Doroshow, Pasquale, Krawitz & Bhaya v. Nanticoke Memorial Hospital and Maria Acosta, Del. Supr., No. 41, 2011 (Jan. 23, 2012)
Whether Delaware recognizes an attorney’s right to assert a charging lien.
Answer: Yes. (Compare recently recognized “attorney retaining lien” to keep file until paid for fees, infra.)
This summary was prepared by a former associate of Eckert Seamans Cherin & Mellott, LLC.
Background and Legal Analysis
In order to understand the Delaware Supreme Court’s recognition of this lien, a brief background is needed. Maria Acosta was seriously injured in a car accident, and treated at Nanticoke Memorial Hospital. Her hospital bill totaled more than $150,000. Since Acosta could not pay her medical bills, the hospital filed a Notice of Hospital Lien against any recovery or judgment obtained by Acosta arising from the car accident.
Acosta retained the law firm of Doroshow Pasquale to represent her on a contingency basis in a personal injury suit against the person who caused the accident. Doroshow Pasquale settled Acosta’s suit with the personal injury defendant’s insurance company for $19,671.49. Pursuant to the contingent fee agreement, Doroshow deducted 40% of the award and put the remaining money in escrow. Acosta never gave Doroshow permission to release the escrowed funds, so Doroshow filed an interpleader suit against Acosta and Nanticoke Memorial seeking permission to release the funds.
Nanticoke answered the complaint claiming that it was owed the entire $19,671.49, and that Doroshow was not entitled to assert an attorney’s charging lien. The Superior Court ruled in favor of Nanticoke, and Doroshow appealed.
The Delaware Supreme Court undertook a full study of the common law history of the attorney charging lien, which is defined as “the right of an attorney at law to recover compensation for his services from a fund recovered by his aid, and also the right to be protected by the court to the end that such recovery might be effected.” The Court noted that while charging liens are equitable in nature, they are based on general principles of justice, and should be asserted as a common law right.
Other Issues Addressed
The Court also addressed its prior decision in DiLoreto v. Tiber Holding Corp., 804 A.2d 1055 (Del. 2001), declining to adopt a “first in time, first in line” rule for determining the precedence of charging liens. Here, the Court held that “[t]he attorney’s charging lien rests on a higher level than all other liens and is not subject to a first in time, first in line rule.”
Additionally, the Court implored the Delaware General Assembly to consider the public policy issues surrounding the precedence of charging liens by competing professionals—namely attorneys and doctors. In this case, the Court held that Doroshow was entitled to its fee even though Nanticoke asserted a lien against Acosta first. However, the Court acknowledged that it is not a “superlegislature,” and deferred any decision on the precedence of charging liens to the General Assembly.
A recent decision from the Court of Chancery in Judy v. Preferred Comm. Sys., on a lawyer’s right to retain the file of a client who has not paid her bill, is highlighted here. This related decision recognizing a retaining lien is another option may be relevant to attorneys exploring their options to collect from deadbeat clients.