Generally the written contract you had with your prior attorney controls. If it was a straight contingency fee, he should not get paid, but there is a term called quantum meruit where the attorney is entitled to the value of the services performed. If he sent out a demand without your approval, you have a good argument that he breached the contract. I know you feel you were burned, but I would highly recommend getting counsel to represent you. Your new attorney can help make sure your prior attorney doesn't get paid and you maximize your recovery.
Your focus is misplaced. I would not worry right now about your former attorney's lien - you can dispute that when and if there is a settlement or judgment. Right now you need to focus on prosecuting your case.
I am not sure what you mean by "reopening" your claim. If you have a statute of limitations deadline approaching you need to file a lawsuit by that date; your negotiations with the insurance company will not suspend the running of the limitations period.
I recommend that you retain a new attorney immediately.
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I agree with the others that have commented on here that your focus should be on prosecuting your current case and not on the attorneys lien agreement. The lien agreement is capable of negotiation at the conclusion of your case.
I specialize in insurance coverage and practice in Orange County. I would be happy to discuss the details of your case with you free of charge. Please do not hesitate to give me a call.