What You Must Disclose to Clients About Pharmacy Liens (And How to Do It)

James Wong — Founder & Pharmacist, LienScripts | June 2, 2025 | 8 min read

What does a PI attorney actually have to tell a client before enrolling them in a pharmacy lien? Here is the minimum required disclosure, a practical intake script, and the ongoing communication obligations that apply throughout the case.

[!KEY] The attorney's disclosure obligation under California RPC 1.4 requires clients to understand that the pharmacy lien will reduce their net recovery — this must be said clearly at enrollment, not revealed for the first time at disbursement.

The Practical Ethics Question

Of all the ethics questions surrounding pharmacy liens, the most practically useful one is also the most specific: what do I actually have to tell my client?

The answer is not found in pharmacy lien-specific guidance — there is none. It is found in California RPC 1.4 (Communication) and, for conflict considerations, RPC 1.7 and 1.8.6. Applied to pharmacy liens, these rules produce a clear and workable disclosure framework.

What follows is that framework — minimum required disclosures at intake, ongoing obligations during the case, what to communicate at pre-settlement, and how to handle the conflict-of-interest question cleanly.

What to Disclose at Intake — The Minimum

Before a client signs a pharmacy lien agreement, they need to understand five things:

1. What the lien is and why it exists. The pharmacy provides medications on credit — no payment required upfront. In exchange, the pharmacy receives a lien against the client's settlement proceeds. When the case resolves, the pharmacy is repaid from those proceeds, alongside other medical lienholders.

2. That the lien reduces their net recovery. The client's net recovery — after attorney fees, litigation costs, and lienholders — will be reduced by the pharmacy lien amount. This is not hidden from the client; it is exactly how every other medical lien works. But it must be said.

3. How the amount is determined. The lien amount is not a flat fee. It accrues on a per-prescription basis as medications are dispensed throughout the case. The total is determined by which medications the treating physician prescribes and for how long the client's treatment continues. Clients should understand that longer treatment periods or more complex medication regimens will produce higher lien amounts.

4. The non-recourse structure. If the case does not result in a settlement or favorable verdict, the lien is waived. The client owes nothing. This is one of the most important pieces of information for a client to hear at intake — it removes the fear that signing the agreement creates a personal debt that exists regardless of case outcome.

5. That the amount may be negotiated. Pharmacy lien amounts are typically negotiated at settlement. The amount shown at disbursement may be less than the gross amount that accrued during the case. The client should not assume that the gross lien balance is the final number.

These five points can be communicated in under three minutes. They do not require a lecture. They require a clear, honest conversation before the client signs.

[!KEY] The non-recourse structure of the pharmacy lien — the client owes nothing if the case doesn't recover — must be explained explicitly at intake; clients who don't understand this often refuse to sign because they fear creating personal debt.

A Practical Intake Script

The following language is not legal advice and should be adapted to your practice. It is offered as a model for the kind of plain-English explanation that satisfies the RPC 1.4 obligation without overwhelming the client:

"We work with a pharmacy lien program that allows you to fill your injury-related prescriptions at no cost to you during the case. Instead of paying out of pocket or fighting with your insurance company, the pharmacy fills your medications and is repaid from your settlement proceeds — the same way your doctors and other medical providers are repaid.

The amount the pharmacy is owed depends on which medications you receive and for how long. We'll keep you updated as the case progresses. When your case settles, we'll work to negotiate the pharmacy lien down, just like we do with medical liens. Your net recovery will reflect that negotiation.

One more thing: if your case doesn't settle for any reason — if we lose at trial or the case is dismissed — you won't owe anything for the medications. The pharmacy lien is contingent on your case resolving in your favor.

Do you have any questions about how this works before you sign?"

That is the substance of what RPC 1.4 requires. Adjust the language to match your office's style.

Ongoing Communication During the Case

The disclosure obligation does not end at intake. For cases that extend over many months, RPC 1.4 requires that clients remain reasonably informed about material developments — including the accrual of their pharmacy lien balance.

For cases running under six months, a single intake disclosure and a pre-settlement summary are typically sufficient. For cases running longer — particularly those involving ongoing complex medication regimens — consider:

• An annual written update with the current lien balance
• A notice when the lien balance crosses a material threshold (for example, when the lien balance first exceeds a significant amount relative to the expected settlement value)
• Prompt communication if the treating physician changes the medication plan significantly, which would affect the lien trajectory

[!KEY] For cases running longer than six months, send the client a written lien balance update at the one-year mark — clients who are surprised by the final balance at disbursement are far more likely to dispute it than those who have tracked it throughout the case.

The goal is that settlement disbursement is not the first time a client hears an updated lien figure. Clients who are informed throughout are easier to work with at disbursement and less likely to dispute the lien amount after the fact.

Pre-Settlement Communication

Before the client signs a settlement release, provide a written breakdown that includes:

• The current gross pharmacy lien balance
• The anticipated negotiated reduction, if a preliminary figure is available
• The estimated net lien amount after negotiation
• How this amount factors into the overall settlement disbursement

This is the same information you would provide for a hospital lien or specialist lien. It is good practice regardless of the type of lien. For pharmacy liens specifically, clients sometimes lose track of the accruing amount during a long case, and a pre-settlement summary is the clearest way to set expectations before the client commits to the settlement number.

The Conflict-of-Interest Question

[!WARNING] If a pharmacy lien provider offers any financial benefit for referrals — fee reductions, volume incentives, or anything else of value — that arrangement requires informed written client consent under California RPC 1.8.6 before enrollment.

California RPC 1.8.6 addresses compensation from third parties: a lawyer shall not accept compensation for representing a client from someone other than the client unless the client gives informed written consent after full disclosure.

Reputable pharmacy lien providers do not pay attorneys referral fees or any form of financial incentive for enrolling clients. If you receive no financial benefit from recommending or using a pharmacy lien provider, there is no conflict under RPC 1.8.6 requiring special disclosure.

If, however, a pharmacy lien provider offers you any form of financial benefit — volume discounts on your own services, referral fees, or anything else of value — that arrangement requires informed written client consent under RPC 1.8.6. This is a clear ethics line. Do not cross it without the required consent, and consider carefully whether the arrangement is appropriate at all.

The safest approach: use providers who do not pay attorney referral fees. The disclosure burden is minimal, and the ethics risk is eliminated. A related question worth considering is whether the program restricts where your client fills prescriptions — or whether they retain true free choice of pharmacy. For the full client autonomy analysis under Model Rule 1.2, see pharmacy lien free choice and client autonomy.

This post is for informational purposes and does not constitute legal advice. Consult your own ethics counsel for guidance on your specific situation.

Related Resources

• California RPC and Pharmacy Liens: Your Complete Fiduciary Obligations
• Can You Recommend a Pharmacy Lien Provider Without Creating Liability?
• When Your Client Disputes the Pharmacy Lien Amount
• Client Intake: Pharmacy Questions Every PI Attorney Should Ask