proceeding with its legal malpractice suit.
{10} Computer One appealed to the Court of Appeals which affirmed the district court. Computer One, Inc. v. Grisham & Lawless, P.A.,
STANDARD OF REVIEW
{11} Because there are no disputed issues of fact in this case, we review the district court’s grant of summary judgment de novo. Salazar v. Torres,
DISCUSSION
{12} We begin our discussion with a brief overview of the history of attorney charging liens, because “[t]he resolution of the issue presented here becomes clear when the historical basis for the ‘charging lien’ is considered.” N. Pueblos Enters. v. Montgomery,
the right of an attorney or solicitor to recover his fees and money expended on behalf of his client from a fund recovered by his efforts, and also the right to have the court interfere to prevent payment by the judgment debtor to the creditor in fraud of his right to the same, and also to prevent or set aside assignments or settlements made in fraud of his right. It does not usually attach until the recovery of judgment, and then does not prevent an honest settlement, nor a payment to his client until the attorney has notified the debtor of his intention to claim a lien.
Id. at 140,
{13} The charging lien arises from a recognition that when an attorney assists a client in procuring a judgment or a “fund recovered by Ms efforts,” the attorney needs to be paid from that fund for the value of services rendered before the proceeds are disbursed. A court, sitting m equity, has a responsibility to enforce the lien against the judgment to protect lawyers from dishonest clients. See id. at 145,
{14} “In New Mexico, there are four requirements for the imposition of an attorney charging lien.” Sowder v. Sowder,
{15} In addition to thesе procedural requirements, a court in its equitable powers “may inquire into the reasonableness of the asserted ... lien.” N. Pueblos Enters.,
{16} From this overview we distill certain principles. First, a charging lien is asserted against the judgment or settlement fund arising from a lawsuit, not against the client; it is not an independent lawsuit. Second, the lien acts as a proxy for payment from the client. Third, the lien is designed to protect the value of the attorney’s services from dishonest clients, not to assert all claims the attorney may have against the client. Finally, attorneys are on notice that they must assert a charging lien in the underlying lawsuit. They cannot wait until later, unlike а subsequent suit for breach of contract.
{17} We now examine whether the charging hen asserted in this instance, including matters adjudicated in the hearing surrounding Computer One’s objections to the charging hen, operate as a bar to Computer One’s subsequent legal malpractice claim. Our discussion focuses first on whether Computer One’s claim for legal malpractice was a compulsory counterclaim that Computer One was required to bring when it filed its objections to the charging hen. If the malpractice claim was not a compulsory counterclaim, we then discuss whether the malpractice lawsuit is nevertheless barred by the doctrine of res judicata.
Compulsory Counterclaim
{18} Our Rules of Civil Procedure define a compulsory counterclaim as
any claim which at the time of serving the pleading the pleader has against any opposmg party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.
Rule 1-013(A). For a claim to be compulsory, there must be parties which are “opposing.” Bennett,
{19} This Court has previously rejected the preclusive effect of the compulsory counterclaim rule with respect to an attorney’s motion for fees, but we have not yet addressed the compulsory counterclaim rule in the context of a charging lien. Bennett,
{20} In a 3-2 decision, the mаjority of this Court held that it was “hesitant to accord res judicata effect to all issues and claims that might have been raised in response to a motion for fees,” as opposed to an independent complaint for collection of fees. Id. While conceding that the motion for fees and the claim for legal malpractice were sufficiently related to arise out of the same transaction or occurrence, more was required to impose upon the client the preclusive effect of Rule 1-013(A). Id. The attorney and his former client were not “opposing parties” at the time of serving the “initial pleading,” i.e., the motion for fees filed in the underlying lawsuit. Id.; see also Rule 1-013(A) (defining a compulsory counterclaim as “any claim which at the time of serving the pleading the pleader has against any opposing party” (emphasis added)). That motion for fees did not establish the kind of “adversarial relationship” between client and attorney that would trigger Rule 1-013(A) and “its attendant res judicata effect.” See Bennett,
{21} The positions taken by the majority and the dissent in Bennett reflect the positions taken in the present litigation by Computer One and the Firm.
