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Costs of Litigation Should Be Considered In Contested Divorce Actions

Pursuant to New Jersey statutes, and a common term in lawyers’ retainer agreements, is often a provision for the attorney to retain what is referred to as a charging lien in the assets of the marital estate to allow an attorney to be paid for legal services. Usually the existence of attorney’s right to a charging lien is merely academic as matters glide through the system. Occasionally, however, issues arise regarding an attorney’s fee which require court intervention. Pursuant to N.J.S.A. 2A:13-15, an attorney is entitled to a lien against a marital assets in controversy for the purpose of the payment of legal fees. The attorney’s lien is an inchoate right that attaches to the assets of the marital estate upon the completion of the ttorney’s involvement in the matter.

Over the last few years the Budd Larner law firm has made sophisticated but unsuccessful attempts to expand family lawyer’s charging lien rights. Specifically, in a 2011 case called Pernini v. Pernini, the Appellate Division, over the law firm’s objection, found that a marital home was exempt from the firm’s charging lien. In 2012 the Appellate Division ruled in a case called Sauro v. Sauro that a family court did not abuse its discretion is disallowing the firm’s charging lien and dedicating the majority of a family’s dwindled finances to the education of the children in a matter where most of the marital estate was exhausted in a hotly contentions litigation for legal fees.

Once again on July 15, 2014 the Appellate Division addressed the issue of the attorney charging lien and once again it was Budd Larner’s legal fees in issue. In an unpublished opinion in Bresnahan v. Bresnahan, the Budd Larner law firm had withdrawn as counsel for the wife and were given a lien at that time on monies held in an attorney trust account. Ultimately, the matter was settled but the parties’ agreement provided that the money held in that particular account was the inherited property of the husband and, therefore, the money was not subject to equitable distribution. Although the Budd Larner firm had represented the wife in the divorce and not the husband, the firm sought to enforce their lien and be paid from the attorney’s trust account. The appellate court found that the charging lien is an inchoate lien and attaches to assets of the marital estate upon adjudication. In this matter it was agreed that the assets in question were not marital assets and hence not subject to distribution. Since they were not part of the marital estate the lien on the account failed and the Budd Larner firm was left to seek payment from the less liquid assets awarded to their former client.

There is a moral in the series of cases concerning Budd Larner and the charging lien statute. Litigation comes at a cost. That cost sometimes, as in Sauro, can exhaust the marital estate to the detriment of the family. Our courts are equipped with various tools designed to encourage and facilitate settlement of matters. When considering settlement the cost of litigation must be one of the factors considered in determining if a settlement is wiser than continued litigation.