State Law Controls Attorney Charging Liens in MDLs: Third Circuit Endorses Pennsylvania’s Recht Causation Test and Rejects McKenzie-Based Fee-Splitting for Former Counsel in NFL Concussion Awards

Case: In re: NFL Players Concussion Injury Litigation (Goldberg, Persky & White, P.C., Appellant)

Court: U.S. Court of Appeals for the Third Circuit

Date: August 27, 2025

Disposition: Affirmed (Not Precedential)

Introduction

This appeal arises from the long-running NFL Players Concussion Injury multidistrict litigation (MDL) in the Eastern District of Pennsylvania. A former lawyer for a retired player asserted an attorney’s charging lien seeking a portion of the contingency fee earned by successor counsel after the player obtained a $196,101 award. A court-appointed special master recommended recognizing only a limited lien for the former firm’s reasonably incurred costs, not fees. The district court adopted that recommendation. The Third Circuit affirmed, holding that the district court did not abuse its discretion.

The decision is noteworthy for three reasons:

It endorses the use of state charging-lien law—here, Pennsylvania’s equitable framework from Recht—to resolve intra-counsel fee disputes over MDL settlement awards, rather than the federal McKenzie reasonableness framework that had previously been used within this MDL for fee-splitting disputes.
It clarifies that the law-of-the-case doctrine does not bind a district court to prior fee-splitting approaches across distinct lien petitions within the same MDL program.
It places dispositive weight on causation: former counsel must show that their services “operated substantially or primarily to secure the fund” (the individual award) to obtain a fee through a charging lien; absent that, reimbursement may be limited to costs only.

The parties: Goldberg, Persky & White, P.C. (former counsel) asserted the lien; J.R. Wyatt Law (successor counsel) obtained the award after rescoring prior neuropsychological testing under 2022 program changes eliminating race-based norming.

Summary of the Judgment

The Third Circuit affirmed the district court’s adoption of a special master’s recommendation to deny former counsel a share of successor counsel’s contingency fee and to award only reasonably incurred costs. Applying Pennsylvania charging-lien law (Recht v. URA of Clairton), the special master concluded—and the district court agreed—that former counsel’s work did not “operate substantially or primarily” to secure the player’s specific award. Successor counsel’s rescoring of 2017 test results and prompt claim submission under the updated scoring protocol was the “engine of recovery.”

The court rejected former counsel’s arguments that (a) the district court was bound by the MDL’s earlier McKenzie-based fee-splitting approach, (b) New York law governed, and (c) Pennsylvania lien law was misapplied. It held that each lien petition is a distinct action, so law-of-the-case did not apply; Goldberg failed to show a true conflict or that New York’s law would change the outcome; and the district court reasonably applied Recht’s five-factor test, particularly the causation requirement.

Analysis

Precedents Cited and Their Influence

In re National Football League Players Concussion Injury Litigation, 821 F.3d 410 (3d Cir. 2016) — Confirmed the comprehensive settlement structure of the NFL concussion MDL, setting the background for individualized claims processing and fee arrangements.
Dunn v. H.K. Porter Co., 602 F.2d 1105 (3d Cir. 1979) — Recognizes district courts’ supervisory authority over attorneys’ fees in complex litigation and class actions, underpinning the MDL court’s role in capping fees and policing fee disputes.
McKenzie Construction, Inc. v. Maynard, 823 F.2d 43 (3d Cir. 1987) — Provides factors for testing the reasonableness of contingency fees, which the MDL court had used to cap individually retained counsel’s fees at 22% and, historically, to mediate fee splits between current and former counsel. The special master pivoted away from using McKenzie to adjudicate charging liens, emphasizing that liens are state-law equitable rights rather than federal reasonableness allocators.
Home Depot USA, Inc. v. Lafarge N. Am., Inc., 59 F.4th 55 (3d Cir. 2023) — Clarifies that the law-of-the-case doctrine does not apply across distinct actions within a multidistrict proceeding. This supports the district court’s ability to adopt a new, state-law-based approach to charging liens notwithstanding earlier magistrate decisions applying McKenzie to other fee disputes.
Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487 (1941); Chin v. Chrysler LLC, 538 F.3d 272 (3d Cir. 2008); Hammersmith v. TIG Insurance Co., 480 F.3d 220 (3d Cir. 2007); Griffith v. United Air Lines Inc., 203 A.2d 796 (Pa. 1964) — Together, these decisions dictated the choice-of-law analysis: federal courts apply forum state conflicts rules; Pennsylvania uses interest analysis per Griffith; absent a true conflict, Pennsylvania law applies. Goldberg neither showed a conflict nor explained how New York law would alter the outcome, so Pennsylvania law governed.
Recht v. Urban Redevelopment Authority of the City of Clairton, 168 A.2d 134 (Pa. 1961) — The keystone of Pennsylvania’s equitable charging lien doctrine. The Third Circuit accepted the special master’s view that the Pennsylvania Supreme Court would apply Recht as refined by later cases, with a particular focus on the second factor: former counsel’s services must have “operated substantially or primarily to secure the fund” at issue. That causation showing was missing here.
Prior MDL management decisions: The MDL court capped contingency fees at 22% using McKenzie (2018 WL 1658808) and had earlier referred fee petitions to a magistrate (In re NFL Players’ Concussion Inj. Litig., 826 F. App’x 136 (3d Cir. 2020)). The special master later implemented new rules, moving lien adjudications to state law.

