Case Name: NATIONAL SALES & SERVICE CO., INC., an Arizona corporation, Petitioner, v. The SUPERIOR COURT OF MARICOPA COUNTY ARIZONA and the Honorable David L. Grounds, Respondent, and Bruce ALPER, Real Party in Interest
Court: Arizona Supreme Court
Jurisdiction: Arizona
Decision Date: 1983-07-21
Citations: 136 Ariz. 544
Docket Number: No. 16321-SA
Parties: NATIONAL SALES & SERVICE CO., INC., an Arizona corporation, Petitioner, v. The SUPERIOR COURT OF MARICOPA COUNTY ARIZONA and the Honorable David L. Grounds, Respondent, and Bruce ALPER, Real Party in Interest.
Judges: HOLOHAN, J., concurs.
Reporter: Arizona Reports
Volume: 136
Pages: 544–551

Head Matter:
667 P.2d 738
NATIONAL SALES & SERVICE CO., INC., an Arizona corporation, Petitioner, v. The SUPERIOR COURT OF MARICOPA COUNTY ARIZONA and the Honorable David L. Grounds, Respondent, and Bruce ALPER, Real Party in Interest.
No. 16321-SA.
Supreme Court of Arizona, En Banc.
July 21, 1983.
Ronald W. Meyer, Phoenix, for petitioner.
Joseph F. Causey, Phoenix, for Bruce Al-per.

Opinion:
HAYS, Justice.
This case comes to us on the petition of National Sales for a special action. Peti tioner brought its special action after the Superior Court in Maricopa County denied its motion seeking an order directing the real party in interest, attorney Bruce Alper, to surrender files and certain books and records of petitioner corporation. We have jurisdiction pursuant to article 6, § 5 of the Arizona Constitution and Rule 8, Special Actions Rules of Procedure, 17A A.R.S.
These are the facts material to a resolution of the controversy. Alper was hired by petitioner to bring suit against Louis and Stephanie Petrossi, and petitioner made a written agreement with Alper to pay for his services on an hourly basis. The suit was filed and eventually set for trial.
In September 1982, shortly before the October trial date, Alper and petitioner began to argue over fees and retainers. The disagreement became aggravated and Alper filed a Motion to Withdraw as Counsel. National Sales retained attorney Ronald Meyer to continue work on the case against Petrossi, and Meyer filed a Notice of Appearance and a Motion to Substitute as Counsel. The court allowed the substitution and continued the October trial date.
Alper refused to turn over the files or the corporate books and records in his possession when Meyer asked him to do so. Alper asserted a "retaining lien" and took the position that the lien entitled him to keep the files, books and records until he was paid the money he had earned representing National Sales against the Petrossis. Meyer filed a motion in the Superior Court seeking an order compelling Alper to surrender the file. After a hearing, the court denied that motion. The motion was renewed on November 17, 1982, and, again, denied. On January 5, 1983, we accepted jurisdiction of National Sales' Petition for Special Action. In this opinion we consider the question of whether Arizona recognizes an attorney's retaining lien in a file after he withdraws as counsel on account of a fee dispute.
There are two types of attorney's liens which have been recognized in American jurisdictions. Arizona case law has addressed so-called "charging liens" which attach to the funds or other property created or obtained by the attorney's efforts. We have held that such a lien arises only when it appears that the parties looked to the fund itself for the payment of the attorney's fee. Linder v. Lewis, Roca, Scoville & Beauchamp, 85 Ariz. 118, 333 P.2d 286 (1958). The record in this case reveals no evidence of such an intent nor is there a specific fund. For that reason little guidance is available to us from the Arizona cases which deal with charging liens.
Attorney Alper maintains that he has a "retaining lien" attached to the files, books and records which came into Alper's possession as a result of his representation of National Sales. The retaining lien, like the charging lien, is a device for securing payment of fees earned and sums advanced by the attorney. No Arizona appellate court has addressed the question of the validity of a retaining lien in our state. We note, however, that such liens are contemplated in the Code of Professional Responsibility, as adopted in Arizona. 17A A.R.S. Sup.Ct. Rules, Code of Professional Responsibility, rule 29(a), DR 5-103(A)(l).
