Attorney Liens: What is a FLARPL?

Attorneys in California are not permitted by the rules of ethics to accept contingent fee arrangements or a percentage of pay in most family law cases based on financial gains or “winnings.” But many couples have a difficult time affording an experienced attorney to get them through what could be the most financially significant challenge in their life.

If there is a disparity in access to funds between the parties, the court may order one party to make a contribution to the other party’s attorney fees. In addition, the court may order one party to pay for the other’s fees based on punishable behavior or as sanctions. Most attorneys will require that their fees are paid up front by the client and later seek reimbursement from the other side.

If the court refuses to issue an attorney fee award, another option is an attorney's lien, or a FLARPL.

What is an attorney's lien?

A FLARPL is a Family Law Attorney’s Real Property Lien. It allows an attorney to record a lien against their client’s interest in real estate to cover fees for legal services that are earned or anticipated to be incurred in a divorce or separation proceeding. This is not a contingency fee arrangement. An attorney will be able to collect reasonable fees earned regardless of the outcome of the proceeding.

Family Law section 2034 was revised in 2011 to expand the power of family courts to approve FLARPL’s in an effort to ensure that litigants have as many possible options to retain and maintain representation.

To be a reliable form of security, the client’s interest in the property that the lien encumbers must be sufficient to cover the amount specified by the FLARPL.

How can a lien pay off attorney fees?

Most often, FLARPLs are satisfied at the conclusion of the family law matter. In many cases, the home is sold and escrow will issue a check directly to the attorney holding the lien. The lien payment should be accounted for by the court if the case ends in trial or by the parties and their attorneys if a settlement agreement is drafted.

For example, if the real property is community property then, upon sale, both parties are entitled to an equal division of the net proceeds. If the community property proceeds are $500,000, then each party is entitled to a distribution of $250,000.

However, if a FLARPL is encumbering the property in the amount of $100,000, escrow will only have $400,000 left to distribute to the parties. The $100,000 attorney lien will be satisfied prior to distribution of funds to the parties. In this case, $150,000 will be distributed to the party who signed the FLARPL and $250,000 will be distributed to the other spouse.

This is generally the case unless there has been an order by the court for one side to contribute to the other’s attorney fees or a different agreement of the parties.

FLARPL’s are not favored by attorneys. They are considered to be the least attractive means for securing that fees will be paid, mainly because the attorney must wait until the end of the case or the end of the sale of the house to get paid. Most attorneys will not agree to finance client litigation in this way. In addition, without “skin in the game” and paying an attorney each month, clients with FLARPLs may become unreasonable in settlement negotiations.

Ways to reduce the cost of a divorce

Signing a FLARPL and engaging in prolonged litigation can result in paying most if not all of your home equity to a family law attorney. There are several ways to reduce the overall cost of divorce that are within your control.

• You are in control of the amount of time you spend talking to your attorney. Family law attorneys are “counselors at law” but oftentimes clients want to use them just as “counselors”. Although going through a divorce is emotionally taxing and can feel very lonely, calling your attorney to speak about non-legal issues will certainly increase your bill. Instead, find a trusted friend or therapist to talk to on a regular basis.
• Avoid fighting over something if the cost outweighs the benefit. With some issues, like important custody disputes or domestic violence restraining orders, there is no price associated with the victory in court. In other cases, there is a very specific cost associated with a “win” and a “loss”. Some litigants will spend tens of thousands in fees to argue about different support calculations that may be a few hundred dollars apart. It will take years to recoup the fees spent in terms of the monthly support amount saved or gained.
• Work with your spouse informally to resolve as many issues as possible. Presenting your divorce attorneys with agreements is very effective at reducing the overall cost of a divorce.
• Review requests submitted by your attorney and respond in an organized fashion. Carefully review all communications from your attorney and provide all requested documentation and information in one succinct email. Attorneys charge by the hour so the more time spent going back and forth with you to obtain necessary information and documents, the more your monthly bill will cost.
• Respond in a timely manner to your attorney. Avoid your attorney being required to send follow-ups or make revisions to documents due to a delay. Many divorce documents are time-sensitive. Therefore, if you provide untimely and piecemeal responses, you will incur greater legal fees.

If you are concerned about how to pay for your attorney fees, or if you will be required to pay the other party’s fees, then contact a family law attorney with Cage & Miles, LLP today to discuss your options.