88-02 : Enforcement of Solicitors' Liens

The Discipline Committee has recently encountered a number of instances where monies obtained in connection with one file of a client are transferred to cover fees for services provided on another file of the same client. The committee wishes to remind the profession that the transfer of monies between a client's files is not permitted (in the absence of the express consent of the client), and constitutes an improper enforcement of a solicitor's lien. The Discipline Committee ruling of March 29, 1985, provides the correct practice to be followed in enforcing solicitor's liens:

Where a solicitor maintains a client's property pursuant to a retaining or general solicitor's lien as a general rule the solicitor is not obliged to give copies of the material to the client nor to allow inspection of the property. There are, however, limitations upon that general rule. The following are important limitations:

1. Delivery of the property will be ordered where payment of the costs has been secured.

    

2. Where a solicitor discharges himself in the course of an action he loses his possessory lien over his client's documents for unpaid fees and the client or new solicitor is entitled to delivery of papers in the cause on an undertaking to hold them without prejudice to the former solicitor's lien.

    

3. Where a client discharges the solicitor without just cause the solicitor is under no obligation to deliver, produce or allow inspection of documents for the benefit of the client unless the interests of third parties would be affected.

The Code of Professional Conduct places an ethical Limitation on this right at Commentary 10 of Chapter XI [now Chapter 12, Commentary 11] which provides that generally speaking a lawyer should not enforce his lien if the result would be to materially prejudice the client's position in any uncompleted matter.

Liens claimed on property recovered or preserved can only be asserted for the costs properly incurred in recovering or preserving the specific property in question.

Members are particularly referred to Cordery on Solicitors (7th ed.) at chapter 8, MacDonald v. Arenson, [1981] 1 W.W.R. 573 (Man. C.A.) and Re. Bank of Western Canada (1969), 67 W.W.R. 568 (Man. Q.B.).

(September 1988)
[updated as to section numbers, February 1992]