IN RE: NAVIDEA BIOPHARMACEUTICALS LITIGATION

Background

Navidea Biopharmaceuticals, Inc. and Third-Party Defendant Macrophage Therapeutics, Inc. moved to compel their former counsel, Thompson Hine LLP and Mintz & Gold LLP, to transfer litigation files concerning their representation in this case. Thompson withdrew on September 14, 2023, without explaining whether it asserted a retaining lien or charging lien. A retaining lien is a lawyer’s claimed right to keep client papers or property in the lawyer’s possession until unpaid legal fees are paid. Mintz & Gold withdrew on June 10, 2024, and initially stated that it was not asserting such a lien at that time.

Navidea and Macrophage later informed the court that both firms were asserting retaining liens. The court directed the firms to respond to the motion by September 25, 2024, stating that it would presume a firm did not object if it failed to respond. Mintz & Gold informed the court on September 25 that it had resolved the issues concerning its files and agreed to turn them over to plaintiff’s counsel by October 2, 2024. Thompson did not respond, so the court presumed that Thompson did not object to the requested relief.

Legal standard and findings

The court stated that New York law generally allows a discharged attorney to retain a former client’s papers and property when the attorney has provided services for which payment has not been made. The court also stated that, absent urgent circumstances, a court ordinarily may not require turnover of papers subject to a lien unless the client pays the fees or provides security for payment.

An exception applies when special circumstances exist. The client must clearly show the need for the papers, the harm that would result from being denied access, and the inability to pay the legal fees or post a reasonable bond. The court found that Navidea and Macrophage met that standard. The materials showed that they were insolvent, that Navidea’s outstanding liabilities exceeded its cash on hand by more than twelve times, and that Navidea was in default on a line of credit secured by company assets. Navidea also made a credible showing that it could not pay the amounts demanded by Thompson or Mintz & Gold. James Ruiz stated that he needed the litigation files to prepare for the trial scheduled for December 9, 2024, and that Navidea and Macrophage had retained no copies of the relevant documents and papers.

Disposition

The court ordered that the motion was granted only as to Thompson. It ordered Thompson to provide the litigation files to Navidea and Macrophage no later than seven days after September 27, 2024. The order did not separately state a disposition as to Mintz & Gold; instead, it recorded that Mintz & Gold had resolved the issues concerning its files and agreed to turn them over by October 2, 2024.