Retention and Withdrawal of Counsel: a guide for attorneys

Adapted from a continuing legal education (“CLE”) course of the same name taught by Richard A. Klass.
Date: October 2015

There are many important considerations when a lawyer is being retained by a client and when the lawyer may be withdrawing from representation of the client.

A: Practice-wide Policies

The attorney in his own law firm must appreciate that the practice of law is a business as well as a profession. And the practice of law is a service business, serving customers (which are referred to as “clients” when receiving professional services). Customer service is an extremely important element of running a successful business. The success of a law firm will generally derive from excellent customer service. Some good practices for creating a successful law firm include:

Defined areas of practice:
In the old days, people had their family lawyer who dealt with all of their legal issues. Unfortunately, there has been a tremendous shift in the general economy and, certainly, the legal field towards specialization. It is difficult for one lawyer to handle every case that comes by him because each area of law has developed into many branches and intricate layers. While the general practitioner is not dead, the notion of one lawyer handling all of his client’s needs is in decline. The attorney ought to be clear and define his areas of practice so that clients know which matters the firm handles. Matters that are “outside the box” may be better handled by another firm unless the attorney is going to become familiar enough with the particular area of law to be effective for the client.
Appropriate, happy staff:
Staffing a law firm is very important. If secretaries, paralegals, assistants or associates are generally dissatisfied with their job environment, it will become quite apparent to those around them, including other office staff, court personnel, other lawyers and, most importantly, clients. When there is job satisfaction, there will be client satisfaction. The personality of staff ought to imbue the image of the firm. Interactions between staff and clients should be pleasant and respectful.
Communication:
Many grievances filed against lawyers arise out of poor communication between lawyer and client. Clients expect to hear from their attorneys on a timely basis about their cases. Various methods of communications with clients may include letter, fax, email, text, or in-person conference. Updates may include sending copies of relevant documents, opinions about strategies to be taken, or simply a status letter. Let clients know they are not forgotten. Very important: Sometimes things get “lost in translation” – either the client thought you said something you never said or denies hearing something you said five times; the follow-up letter or email confirming the conversation or advice may be invaluable to a later dispute or complaint between lawyer and client.
Billing Discretion:
There is a very important distinction between time recording and billing. It is very valuable for a law firm to keep track of its time spent on various matters for all sorts of reasons, not just for billing purposes. Time recording allows the law firm to determine whether certain areas of law or certain clients are financially beneficial to the firm’s “bottom line.” Time ought to be recorded for all cases, including contingency ones. Then, when billing the client for time spent on his matter, the lawyer ought to review the bill and use some discretion to determine whether the bill is appropriate.
Technology:
Utilizing technology in every facet of the law firm will help build success. Technology will play a role in management, marketing, accounting, litigation protocols, billing, tax matters, case investigation and case-specific matters.
Marketing:
Before any marketing material is released, the lawyer must take a careful look at it and ask himself, “Does this project the image I want to make?” If the answer is no, then pull it. Marketing, advertising and public relations are all interconnected into the image of the law firm. There is a wide range of clients, from those seeking the conciliatory, settling type of lawyer to those seeking the pitbull, take-no-prisoners type of lawyer. Client expectations may not be met if they believe they were offered one thing in an advertisement but received another.

B: Screening Clients

Not all clients are the same! The 80-20 Rule (also named the “Pareto Principle” after Italian economist Vilfredo Pareto) is that 80% of the firm’s profits are going to derive from 20% of its clients (and, conversely, the other 80% of clients will consume most of the firm’s energy but contribute little to profits).

