On Behalf of | Jul 28, 2020 | Discharged Attorney

The Ohio Supreme Court recently held that the tortfeasor’s liability insurer was not directly responsible to pay the former attorneys’ lien when settling the case against its insured.

In Kisling, Nestico & Redick, LLC v. Progressive Max Insurance Co. 2020 Westlaw 236806 (Ohio January 16, 2020), the Ohio Supreme Court held that the insurer for the tortfeasor had no responsibility to pay an attorney’s charging lien and that attorney was discharged as the plaintiff’s attorney prior to the settlement proceeds being paid. In this case, the insurance company, Progressive Southeastern Insurance Co. attempted to settle the claim against its insurer prior to lawsuit. In order to accomplish the settlement, Progressive offered to settle the case for $12,500. After that offer was made, the plaintiff fired the law firm that represented him. The attorneys’ law firm asserted an attorney’s lien against any settlement proceeds paid to the plaintiff by Progressive. However, no agreement existed between Progressive and the law firm requiring Progressive to protect any lien. Ultimately, the case was settled. Progressive paid the full settlement amount to the plaintiff. Plaintiff did not pay his former attorneys. The attorneys then sued Progressive alleging that Progressive owed a duty to protect its charging lien. The Ohio Supreme Court disagreed.

The Ohio Supreme Court characterized the enforcement of an attorneys charging lien as an equitable remedy and that equitable liens were ordinarily only enforceable against a specifically identified fund. The Court found that the settlement fund did not come into existence until Progressive paid the agreed upon amount and obtained a release of the insured. At that point, Progressive no longer controlled the funds. When that settlement occurred, the Court held that the law firm’s only recourse was to sue its client for breach of contract, quantum meruit and unjust enrichment.