Save Your Lien When A Plaintiff Changes Counsel

September 21, 2016
5min read

We all dread hearing the news - when plaintiffs switch attorneys, it can create a massive headache for funders who have invested in their claims for several reasons. It can create extra work. You may risk that the claim has already settled and been paid before you can notify the new attorney.

Even if you do properly get a hold of a new attorney, they may have a poor track record or be difficult to deal with, and most funders want to feel as confident in the attorney as the case.

Tracking down, notifying and getting a new attorney up to speed with your existing funding contract, and ensuring they will honor your lien, can be extremely challenging. Ideally, the plaintiff will follow the contract and help facilitate that for you, but as we all know this rarely happens even with your explicit instructions.

This article will discuss best practices for avoiding and tackling this issue. We have also included two sample letter templates, one to send to plaintiffs and one to attorneys, that your company can modify and use when tracking down your investments with new attorneys.  


One of the keys to successfully ensuring you don't get burned by a plaintiff you've funded switching counsel is being thoughtful and prepared before the funding even takes place.

You need to have the following in place before funding:

  1. A solid, well-written contract
  2. Confidence that the initial attorney who signed your agreement knows how funding works and understands their responsibilities to alert you for changes in representation (which partly ties into the contract!)
  3. A great system in place for collecting plaintiff contact information, and keeping it up to date, for every plaintiff you fund. This is especially true for cases that are not yet publicly filed and trackable in the court system.

The Contract

Your funding contract plays an important role here. It must clearly show that the contract follows the plaintiff, and is paid out of the settlement of that claim, no matter who they end up with as counsel. It also gives attorneys notice and instructions that they should be alerting you with respect to changes in the client's representation. There are many important provisions that serve to accomplish this, and below are examples of three crucial ones.

Your funding contract should already contain all of these concepts, but it's still smart to make sure.

1. Make it extremely clear what the plaintiff is responsible for if they hire a new attorney for their claim:

Substitute Counsel.  If I decide to hire new or additional attorneys to represent me with respect to the Claim, I agree to within 10 days thereafter: (i) deliver to [Company] written notice of such decision, specifying the name, address and telephone number with respect to each new or additional lawyer; (ii) deliver a copy of this  Agreement to such new or additional attorney; (iii) require such new or additional attorney to sign and deliver to [Company] a document in form and substance identical to the ["My Counsel's Agreement"] portion of this Agreement, at Section [X].  Any new or additional attorney(s) shall upon such hiring also be considered "my Counsel" for all purposes of this Agreement, and [Company] will have the right to receive from my new attorney(s) all information and payments due hereunder.

2. Include instructions for the plaintiff on dealing with their counsel:

Irrevocable Instructions to my Counsel.  By signing this Agreement, I hereby irrevocably instruct my Counsel, my Counsel's successors and/or assigns, and any attorney or escrow agent representing me with respect to my Claim, to fully cooperate with [Company], including providing any information that [Company] may reasonably request, and promptly notify [Company] in writing of receipt of any Money Recovery, to promptly upon receipt of a Money Recovery pay or set aside funds sufficient to pay Superior Liens and then, before paying me or anyone else, pay [Company] the amount it is due, and to otherwise comply with the instructions in ["My Counsel's Agreement,"] in Section [X], below.

3. Make sure the contract has a clearly delineated section to be signed by the plaintiff's counsel (referred to above as "My Counsel's Agreement"). As dictated by the "Substitute Counsel" section, above, every new attorney should sign a copy of this. That is why it's best to keep it on a separate page in the contract.

The most important acknowledgments for our purposes here are that the attorney will:

  1. provide notice of any money recovered on the claim
  2. notify you if they cease to be plaintiff's counsel, inform you of any successor counsel, and notify successor counsel (and any person who inquires) of your lien and interest in the claim

As you can see, all of this language together mandates that both plaintiff and counsel abide by your contract and update you of any changes in representation. Now, getting people to follow these instructions is the real challenge.

Confidence in the Attorney

There's an old saying: It's better to do a bad deal with a good person than a good deal with a bad person. No matter how tight your contract language is, some attorneys just won't follow it.

So for many funders, working with attorneys they know and trust is essential. They know the law firm or attorney feels obligated to protect their lien, and they won't have to worry about a plaintiff changing attorneys without quickly being alerted.

If you have those relationships, you're lucky. But one warning: sometimes those relationships backfire. Attorneys can take for granted the lack of formality, and they may simply forget you had a lien due to disorganization, which means they won't inform you when the plaintiff changes counsel.  

Collecting Contact Information

Every funder has experienced the disappearing plaintiff routine. To avoid it, you need to properly gather as much contact information as possible from a plaintiff: phone numbers, emails, faxes, home and work addresses, driver's licenses, etc.

We've written extensively on best practices for effective plaintiff communication, so check out our 2-part series to learn more about this area.

There is a tradeoff, however, with how much information to collect from plaintiffs. One tip is to collect only basic information during the intake phase to ensure as little friction as possible during the application process. The best time to collect every plaintiff data point is once they've accepted your offer for funding and you're drawing up the agreement.


Make sure your computer system for storing plaintiff contact information doesn't override old plaintiff information, but rather saves the historical version. A funder once told us a story about a plaintiff who proactively called to update their contact information.

The funder was glad to do it. In fact, he was elated to have such a "responsible plaintiff" on his hands. When the funder realized this plaintiff had changed attorneys shortly thereafter, however, he discovered the truth: the plaintiff had given him fake new information, knowing it would probably overwrite the real contact information the funder had. That plaintiff disappeared, and it became impossible to track him down.

