Duffus v. Baker

BUSINESS LAW

Supreme Court of Alaska (2022)

Sarah Couillard

In Duffus v. Baker, 513 P.3d 264 (Alaska 2022), the supreme court held that an attorney’s lien may be asserted against settlement funds despite a standard clause making each party responsible for their own fees, attorney participation in settlement negotiation, and a provision in the settlement agreement for payment of attorneys’ fees. (Id. at 274–75). Duffus and Baker were former business partners whose business ventures failed, resulting in extended litigation. (Id. at 267). Duffus had previously obtained a charging order against distributions from Baker’s 50% membership interest in an LLC. (Id. at 267–68). In a suit involving the LLC, the parties ultimately settled without including Duffus, and Duffus attempted to intervene, arguing that the charging order applied to settlement funds. (Id. at 268–69). The settlement involved a payment to the law firm that represented Baker, for which the firm filed an attorney’s lien. (Id. at 269–70). The superior court below granted Duffus’s charging order, but enforced the law firm’s lien priority over the charging order, resulting in partial recovery for Duffus. (Id. at 273). On appeal, Duffus argued that the lien was invalid. (Id. at 270). The supreme court upheld the validity of the lien, reasoning that a clause in the settlement agreement making each party responsible for its own fees did not by itself obviate the law firm’s right to an attorney’s lien on Baker’s settlement funds, and that the law firm’s participation in settlement negotiations did not make it a “party” in itself. (Id. at 274–75). The court further reasoned that the fact that the law firm’s fees were included in the settlement agreement did not preclude it from seeking a lien, because the attorney’s lien statute is construed liberally. (Id.). The supreme court vacated and remanded for an evidentiary hearing, declining to address priority of the lien over the charging order. (Id. at 270–71, 273, 275–76). However, the supreme court held that an attorney’s lien may be asserted against settlement funds despite a standard clause making each party responsible for their own fees, attorney participation in settlement negotiation, and a provision in the settlement agreement for payment of attorneys’ fees. (Id. at 274–75).

 

Duffus v. Baker

BUSINESS LAW

Supreme Court of Alaska (2022)

Sarah Couillard

In Duffus v. Baker, 513 P.3d 264 (Alaska 2022), the supreme court held that an attorney’s lien may be asserted against settlement funds despite a standard clause making each party responsible for their own fees, attorney participation in settlement negotiation, and a provision in the settlement agreement for payment of attorneys’ fees. (Id. at 274–75). Duffus and Baker were former business partners whose business ventures failed, resulting in extended litigation. (Id. at 267). Duffus had previously obtained a charging order against distributions from Baker’s 50% membership interest in an LLC. (Id. at 267–68). In a suit involving the LLC, the parties ultimately settled without including Duffus, and Duffus attempted to intervene, arguing that the charging order applied to settlement funds. (Id. at 268–69). The settlement involved a payment to the law firm that represented Baker, for which the firm filed an attorney’s lien. (Id. at 269–70). The superior court below granted Duffus’s charging order, but enforced the law firm’s lien priority over the charging order, resulting in partial recovery for Duffus. (Id. at 273). On appeal, Duffus argued that the lien was invalid. (Id. at 270). The supreme court upheld the validity of the lien, reasoning that a clause in the settlement agreement making each party responsible for its own fees did not by itself obviate the law firm’s right to an attorney’s lien on Baker’s settlement funds, and that the law firm’s participation in settlement negotiations did not make it a “party” in itself. (Id. at 274–75). The court further reasoned that the fact that the law firm’s fees were included in the settlement agreement did not preclude it from seeking a lien, because the attorney’s lien statute is construed liberally. (Id.). The supreme court vacated and remanded for an evidentiary hearing, declining to address priority of the lien over the charging order. (Id. at 270–71, 273, 275–76). However, the supreme court held that an attorney’s lien may be asserted against settlement funds despite a standard clause making each party responsible for their own fees, attorney participation in settlement negotiation, and a provision in the settlement agreement for payment of attorneys’ fees. (Id. at 274–75).