{22} Our Court of Appeals attempted to distinguish Bennett by interpreting that opinion narrowly, almost limiting it to its facts. Computer One, Inc.,
{23} While we agree with the Court of Appeals to a limited extent, we are not persuaded to disregard our holding in Bennett. We agree that a court should consider the nature of the claim and the relationship that results from that claim. However, that analysis cannot be used to undercut what is clear from the pleadings. If the relationship between the parties is adversarial in nature and creates “opposing parties” within the meaning of Rule 1-013(A), then a party’s failure to raise compulsory counterclaims will be fatal to its subsequent lawsuit. Both are required. Without an adversarial relationship, a party would not be on notice and “would not necessarily know that he or she would have to assert all defenses or claims against a party who has filed a motion.” Moffat v. Branch,
{24} However, pleading formalities are also important, and even of predominant significance. The preclusive effect of Rule 1-013(A) is premised on the formality of an “opposing party,” because that very status fairly alerts litigants that all claims and counterclaims “aris[ing] out of the transaction or occurrence” must be brought at one time under penalty of waiver. See Rule 1-013(A). Conversely, ancillary participants in a lawsuit may find themselves at odds with each other, but not necessarily be “opposing parties.”
{25} The notion of fair notice implicit in Rule 1-013(A) follows one’s status as an opposing рarty. Nothing in that rule speaks about “degrees of hostility” or a “sufficiently adversarial” relationship, or other terms susceptible to a variety of interpretations, as a substitute for being an “opposing party.” Nothing in Rule 1-013(A) would force a compulsory counterclaim on one who is not first a “party.” Given the grave consequences of Rule 1-013(A), we think that rule is better served by a sense of certainty and predictability implicit in the notion that one must first be a “party” before one can be an “opposing party.” And as this Court made clear in Bennett, an attorney does not transform his former client into either, merely by taking steps to secure attorney fees in the same underlying proceeding.
{26} On the other hand, if the Firm had wanted to file a separate suit for breach of contract against Computer One for its attorney fees, then under Bennett Computer One would have had to press its legal malpractice allegations simultaneously as a compulsory counterclaim. See Brunacini v. Kavanagh,
{27} As discussed earlier, a charging lien is a limited equitable remedy. In this case, the Firm’s charging lien stated that the lien was “against any and all proceeds of any money judgment, settlement fund, or other recоvery against Sandia Corporation.’’ (Emphasis added.) It was not filed as an in personam action against the client. By filing the charging lien, the Firm not only sought the court’s equitable enforcement of the hen, but also put Sandia on notice that there were creditors who should be paid from the settlement. If the Firm had not alerted Sandia to its claim for fees, the Firm risked forfeiting its right to recover under the charging hen. See Thompson,
{28} We are informed by the language of Rule 1-013(A) (“opposing parties”), the policy considerations presented by a majority of this Court in Bennett under very similar circumstances, and the hmited nature of charging hens. It would take a powerful argument indeed for this Court to reverse the result of the debate that occurred in Bennett over fifteen years ago, in which the Court decided in favor of allowing the legal malpractice claim to proceed. We are not persuaded to alter Bennett, and for the reasons already expressed by the majority therein, we hold that the compulsory counterclaim rule does not apply to an attorney’s charging lien. To do otherwise might inadvertently “immunize lawyers from the inevitable consequence of their actions or inactions, [which] would most assuredly undermine the public trust and confidence that the legal profession certainly must desire and should strive to attain at all costs.” Collins ex rel. Collins v. Perrine,
{29} Finally, the Firm’s reliance upon the Court of Appeals’ opinion in Moffat is misplaced. Moffat did not involve counterclaim-ants under Rule 1 — 018(A); there was no discussion of whаt constitutes an “opposing party” under that rule. Moffat,
Claim Preclusion
{30} Independent of any preclusive effects of Rule 1-013(A), the Firm argues that Computer One’s malpractice claim is barred by the doctrine of res judicata. In the district court, the Firm contended that Computer One’s objections to the charging lien wеre “in large part the same objections which are the subject of [the] legal malpractice suit.” Because the objections were actually litigated, the Firm argued that “any further re-litigation of the same in [the malpractice] lawsuit is barred under the doctrine of res judicata and claim preclusion.” The Court of Appeals apparently agreed, stating “[w]hen Computer One filed its objections to the attorney fees, it asserted claims arising out of Defendants’ representation in the Sandia Corporation ease. Claim preclusion required that Computer One bring all its claims arising оut of this transaction at that time.” Computer One, Inc.,
{31} Res judicata is designed to “ ‘relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and ... prevent[ ] inconsistent decisions, [and] encourage reliance on adjudication.’ ” Three Rivers Land Co. v. Maddoux,
{32} Though we agree that Computer One may not relitigate that which was already adjudicated in the charging lien proceeding, that principle is of no help to the Firm based on what actually transpired below. Having reviewed the record, it is quite clear to this Court that Computer One’s objections to the chаrging lien differed markedly from its present malpractice claims. Computer One is not simply rehashing what it brought before the court in answer to the charging lien. Both the Firm and the Court of Appeals are mistaken on this point.