In other words, hang on to all of the contact information you get throughout the life of the claim. You never know when it may come in handy.

Stay in touch

Merely finding out that a plaintiff has switched counsel can be difficult. The sooner you know, the better. It may even be smart to check in with plaintiffs to gather information about their case's status and current counsel for fundings that are: (i) high value (ii) not trackable in court systems, and (iii) represented by attorneys you don't know well.    


Talk to the prior attorney and find out why it happened!

It can be extremely helpful to ask the attorney for a letter explaining why they are no longer representing a plaintiff. Ask for the reason why and the name and contact information of their former client's new attorney.

Sometimes, an attorney will drop a plaintiff rather than the other way around. Their reasoning could affect your business decisions. If an attorney dropped a client because, for example, they began to feel that it was an unwinnable case, you could use that information to quickly decide to write off the investment as a loss and move on, rather than spend time and resources trying to track down and recoup.  

Contact the new attorney ASAP

When you learn that a plaintiff has hired a new attorney, you should immediately reach out to put them on notice of your lien. You can start with a friendly email explaining the situation and attaching the plaintiff's executed contract.

Hopefully they know the industry, understand contract law, and are amenable to working with your company. They may even be willing to sign a new attorney acknowledgment form, explicitly agreeing that they will honor your lien and pay your company before the plaintiff. Of course, it's rarely that easy.

When we used to fund, we got the following response from an attorney in his reply to our email informing him of our existing lien on his client's case. This client had left their original attorney, but did not tell his new attorney about the funding lien:

"This is an agreement between you and [the plaintiff], and also [their previous attorney] and not our firm. Since we did not sign off on this, we are not obliged in any way under your agreement, so any further comment as to such, you can have between your company and [the plaintiff]."

It's shockingly common despite being completely wrong per the tenets of a properly drafted contract (as outlined above). It's understandable that an attorney wouldn't be happy to suddenly learn there is a lien on their new client's case. It can happen when a plaintiff "forgets" to tell newly hired counsel, whether because they're trying to be tricky or just didn't understand the deal.

Unfortunately for these attorneys, your business depends on recouping your investments and a contract is a contract.

Send a formal notice letter

If a friendly email or phone call to the new attorney doesn't yield results, the next step is sending a formal letter putting the new attorney on notice that this lien exists and is enforceable. Make sure you send it certified or otherwise confirm receipt.

SAMPLE LETTER TO PLAINTIFF: This is a letter you can send to plaintiffs to try and launch them into action.

Dear [Plaintiff’s Name],

Our company financed your legal claim, pursuant to the [Funding Agreement] (“Agreement”) between [Funding Agreement] and you, dated as of [__________________ , 20__]. You should already have a copy of this agreement on file but, just in case, enclosed is a copy of the fully-executed Agreement. At this time, we understand that you may have hired a new or additional attorney to represent you in this matter.

As you know, this contract is a binding commitment on you and your counsel, including any newly hired or additional attorneys.

Section [X] of the Agreement contains an acknowledgment form which you agreed to get filled out by any and all attorneys representing you in this matter. We have enclosed a copy of that form here for your convenience.

Please call us as soon as possible so that we can discuss this matter. Our direct line is [XXX-XXX-XXXX].

If you have any questions or need anything, please let us know.  We look forward to continuing to work with you on your case!




Here is one you can send to the plaintiff's new attorney.

Dear [Attorney’s Name],

Our company financed your client [Plaintiff’s Name] (“Your Client”), pursuant to the [Funding Agreement] (“Agreement”) between [Your Funding Company] and Your Client, dated as of [__________________ , 20__]. This non-recourse advance was provided in return for an assignment to us of certain proceeds from the recovery if Your Client wins or settles their claim.

Pursuant to the Agreement, Your Client should already have notified you of this contract and our lien. We have enclosed another copy of the fully executed Agreement for your records. We may have tried to confirm that you have the lien on file via phone or email, but either way please accept your receipt of this letter as notice of our lien.

This contract is a binding commitment of both Your Client and their counsel. The obligations stipulated in the contract follow the client and apply to anyone representing them, including newly hired or additional attorneys. Per Section [X] of the Agreement:

[INSERT THE SIMILAR PROVISION FROM YOUR CONTRACT: “Any new or additional attorney(s) shall upon such hiring also be considered “my Counsel” for all purposes of this Financing Agreement, and [Your Funding Company] will have the right to receive from my new attorney(s) all information and payments due hereunder.”

You will see, in Section [X] of the Agreement, an acknowledgment form which should be filled out by any attorney representing Your Client. We have enclosed a suitable copy of that form here for your convenience. We would greatly appreciate if you could sign and deliver the form to us as soon as possible, via (a) email to [] or (b) mail to the following address: [Address].

Please let us know if you have any questions.  We look forward to continuing to work with you on [Plaintiff’s Name] case.




If the new attorney still refuses to acknowledge your lien, you should enlist the plaintiff's help, get your local counsel involved, and take any other action to protect your investment. One reason funders value cases that have been already filed is that have a better sense of when a case is going to settle. If you see a case is settling, make sure you make a stink that you expect to have your agreement honored!  


Handling the transition from when a plaintiff switches attorneys to collecting on your lien can be difficult. Make sure you follow the tips in this article, set up the right infrastructure and maintain a disciplined follow-up protocol to set yourself up for success.

One final note: you might be wondering what you should do in the rare case that a plaintiff decides to drop their attorney and represent themselves (pro se legal representation). Well, that scenario requires an entire article unto itself! Stay tuned.

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