Assignment Void Under The Anti-Assignment Act; However, Not All Is Lost—Contractual Attorney’s Lien Is Allowable As Against Government In CAFRA Actions.
Under the Civil Asset Forfeiture Reform Act (CAFRA), successful claimants challenging the U.S. government’s seizure of property can obtain an attorney’s fee award against the government, which happened in the next case we discuss. The attorney, seeking to protect his interest in the recovery, had upfront entered into a retainer agreement with the clients by which he was assigned their interest in a fee recovery such that it would be paid directly to him by the government. Claimants did win a substantial fee award against the government, and the district court held that the fees awards could be paid directly to attorney rather than the clients/claimants—important because claimants had federal tax liens against them.
The assignment was voided in United States v. Kim, No. 12-56922 (9th Cir. Aug. 13, 2015) (published), but the Ninth Circuit did indicate that an attorney could protect his interest in a fees award through a contractual attorney’s lien.
This case is must reading in the CAFRA area, because it confronts many interesting issues. After rejecting a judicial estoppel claims against government, the appeals court found no equitable exceptions to the Anti-Assignment Act applied given that a CAFRA fee award is a claim against the U.S. and CAFRA fees belong to the client rather than the attorney. The goods news for attorneys is that even though the Ninth Circuit determined the fees must be paid to the clients, it refused to find that the Anti-Assignment Act avoided all interests of the attorney such that a contractual charging lien for attorney’s fees was valid. The reviewing court vacated the order awarding fees directly to the attorney and remanded to determine the priority of liens, with the future possibility that the attorney’s charging lien “trumps” the government’s tax liens against claimants.