In this matrimonial proceeding, in which the judgment of divorce has been signed, the wife's attorney moves for a charging lien against the wife's interest in funds held in escrow by the husband's attorney. The wife pro se moves to vacate certain confessions of judgment signed by her in favor of the wife's attorney, and for an order requiring the husband's attorney to release the escrow funds.

The wife's attorney seeks a charging lien against $58,528.00 that is currently held in escrow by the husband's attorney. She seeks an order permitting her firm to retain the money in escrow subject to further order of the Court.

The husband's attorney submits an affidavit in opposition, arguing that the wife has failed to produce certain personal property of the husband as required by the judgment divorce and therefore certain monies are being held in escrow for "leverage." The husband's attorney also argues that transfer of the money to the wife's law firm would violate the terms of the judgment of divorce. He also notes that while the wife signed confessions of judgment in favor of the wife's law firm for attorneys fees totaling $65,735.32, no notice of these confessions of judgment was previously received by the husband's attorney and no court leave was obtained pursuant to 22 NYCRR 1400.5.

The wife pro se has filed a motion seeking to vacate the two confessions of judgment that she signed, one in the amount of $45,000.00 and one in the amount of $20,735.32. She also seeks to pursue fee arbitration regarding the total amount of attorneys fees that she presently owes to the wife's law firm, totaling $226,271.02. The wife also seeks release of the funds held in escrow by the husband's law firm, noting that the funds represent a $50,000.00 distributive award, $5,000.00 in child support arrears and $3,528.00 representing tax obligations withheld from child support. The wife argues that the billing and collection processes of the wife's law firm "are unreasonable and unjust." She also asserts that the amount of fees she owes is disproportionate to the financial distribution she received from the divorce, while she acknowledges that she owes the law firm "some money."

In response, the wife's attorney notes that the judgment of divorce does not provide that the wife's $50,000.00 distributive award is contingent upon the transfer of the husband's personal property. The wife's attorney also argues that the confession of judgment in this case only seeks attachment to the wife's separate interests in the distributive award and therefore did not require compliance with 22 NYCRR 1400.5. She argues that even if the confessions of judgment were vacated, the wife's attorney is still entitled to a charging lien. Regarding the wife's motion seeking fee arbitration, the wife's attorney notes that the amount of fees in dispute are above $50,000 and therefore are not required to be arbitrated pursuant to 22 NYCRR 137.1(b)(2). The wife's attorney does [*2]not object to a charging lien limited to $50,000.00 of the amount held in escrow by the husband's law firm, along with an award of legal fees beyond that amount as the Court shall determine.

First, regarding the personal property of the husband that is apparently still in possession of the wife, the Court concurs with the wife that there is no connection in the judgment of divorce between release of personal property and release of the money presently held in escrow by the husband's law firm. It appears that the wife has made attempts to arrange a time for husband to pick up his personal property. If the husband feels that the wife is in violation of this term of the judgment divorce, his remedy is not to withhold funds in escrow, but rather to make the appropriate application to the Court.

Regarding the wife's request for fee arbitration, the Court concurs with the wife's attorney that fee arbitration is not applicable in this instance based upon the amount of the fee that the wife alleges is in dispute (22 NYCRR 137.1[b][2]).

The Court has considered the wife's attorneys' motion and the wife's separate motion and finds that the wife's attorney is entitled to a charging lien of $50,000.00 against the funds held in the husband's attorney's escrow account (Judiciary Law § 475). The remaining monies in the escrow account shall be disbursed to the wife forthwith. In coming to this conclusion, the Court has considered the proof set forth by the wife's attorneys, including the retainer agreement and monthly billings that are not disputed by the wife. While the wife appears to dispute whether the amount of fees generated by her attorneys was ultimately warranted based upon her feelings concerning the end result of the case, it is not disputed that her attorney was to be paid an hourly rate and the fees could not be determined based upon the result of the case. This information is in fact set forth specifically in the retainer agreement and reflects the current state of the law in New York concerning the manner in which attorneys may bill clients for matrimonial proceedings. The Court does not find that the wife sets forth any factual disputes requiring a hearing regarding the legal fees in question.

Concerning the total amount of attorneys fees sought by the wife's attorney, totaling $226,204.46 according the documentation attached to the wife's attorney's motion, the Court finds that after payment of the $50,000.00 in fees as referenced above, the wife's attorney is entitled to further payment of $110,469.14. The Court finds that the wife's attorney has forfeited the right to recover $65,735.32 in fees based upon the confessions of judgment signed by the wife which were not in compliance with 22 NYCRR 1400.5. Specifically, notice to the husband and approval of the Court were not obtained prior to the confessions of judgment being signed by the wife during the pendency of this action. While the wife's attorney argues that compliance with this regulation is not required because she is only seeking enforcement against the wife's portion of the divorce proceeds, at the time the confessions of judgment were signed, compliance with 22 NYCRR 1400.5 was required. Case law is clear that when confessions of judgment are obtained in violation of 22 NYCRR 1400.5, an attorney [*3]forfeits such fees to the extent that they remain unpaid (Papapietro v Pollack & Kotler, 9 AD3d 419 [2nd Dep't 2004]; Behrins & Behrins, P.C. v Sammarco, 305 AD2d 346 [2nd Dep't 2003]).

Accordingly, it is

ORDERED, that the wife's attorneys' motion for a charging lien is granted to the extent that a charging lien is granted upon $50,000.00 presently held in escrow by the husband's attorney; and it is further

ORDERED, that the husband's attorney shall forthwith issue payment of the funds held in escrow as follows: $50,000.00 payable to the wife's attorney and $8,528.00 payable to the wife; and it is further

ORDERED, that the wife's motion, to the extent it seeks to vacate the confessions of judgment is granted, and to the extent it seeks fee arbitration is denied, as set forth above.

This constitutes the Decision and Order of the Court. This Decision and Order is returned to the attorneys for the plaintiff. All other papers are delivered to the Supreme Court Clerk for transmission to the County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of this rule with regard to filing, entry and Notice of Entry.

Dated: January 4, 2011

Troy, New York

________________________________________

Henry F. Zwack

Acting Supreme Court Justice