First interaction:
Many times, the first interaction between lawyer and client is over the telephone. The first decision the lawyer must make is whether to engage in detailed conversation with prospective clients over the phone or whether to elicit enough information as to whether the lawyer can help the client in order to set up an in-person consultation. (Remember: that 2-minute phone call may be enough to constitute an “attorney-client” relationship with the random caller).
Web/email:
Nowadays, many lawyers are getting unsolicited emails or postings on social media/business sites. The law firm should develop protocol in responding to those potential clients.
Consultation:
The client comes into the office for the initial consultation. First question: Do the lawyer, his staff, and the physical office present the image of a lawyer that the client would want to retain? Assuming the answer is an emphatic “Yes,” then the client consults with the lawyer who is going to handle his case. The client is there not only to get advice but also to judge the character, knowledge and appearance of the lawyer. In turn, the lawyer is “checking out” the client who will be calling the office, coming in for meetings and going with the lawyer to court. Is that client the person that the lawyer feels comfortable representing? If not, think twice about taking on the matter.
Conflicts check:
It is very important that the lawyer perform a check on any potential conflicts of interest before taking on a matter.
Client’s expectations:
Assess the viability of the client’s position to determine whether the client has realistic expectations which can be met. Hand-in-hand with those expectations, can the client afford the legal fees and expenses associated with achieving results.
“Gut instinct”:
The hardest part of screening clients is learning to rely on a gut instinct about people or cases. If the lawyer feels reluctance in taking on a matter, it may be for good reason. Getting to know what sounds like a bad case or who looks like trouble takes experience. Unfortunately, this gut instinct may take years to develop (and, hopefully, not being burned too badly on the way to wisdom!).
Declining the case:
There may be circumstances that prevent the lawyer from representing the client or something came up during consultation that impels the lawyer to decline representation. Lawyers should become familiar with some of the reasons contained in Rules of Professional Conduct Section 1.16, infra.

C: Retention of Counsel

Once the lawyer and client have decided to do business together, the terms of the retention must be clearly laid out.

Fee arrangements:
There are various fee methods in which a client may retain an attorney. Hourly, flat fee, contingency, hybrid, per-project or stage billing, and statutory fees are most of the ways that lawyers obtain fees on clients’ matters. Aside from the requirement under New York’s Rules of Professional Conduct Section 1.5 that fees not be “excessive or illegal,” 1 the lawyer and client may negotiate a reasonable fee for the lawyer’s work. It is important for the viability of the law firm that sufficient fees be generated from client matters.
Retainer agreement:
Once the fee method has been negotiated, the client should sign a retainer agreement with the lawyer (even in matters in which a formal retainer agreement or letter of engagement is not required). The retainer agreement, in and of itself, is a marketing method of the law firm. More importantly, the agreement ought to lay out all of the respective rights and responsibilities of the lawyer and client.
Other statutory requirements:
There may be other statutes or rules that govern retention of counsel which should be determined and complied with, including but not limited to Office of Court Administration (OCA) retainer statements, OCA fiduciary forms, court orders, or administrative agency filings.

D: Terms of the Retainer Agreement

A comprehensive, plain English retainer agreement should be provided to all clients. A copy of the agreement should be provided to the client. A sample retainer agreement is attached as Addendum A. While one form of retainer agreement cannot satisfy all types of matters, there are some terms that ought to be included in every agreement, including:

Nature and scope of work:
Lay out for the client exactly what the law firm will and won’t do. The scope of work may include many activities associated with achieving the overall result. It is also important to specify what matters the law firm will not be handling as part of its representation pursuant to the agreement.
Method of computing the fee:
The agreement should specify the method in which the legal fee will be computed. If hourly, specify the hourly rate of those lawyers and staff who will be billing on the matter. If there is a contingency, specify whether expenses are deducted prior to or after computation of the percentage fee.
Payment of expenses:
The payment of expenses expended in the matter may be billed to the client or deducted at the conclusion of the matter. Client may be expected to pay certain expenses upfront or at certain times, such as expert witness fees.
Fee arbitration:
With few exceptions, clients have the right to arbitrate legal fees with their lawyers. Include in the agreement: “In the event of a dispute, you have the right to receive notice of your right to arbitrate any fee dispute in accordance with Part 137 of the Rules of the Chief Administrator.”
Statement of Client’s Rights:
Attach a copy to the retainer agreement. Should also be conspicuously posted in the lawyer’s waiting room or office.
Fee sharing:
If two or more law firms will be working on the matter, lay out the manner in which the fee will be shared.
Payment by others:
There may be occasions when the client is not the one who will be paying the bills (perhaps, a parent or spouse will be). Ensure that appropriate language binding the guarantor is included in the agreement – and, make sure, that the guarantor is aware that the attorney-client privilege trumps his desire to know what is going on with the matter!
Withdrawal of counsel:
While not required to be in the agreement itself, it may be recommended for the lawyer to inform the client that the failure to pay fees when billed will trigger the lawyer’s withdrawal from the matter. If court permission is needed to withdraw, the lawyer may want to inform the client that a motion may be made for withdrawal and may specify the reason(s) for withdrawal, including nonpayment of fees.