{33} Computer One’s objections to the charging lien were limited to three arguments. First, as previously stated, Computer One objected on the basis that the Firm lacked authority to enter into the agreement. We agree that the issue of authority was already decided by the district court, and Computer One is barred from relitigating that claim. However, Computer One’s remaining objections focused solely on the value of the Firm’s services, not on the manner in which those services were performed. Computer One argued that the fees were too high because the fees were based, in part, on work that the Firm promised to perform, yet never did. Computer One also argued that the fees were inflated because the Firm included work that was not part of the Sandia lawsuit. Finally, Computer One attacked the validity of the charging lien based on the attorney’s fee agreement it had with the Firm.
{34} In contrast, Computer One’s malpractice complaint alleges that the Firm “committed acts and wеre guilty of omissions which fell below the standard of care of attorneys practicing under similar circumstances.” Significantly, in that complaint Computer One does not question the validity of the fees asserted in the charging lien, nor does Computer One seek to recover its fees paid to the Firm. Instead, Computer One requests damages for “the difference between the amounts finally paid in settlement in Sandia and the amount of recovery by settlement or judgment which should have been recovered in such amount as the jury finds reasonable.” In other words, Computer One claims that it would have recovеred more money from Sandia had the Firm done a better job of legal representation and particularly a better job of evaluating the true extent of its damages for purposes of settlement. Computer One made no such claim during its objections to the charging lien.
{35} As discussed previously, Computer One’s objections to the charging lien reflect the limited nature of such a lien. Because only the value of the fees are at issue, a client’s objections to a charging lien may well differ from a client’s claim of legal malpractice. When objecting to a charging lien, a client may challenge the reasonableness of the value assigned to the attorney’s fees, or the basis for that value. Similarly, a client may attack the validity of the fee agreement itself upon which the charging lien was based. In contrast, a client’s claim of legal malpractice challenges the actual performance of the lawyer’s duties, not the hourly rate the lawyer charged for those duties. See Rancho del Villacito Condos., Inc. v. Weisfeld,
{36} Even if we were to assume, without deciding, that Computer One could have raised its malpractice claim in response to the charging lien, a questionable proposition at best, this would not change our result in this particular case. 3 Computer One disclosed during the February 2002 disbursement hearing that it was considering a malpractice claim against the Firm. The Firm responded that “if Computer One chooses to sue us later for malpractice for whatever reason, they would still be able to do it. The present situation has nothing to do with the pending proceedings.” Having been alerted to Computer One’s potential malpractice claim, and affirmatively acknowledging that the charging lien was not related to the malpractice claim, the Firm cannot now change course and claim an opportunity for Computer One to do the very thing it urged Computer One not to do below. 4
{37} Becausе we conclude that Computer One is not precluded from bringing its malpractice claim, we remand to the district court. On remand, however, Computer One is precluded from attempting to relitigate any of the issues actually litigated during the underlying Sandia lawsuit related to the charging lien.
CONCLUSION
{38} We reverse the Court of Appeals and the district court and remand this case for proceedings consistent with this Opinion.
{39} IT IS SO ORDERED.
Notes
. Computer One filed the malpractice lawsuit against the firm of Grisham & Lawless, P.A., as well as against Grisham and Lawless individually. This Opinion refers to Defendants collectively as the Firm.
. Neither party provided this Court with a transcript from the February 11, 2002 hearing. This Court was able to procure a copy of the transcript, although the copy is only a draft, not a formal transcript. This draft transcript has been added to the record proper for this appeal.
. The Court of Appeals concluded that Computer One’s objections to the charging liens and its malpractice claim would form a convenient unit for trial. Computer One, Inc.,
. These representations by the Firm could be said to distinguish this case from Moffat in which no one urged the attorney to bring a separate action for fees. However, we must acknowledge that the implicаtions of our opinion may call into question the Court of Appeals’ holding in Moffat. In Moffat, the Court concluded that an attorney's subsequent breach of contract lawsuit for fees was barred by the federal court's earlier determination that the attorney charging lien was defective as a matter of law.