- 20 -
Ninth Circuit in Benci-Woodward v. Commissioner, 219 F.3d 941,
943 (9th Cir. 2000), affg. T.C. Memo. 1998-395, and Coady v.
Commissioner, 213 F.3d 1187 (9th Cir. 2000), affg. T.C. Memo.
1998-291, we conclude, as did the Court of Appeals in those
cases, that Estate of Clarks ex rel. Brisco-Whitter v. United
States, supra, is distinguishable. Whereas the applicable State
law in Estate of Clarks ex rel. Brisco-Whitter v. United States,
supra, was that of Michigan, the applicable State law here is
that of California. Under California law, an attorney’s lien
does not confer any ownership interest upon an attorney or grant
an attorney any right and power over the suits, judgments, or
decrees of their clients. As explained by the California Supreme
Court, in interpreting its State law:
in whatever terms one characterizes an attorney's lien
under a contingent fee contract, it is no more than a
security interest in the proceeds of the litigation
* * * While there is occasional language in cases
to the effect that the attorney also becomes the
equitable owner of a share of the client's cause of
action, we stated more accurately in Fifield Manor v.
Finston, 54 Cal.2d 632, 641 (1960), * * * that
contingent fee contracts “do not operate to transfer
a part of the cause of action to the attorney but only
give him a lien upon his client's recovery.”
* * * * * * *
[t]he conclusion emerges that in litigation an
attorney conducts for a client he acquires no more than
a professional interest. To hold that a contingent fee
contract or any “assignment” or “lien” created thereby
gives the attorney the beneficial rights of a real
party in interest, with the concomitant personal
responsibility of financing the litigation, would be to
demean his profession and distort the purpose of the
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011