E: Deciding Whether to Withdraw

Rules of Professional Conduct Section 1.16 describes the various reasons for which an attorney should withdraw from representation of the client.

Rule 1.16: Declining Or Terminating Representation

(a) A lawyer shall not accept employment on behalf of a person if the lawyer knows or reasonably should know that such person wishes to:

(1) bring a legal action, conduct a defense, or assert a position in a matter, or otherwise have steps taken for such person, merely for the purpose of harassing or maliciously injuring any person; or

(2) present a claim or defense in a matter that is not warranted under existing law, unless it can be supported by a good faith argument for an extension, modification, or reversal of existing law.

(b) Except as stated in paragraph (d), a lawyer shall withdraw from the representation of a client when:

(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.

(c) Except as stated in paragraph (d), a lawyer may withdraw from representing a client when:

(1) withdrawal 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.

(d) 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.

(e) 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. 2

For the most part, lawyers look to withdraw from a matter because the client is not paying his bill. When the client no longer pays the bill, the decision to withdraw from representation ought to be made only after some frank discussion with the client. Sometimes, the client does not realize that the bills are not being paid by the accounts receivable department; sometimes, the client mistakenly believed that the retainer deposit was going to carry the lawyer’s fees through the conclusion of the matter. As with any business, it is critical to have good client relations concerning billing so that misunderstandings and disagreements do not fester and become the subject of litigation and grievances.

The decision to withdraw as counsel may be made for reasons other than fees, especially when the attorney-client relationship has broken down to the point where it is “irretrievable.” At that point, further representation will only hurt both lawyer and client.

F: Withdrawal from Representation

The “when” and “how” the lawyer withdraws from representation are just as important to the decision to withdraw. Considerations must be made as to the effects on the client, matter and law firm must be made.

Timing of withdrawal:
Once the decision to withdraw has been made, there must be a follow-up decision as to when the withdrawal will be done. The overriding concern in timing the withdrawal from representation is whether the client is being abandoned at a critical moment. The lawyer must show that the client is not prejudiced by the withdrawal (e.g. withdrawal on the eve of trial).
Methods of withdrawal:
In the non-litigation context, notice of withdrawal may simply be done by notice to the client and others involved in the matter. In litigation, either the client will consent to the withdrawal or substitution of the lawyer or court permission will likely be required before the lawyer may withdraw. A sample Order to Show Cause for withdrawal of counsel is attached as Addendum B.
Motion to withdraw:
The motion to withdraw as counsel for a party in litigation must generally be brought by Order to Show Cause so that the court may specify the manner of service of the motion. See CPLR 321(b) 3 The court will schedule a date for the hearing of the motion after service upon the client and other parties to the action.
Attorney’s Liens:
There are two types of attorney’s liens available to a lawyer who has either been discharged by his client or voluntarily withdrawn. Your Court Street Lawyer’s Quick Reference Guide to Attorney’s Liens and Legal Fee Enforcement is attached as Addendum C.

Footnotes

1 Rule 1.5 defines a fee as “excessive” when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee may include:

The time and labor required, the novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly.
The likelihood, if apparent or made known to the client, that the acceptance of the particular employment will preclude other employment by the lawyer.
The fee customarily charged in the locality for similar legal services.
The amount involved and the results obtained.
The time limitations imposed by the client or by circumstances.
The nature and length of the professional relationship with the client.
The experience, reputation and ability of the lawyer or lawyers performing the services.
Whether the fee is fixed or contingent.

[1] A lawyer should not accept representation in a matter unless it can be performed competently, promptly, without improper conflict of interest and to completion. Ordinarily, a representation in a matter is completed when the agreed-upon assistance has been concluded. See Rules 1.2(c), 6.5; see also Rule 1.3, Comment [4].

Mandatory Withdrawal

[2] A lawyer ordinarily must decline or withdraw from representation under paragraph (a), (b)(1) or (b)(4), as the case may be, if the client demands that the lawyer engage in conduct that is illegal or that violates these Rules or other law. The lawyer is not obliged to decline or withdraw simply because the client suggests such a course of conduct; a client may make such a suggestion in the hope that a lawyer will not be constrained by a professional obligation.

