Anthony E. Davis

Given the time of year, we begin with a story often told by my Canadian friend Simon Chester (and often repeated by me) about Simon’s friend Al. Simon describes how each New Year’s Day, his friend Al would settle into a rocking chair overlooking his back yard and consider how his firm had fared that year. Not so different from most lawyers. But Al’s annual ritual had a twist. As he sipped his hot toddy, he’d also consider his list of clients and would pick one—and fire that client. In this article we will consider when, why and how lawyers may go about withdrawing from client engagements—and whether it is appropriate to follow Al’s example.

In New York, the principles governing withdrawal from representation are set out in New York Rule of Professional Conduct (RPC) 1.16(b) and (c). The Rule provides for two sets of circumstances—when lawyers are required to withdraw (RPC 1.16 (b)), and when they are permitted to withdraw (RPC 1.16(c)). Withdrawal is required in any of four circumstances:

“(1) the lawyer knows or reasonably should know that the representation will result in a violation of these Rules or of law; (2) the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client; (3) the lawyer is discharged; or (4) the lawyer knows or reasonably should know that the client is bringing the legal action, conducting the defense, or asserting a position in the matter, or is otherwise having steps taken, merely for the purpose of harassing or maliciously injuring any person.”

Rule 1.16(c) provides 13 possible permissive grounds for withdrawal, when:

“(1) it can be accomplished without material adverse effect on the interests of the client; (2) the client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes is criminal or fraudulent; (3) the client has used the lawyer’s services to perpetrate a crime or fraud; (4) the client insists upon taking action with which the lawyer has a fundamental disagreement; (5) the client deliberately disregards an agreement or obligation to the lawyer as to expenses or fees; (6) the client insists upon presenting a claim or defense that is not warranted under existing law and cannot be supported by good faith argument for an extension, modification, or reversal of existing law; (7) the client fails to cooperate in the representation or otherwise renders the representation unreasonably difficult for the lawyer to carry out employment effectively; (8) the lawyer’s inability to work with co-counsel indicates that the best interest of the client likely will be served by withdrawal; (9) the lawyer’s mental or physical condition renders it difficult for the lawyer to carry out the representation effectively; (10) the client knowingly and freely assents to termination of the employment; (11) withdrawal is permitted under Rule 1.13(c) or other law; (12) the lawyer believes in good faith, in a matter pending before a tribunal, that the tribunal will find the existence of other good cause for withdrawal; or (13) the client insists that the lawyer pursue a course of conduct which is illegal or prohibited under these Rules.”

Both these provisions are expressly subject to RPC 1.16 (d) and (e).

1.16(d) states that “If permission for withdrawal from employment is required by the rules of a tribunal, a lawyer shall not withdraw from employment in a matter before that tribunal without its permission. When ordered to do so by a tribunal, a lawyer shall continue representation notwithstanding good cause for terminating the representation.”

1.16(e) provides that “Even when withdrawal is otherwise permitted or required, upon termination of representation, a lawyer shall take steps, to the extent reasonably practicable, to avoid foreseeable prejudice to the rights of the client, including giving reasonable notice to the client, allowing time for employment of other counsel, delivering to the client all papers and property to which the client is entitled, promptly refunding any part of a fee paid in advance that has not been earned and complying with applicable laws and rules.”

Two recent cases from other states give color to these rules. In Cesso v. Todd, 82 N.E.3d 1074 (Mass. App. 2017), Cesso engaged attorneys Todd and Quigley to represent him in a matrimonial action. Shortly afterwards, Quigley left Todd’s firm to start his own firm, and Todd filed a notice of withdrawal of appearance, sent Cesso a letter that informed Cesso of Quigley’s departure from Todd’s firm, and stated that “[a]lthough Quigley and I will continue to work together and consult on your case, your hard files will need to be transferred to Quigley’s office in Newburyport.” The letter was hand delivered to Cesso, who signed it, agreeing to the file transfer. However, although thereafter Cesso had no verbal communication with Todd and Todd did not bill Cesso, Cesso subsequently copied Todd on emails to Quigley, requested that Todd appear with Quigley at hearings, requested a conference call with both attorneys to discuss strategy, and questioned what the roles were between Quigley and Todd. Todd never responded to these emails or spoke to Cesso, nor did he appear at trial. After the case concluded, Cesso filed suit against both lawyers for legal malpractice.

