The Exercise of Lien

Where documents* and records are not owned by the Member in Practice, they generally belong to the client. In order to determine whether documents and records belong to the member it may be necessary to consider:

• the capacity in which the member acts in relation to his client
• the contract between the member and his client (see Terms of Engagement)
• the purpose for which the documents and records exist or are brought into being.

* Members should be aware that the term ‘documents’ is not confined merely to documents stored on paper, but extends to any information which can be understood by the senses or is capable of being made intelligible by the use of equipment. The term therefore covers information that is stored on microfilm or electronically, for example on hard or floppy disks, including messages sent by electronic mail.

What is a lien?

‘A lien is a right of a person to retain possession of the owner’s property until the owner pays what he owes to the person in possession’.

A particular lien is a lien over property which can be retained only until payment of a particular debt due in respect of it is paid. The courts favour particular liens as being equitable between debtor and creditor. An accountant has a particular lien over documents belonging to his client in respect of which the accountant has performed work for which he has not been paid the fee due.

However, in the absence of a special contractual provision accountants do not have a right of general lien in law and members are advised that it would not be worthwhile to assert such a right against a client unless they are expressly given that right by their contract with the client.

Conditions for the exercise of a ‘particular’ lien

A right of particular lien will exist only where all of the following circumstances apply:

(i) the documents retained must be the property of the client who owes the money and not of a third party, no matter how closely connected with the client
(ii) the documents must have come into the possession of the member by proper means
(iii) work must have been done by the member upon the documents and a fee note rendered
(iv) the fees for which the lien is exercised must be outstanding in respect of such work and not in respect of other unrelated work.

An example of this might be where a Member in Practice does work for a company and also for the directors of that company in their private capacities. If the fees for work done for a director in his private capacity are unpaid, no right of lien exists over the company’s documents in the light of (i) and (iv) above.

Where a member in practice presents a bill to a client, which the client considers to be excessive, the client may be prepared to pay a smaller sum and may tender that amount. There is no legal disadvantage in accepting the amount offered provided it is made clear by the member, preferably in writing, at the time of acceptance, that the sum is accepted as a part payment only and not in full discharge of the debt.

When a client behaves in this way, it is possible that he has genuine doubts as to the propriety of the fee, and is not actuated by malice or lack of means. The exercise of a lien in fee disputes is perfectly legal, but members should remember that its nuisance value is likely to promote ill-will not only between the parties, but also towards the profession as a whole.

Members should, however, take legal advice before seeking to exercise a lien in any but the most straightforward of cases.