[3] Court approval or notice to the court is often required by applicable law, and when so required by applicable law is also required by paragraph (d), before a lawyer withdraws from pending litigation. Difficulty may be encountered if withdrawal is based on the client’s demand that the lawyer engage in unprofessional conduct. The court may request an explanation for the withdrawal, while the lawyer may be bound to keep confidential the facts that would constitute such an explanation. The lawyer’s statement that professional considerations require termination of the representation ordinarily should be accepted as sufficient. Lawyers should be mindful of their obligations to both clients and the court under Rule 1.6 and Rule 3.3.

Discharge

[4] As provided in paragraph (b)(3), a client has a right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer’s services. Where future dispute about the withdrawal may be anticipated, it may be advisable to prepare a written statement reciting the circumstances.

[5] Whether a client can discharge appointed counsel may depend on applicable law. A client seeking to do so should be given a full explanation of the consequences. These consequences may include a decision by the appointing authority that appointment of successor counsel is unjustified, thus requiring self-representation by the client.

[6] If the client has severely diminished capacity, the client may lack the legal capacity to discharge the lawyer, and in any event the discharge may be seriously adverse to the client’s interests. The lawyer should make special effort to help the client consider the consequences and may take reasonably necessary protective action as provided in Rule 1.14(b).

Optional Withdrawal

[7] Under paragraph (c), a lawyer may withdraw from representation in some circumstances. The lawyer has the option to withdraw if withdrawal can be accomplished without material adverse effect on the client’s interests. Withdrawal is also justified if the client persists in a course of action that the lawyer reasonably believes is criminal or fraudulent, for a lawyer is not required to be associated with such conduct even if the lawyer does not further it. Withdrawal is also permitted if the lawyer’s services were misused in the past, even if withdrawal would materially prejudice the client. The lawyer may also withdraw where the client insists on taking action with which the lawyer has a fundamental disagreement.

[7A] In accordance with paragraph (c)(4), a lawyer should use reasonable foresight in determining whether a proposed representation will involve client objectives or instructions with which the lawyer has a fundamental disagreement. A client’s intended action does not create a fundamental disagreement simply because the lawyer disagrees with it. See Rule 1.2 regarding the allocation of responsibility between client and lawyer. The client has the right, for example, to accept or reject a settlement proposal; a client’s decision on settlement involves a fundamental disagreement only when no reasonable person in the client’s position, having regard for the hazards of litigation, would have declined the settlement. In addition, the client should be given notice of intent to withdraw and an opportunity to reconsider.

[8] Under paragraph (c)(5), a lawyer may withdraw if the client refuses to abide by the terms of an agreement concerning fees or court costs (or other expenses or disbursements).

[8A] Continuing to represent a client may impose an unreasonable burden unexpected by the client and lawyer at the outset of the representation. However, lawyers are ordinarily better suited than clients to foresee and provide for the burdens of representation. The burdens of uncertainty should therefore ordinarily fall on lawyers rather than clients unless they are attributable to client misconduct. That a representation will require more work or significantly larger advances of expenses than the lawyer contemplated when the fee was fixed is not grounds for withdrawal under paragraph (c)(5).

Assisting the Client upon Withdrawal

[9] Even if the lawyer has been unfairly discharged by the client, under paragraph (c) a lawyer must take all reasonable steps to mitigate the consequences to the client. The lawyer may retain papers as security for a fee only to the extent permitted by law. See Rule 1.15.

3 (b) Change or withdrawal of attorney. 1. Unless the party is a person specified in section 1201, an attorney of record may be changed by filing with the clerk a consent to the change signed by the retiring attorney and signed and acknowledged by the party. Notice of such change of attorney shall be given to the attorneys for all parties in the action or, if a party appears without an attorney, to the party. 2. An attorney of record may withdraw or be changed by order of the court in which the action is pending, upon motion on such notice to the client of the withdrawing attorney, to the attorneys of all other parties in the action or, if a party appears without an attorney, to the party, and to any other person, as the court may direct.

Addendums

(click link to download)

Addendum B opens PDF file : sample “Order to Show Cause” for withdrawal of counsel

Addendum C opens PDF file : Your Court Street Lawyer’s Quick Reference Guide to Attorney’s Liens and Legal Fee Enforcement, by Richard A. Klass, Esq.