Our appellate courts have, in the past, expressed their inclination to follow the principles of the Restatement of the Law when not bound by previous Arizona decisions or legislative enactments. Advance Leasing & Crane v. Del E. Webb Corp., 117 Ariz. 451, 573 P.2d 525 (App.1977). Following that guideline, we have found that the Restatement of Security (1941) recognizes a retaining lien in favor of an attorney in the following language:
§ 62. Persons Entitled to General Possessory Liens.
General possessory liens exist in favor of
(b) an attorney at law, as security for the general balance due him for professional services and disbursements, upon the papers and other chattels of his client, which come into his possession in his professional capacity;
Likewise, Restatement (Second) of Agency § 464(b) (1957) recognizes a retaining lien in favor of an attorney at law as security for his fees and advances:
§ 464. When Agent Has Lien
Unless he undertakes duties inconsistent with such a right or otherwise agrees that it is not to exist:
(b) a factor, banker, or attorney-at-law has the further right to retain possession of money, goods, or documents until he is paid the amount due him upon the general balance of accounts created by transactions conducted by him as such factor, banker, or attorney!;.]
The Restatement of Agency qualifies the lawyer's retaining lien by its mention of "duties inconsistent with such a right .," but we believe both rules are sound. We therefore hold that an attorney has a retaining lien as security for the general balance due him for professional services and disbursements upon the papers and other chattels of his client which come into his possession in his professional capacity. Attorneys and clients are, of course, encouraged to negotiate and agree upon compromises over disputed fees. Compromises and provisions to secure payment which avoid the assertion of the attorney's lien rights are obviously preferable to a lawsuit. See ABA Code of Professional Responsibility EC 2-23 (1977).
Because of the broad range of tasks a lawyer might undertake for a client, there can be no question that some of a lawyer's duties can be inconsistent with the assertion of his lien rights. It is our task, therefore, to examine this case for circumstances such as duties imposed by the Code of Professional Responsibility which limit the nature and extent of the attorney's retaining lien. The extreme limits of the reach of the lien are obvious. For example, we believe it is proper for the lien to apply to the lawyer's, and his staff's, research notes and internal memoranda concerning the case. This kind of paper work, the work product of the lawyer's efforts, is clearly the lawyer's property and remains his property at least until he is paid.
On the other hand, we believe it is improper for the lien to attach to a document given by the client to the lawyer for a purpose inconsistent with the fixing of a lien upon it. If, for example, a client brings an original document or instrument to a lawyer for delivery to another, then the client's purpose is inconsistent with the fixing of a lien upon the document or instrument. See Restatement of Security § 62, Comment i, Illustration 8 (1941). Likewise, if a client brings some book, document or other chattel to his lawyer for use as an exhibit at an impending trial, the client's purpose is inconsistent with the fixing of a lien upon the document. In either of the above cases the lawyer's duty to seek his client's lawful objectives and to avoid prejudice or damage to his client are inconsistent with his assertion of a retaining lien. See 17A A.R.S. Sup.Ct.Rules, Code of Professional Responsibility, rule 29(a), DR 7-101(A)(1) & (3).
Between these extremes lies a number of situations where a detailed record would be helpful in determining the existence of a lien and the propriety of its fixing on a given document. It is our belief that this case falls in that area between the extremes where the inquiry must be particularized to the individual documents demanded by the client and the details of the procedural posture of the case. No court can precisely determine the existence or possibility of prejudice to the client without such information. We believe that petitioner could have made such a showing in this case, but it appears that he did not. This particular dispute was framed, in the trial court, as a fight over possession of an amorphous and vaguely defined entity, "the file." We hold that the trial court abused its discretion by ruling on the motion as to "the file" without requiring the parties to particularize their dispute.
Accordingly, we remand to the trial court for a further hearing. It appears from the record that petitioner knows what was turned over to attorney Alper in the way of corporate books and records. It further appears that petitioner knows or can easily ascertain what pleadings have been filed on its behalf by Alper. On rehearing it will be petitioner's burden to establish, with particularity, the documents he contends Alper is not entitled to retain and the reasons, consistent with this opinion, why Alper's lien rights should not extend to those documents.
We believe the reasonable behavior of the parties and the trial court's sound discretion can combine to create a record sufficiently detailed that an informed ruling can be made by the trial court. Accordingly, we set aside the ruling of the Superior Court and direct that it set petitioner's motion to surrender file for rehearing. Because this controversy involves a previously unsettled point of law, we direct that each party shall bear its own fees and costs for this special action.
Remanded for further proceedings.
HOLOHAN, J., concurs.