By: Scott Chimuk
In, Law Society of Alberta v Higgerty, 2024 ABKB 410, Scott Chimuk acted for 6 different law firms (the “New Firms”) in a receivership application relating to whether a litigation lender was entitled to a charging lien or charging order against files that were transferred by the Custodian to the New Firms following a notice of intention to enforce security by the lender after a law firm (Higgerty Law) went into custodianship.
The transferred files were all contingency files such that no fees would be paid until such time as the files were either settled or resolved by way of trial. Therefore, any potential payments for work performed by Higgerty Law had not yet crystallized at the time of the application.
The lender argued that since it had a security interest in all the property of Higgerty law that this interest gave it all rights and entitlement of Higgerty Law – including the ability to assert a solicitor’s lien in respect of its files.
The New Firms, argued that the lender could not assert such an interest because:
It was not a solicitor and therefore not subject to the regulation of the Law Society;
To allow the lien to be asserted would breach the solicitor client privilege of the former clients of Higgerty law; and
That the Receiver/Custodian was the appropriate party to assert a claim
The Court found that the lender was not entitled to assert a lien on the basis that it did not meet the requirements under either the Rules or the common-law. Because of this finding it was unnecessary to rule on the issues of privilege or Law Society regulation.
In obiter dicta, the Court did leave open the possibility that the custodian/receiver-manager, as opposed to the lender, could potentially assert a solicitor’s lien in recovering the potential proceeds to repay the creditors of Higgerty Law. The application of the lender was therefore dismissed.
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