Legal Reasoning

Scope of district court discretion in MDLs. The MDL court may supervise and cap fees (Dunn) and can appoint a special master to recommend frameworks for fee disputes. The special master’s adoption of a state-law approach to attorney charging liens is “sensible and legally sound,” and the district court’s decision to follow it is reviewed for abuse of discretion (In re NFL Players’ Concussion Injury Litig., 962 F.3d 94, 101 (3d Cir. 2020)).
Charging liens are matters of state law, not federal “free-floating” rights. A charging lien secures an equitable recovery for former counsel when the fee contract no longer provides a post-termination entitlement. The special master correctly observed that there is no federal common-law charging lien, and that such rights sound in state unjust enrichment/equity. Hence, Pennsylvania substantive law applies—unless a proper choice-of-law analysis compels otherwise.
Law-of-the-case does not bind across distinct MDL lien actions. Although earlier lien disputes in this MDL were resolved with McKenzie reasonableness factors, each lien petition is a separate action. Per Home Depot, law-of-the-case cannot be exported across distinct actions. The district court could therefore adopt a different methodology (state law) for later lien petitions.
Choice of law: Pennsylvania applies. Under Klaxon/Chin/Hammersmith/Griffith, the forum state’s conflict rules govern. Because Goldberg identified neither a true conflict between Pennsylvania and New York law nor a persuasive basis for enforcing any choice-of-law clause to this particular lien dispute, the special master reasonably applied Pennsylvania law. On appeal, Goldberg’s argument for New York law was cursory and undeveloped; the Third Circuit declined to disturb the district court’s determination.
Applying Pennsylvania’s Recht test. To establish a charging lien, former counsel must satisfy five elements, most pivotally that their services “operated substantially or primarily to secure the fund.” The “fund” here is the player’s individual award. The special master found, and the district court agreed, that successor counsel’s actions—leveraging the 2022 protocol changes, rescoring 2017 tests, and promptly submitting the successful claim—were the engine of recovery. Former counsel’s earlier efforts (registration, arranging two exams that did not qualify, and largely undated or pre-settlement work) did not substantially or primarily secure the award. On equity, the special master nonetheless recommended (and the court allowed) a limited lien for reasonably incurred costs “tightly linked” to the claim; the proved costs were about $3,000. A fee share was not warranted.

Impact and Significance

Methodological shift within MDL fee disputes. Even though non-precedential, the decision validates a move away from using a federal reasonableness balancing (McKenzie) to divide contingency fees between successive counsel, and toward applying state charging-lien law. Expect more lien adjudications to turn on state-specific elements and causation, not on generalized equitable splits.
Causation reigns: “Engine of recovery” controls. Former counsel seeking a fee through a charging lien must show their work substantially or primarily produced the specific award. Administrative or foundational steps (e.g., registration, non-qualifying tests, or work unrelated to the eventual qualifying criteria) may be insufficient. Where causation is lacking, recovery will likely be limited to documented, reasonable costs.
Law-of-the-case will not preserve earlier fee-splitting practices across MDL lien petitions. Lawyers cannot rely on prior internal program decisions to control later lien disputes. Each petition stands on its own record and governing state law.
Practical consequences for practitioners:
- Document tightly linked, outcome-producing work. Block-billing, undated time, or billing for “lien” or “poaching” issues will carry little or no weight under Recht.
- Prepare for state-law choice-of-law battles. Identify actual conflicts and demonstrate why another state’s law materially changes the result; conclusory invocations of a choice-of-law clause will not suffice.
- Expect reduced fee-sharing windfalls for former counsel whose work did not lead to the winning theory or proof under evolving program rules.
- Incentives may shift toward efficient, specialized successor counsel who can capitalize on programmatic changes; claimants may retain greater net recoveries when fee “taxes” from former-counsel splits are curtailed.
Continued vitality of fee caps and reasonableness review. The MDL’s 22% fee cap and the court’s supervisory authority remain intact. This decision merely distinguishes between (a) policing overall reasonableness of fees (where McKenzie still informs caps) and (b) allocating fees between successive counsel (now guided by state charging-lien law).