The lower court granted summary judgment in favor of Todd, and Cesso appealed. Todd argued that there was no legal malpractice because there was no attorney-client relationship after Todd withdrew from the action. The appellate court disagreed, reasoning that an attorney-client relationship can be implied-in-fact. The appellate court looked past Todd’s formal withdrawal of his appearance and concentrated on the facts that demonstrated that a reasonable person would think Todd was still working on the case, albeit in the background. On that basis, the appellate court held that a reasonable trier of fact could conclude that the attorney-client relationship continued after Todd formally withdrew. The case demonstrates that plain speaking—and acting consistently—can make the difference between a successful dispositive motion and an expensive settlement in a legal malpractice claim.

In Regal Cinemas v. Shops at Summerlin, 2017 U.S. Dist. LEXIS 149497 (E.D. Cal. Sept. 13, 2017), the court considered the timing of withdrawal in the context of the rules governing conflicts of interest. Regal Cinemas (the plaintiff) sued Shops at Summerlin North, Elk Grove Town Center and the Howard Hughes Corp. (HHC) (collectively, the defendants) for breach of contract. The defendants moved to disqualify plaintiff’s counsel (the firm) on the basis that the firm had terminated its representation of HHC for the purpose of engaging Regal Cinemas as a client in the litigation.

In California (like New York), the Rules of Professional Conduct prohibit an attorney from representing a new client where the new client’s interests are adverse to the interests of a current client, even in unrelated matters. By contrast, an attorney may represent a client against a former client, except where the subject of the new matter is the same as, or substantially related to, the subject of the previous matter. Thus, the issue was whether HHC was the firm’s current or former client at the time the firm sought to represent the plaintiff.

According to the defendants, HHC and the firm entered an “ongoing” attorney-client relationship pursuant to an engagement letter executed in 2015 and the firm provided legal advice to HHC as late as June 2016. In October 2016, the firm sent a letter to HHC terminating the attorney-client relationship “effective immediately,” and filed the litigation on behalf of the plaintiff. The defendants argued that the firm could not avoid the rule against concurrent representations by terminating an existing client for the purpose of taking on a representation adverse to that client. The plaintiff argued that the firm’s attorney-client relationship with HHC was not ongoing because the 2015 engagement letter stated that the firm would perform additional legal services as the parties “may agree upon from time to time,” that there had been no such subsequent agreement, thereby making HHC a former client when the last work was performed, in June, and that the letter was only sent out of an abundance of caution. The court held that, under all the circumstances, HHC was a former client and, since the subject matter of the litigation did not substantially relate to the subject matter of the firm’s representation of HHC, the firm should not be disqualified. This case illustrates the importance of timely drafting and sending termination letters to end the representation, but also of narrowly tailoring engagement letters to the particular representation at hand.

It is also critical that the termination be confirmed before the commencement of representation in a matter adverse to the now former client. In McClain v Allstate Prop. & Cas. Ins. Co., Case No. 3:16CV843-TSL-RHW (S.D.Miss. Northern Div., April 25, 2017), the lawyer was disqualified when he sent a termination letter one day after execution of the engagement agreement with the new client.

Returning to Al, few are the lawyers who don’t suffer under the burden of “problem” clients, who may be the source of significant trouble, including ethical dilemmas, for little or no reward. While the year is still young, you may want to consider following Al’s practice and terminate your relationship with a client whom you have concluded is unworthy within the meaning of RPC 1.16. Of course, consult the Rule, and, if you do decide that it is appropriate to terminate a client relationship, do it clearly, timely and in accordance with 1.16(e). Most important, do it in a way that avoids harm to the client’s interests.

Anthony E. Davis is a partner of Hinshaw & Culbertson and is a past president of the Association of Professional Responsibility Lawyers.