Complex Concepts Simplified

Charging lien. An equitable security interest that allows a lawyer to be paid from a client’s recovery when the lawyer no longer represents the client and the fee contract no longer gives a direct payment right. In Pennsylvania, it is recognized through Recht’s five-factor test; it is not a federal right.
Recht test (Pennsylvania). Former counsel must show: (1) a fund exists for equitable distribution; (2) the lawyer’s services substantially or primarily secured that fund; (3) the parties agreed the lawyer would look to the fund for compensation; (4) the lien is limited to litigation costs/fees that produced the fund; and (5) equities necessitate recognizing the lien. The second factor (causation) is often dispositive.
McKenzie framework. A federal reasonableness test for evaluating contingency fees (e.g., circumstances at retention, quality of work, results obtained, substantial contribution). Useful for assessing total fees, but not controlling for recognizing state-law charging liens between successive counsel.
Law-of-the-case doctrine. A prudential rule discouraging reconsideration of legal issues previously decided within the same case. It does not apply across distinct actions inside an MDL, so a court can vary its approach among different lien petitions.
Choice of law in federal court. Federal courts apply the forum state’s choice-of-law rules. In Pennsylvania, courts first determine whether a true conflict exists. If not, Pennsylvania law applies. Parties must identify and develop conflicts with analysis; bald assertions are insufficient.
Quantum meruit / unjust enrichment. The equitable basis for compensating a lawyer for the value of services when no enforceable contract right to payment exists after termination. A charging lien is often how that equitable claim is secured against the recovery.

Practice Pointers and Lessons

For former counsel:
- Build a causation record. Keep contemporaneous, dated time entries showing how your work materially advanced the precise theory or evidence that generated the award.
- Connect the dots. Demonstrate how your steps “operated substantially or primarily” to secure the fund under Recht. Mere registration or failed testing is unlikely to suffice absent a clear causal chain.
- Be precise about costs. Expect scrutiny; only “tightly linked” costs are recoverable. Avoid billing time to lien prosecution as a basis for increasing the lien.
- Brief choice-of-law seriously. Identify a true conflict and explain how a different state’s law would lead to a different result. Cite statutes (e.g., New York Judiciary Law § 475) and case law, and tie them to your facts.
For successor counsel:
- Document the “engine of recovery.” Show how your work—especially in navigating evolving program rules—produced the qualifying proof, leading to the award.
- Use the record to resist fee splits. Under Recht, emphasize the lack of substantial/primary contribution by former counsel and propose reimbursement limited to reasonable costs.
For courts and special masters in MDLs:
- Distinguish between fee caps/overall reasonableness (federal supervisory role) and lien recognition/amount (state substantive law).
- Apply the forum’s conflicts analysis and require robust briefing before departing from forum law.
- Center causation when assessing charging liens, and consider costs-only awards where equity warrants limited recovery.

Conclusion

The Third Circuit’s affirmance in this non-precedential decision crystallizes a practical rule for attorney charging liens in MDL settlement programs: state law, not federal reasonableness balancing, governs whether and to what extent former counsel can intercept a client’s individual award. In Pennsylvania, Recht’s causation requirement is paramount. Former counsel must show their services substantially or primarily secured the specific fund; otherwise, relief may be limited to documented costs. The court also clarifies that prior fee-splitting approaches do not bind later lien petitions via law-of-the-case in the MDL context, and that choice-of-law arguments must be properly framed with true-conflict analysis.

Applied to the facts here, successor counsel’s swift use of the 2022 rescoring protocol produced the award. Former counsel’s efforts, though not irrelevant, did not clear the causation threshold. The decision thus steers future intra-counsel disputes toward rigorous state-law analyses, rewards outcome-producing work, and promises a leaner fee burden on claimants’ recoveries in MDLs.