|Oregon State Bar Bulletin MAY 2008|
Lawyer: I’m having a problem with my client. Last week he authorized me to accept a settlement offer. The documents are here, but now the client refuses to sign. He says he’s changed his mind and wants to take his chances at trial. This is very frustrating and I think I need to get off the case.
General Counsel: Why would you need to get off the case?
Lawyer: Well, I think I have a conflict of interest. I worked really hard to get that offer for the client and I think it’s in his best interest to take it. The likelihood of doing better at trial isn’t good. I think the client is being unreasonable. So, can I withdraw?
General Counsel: Maybe. Let’s talk about this…
It is a fundamental principal of lawyering that the lawyer is the client’s agent and is charged with pursuing the client’s legitimate goals. RPC 1.2 reminds us generally that "a lawyer shall abide by the client’s decisions concerning the objectives of representation" and specifically that a lawyer "shall abide by the client’s decision whether to settle a matter." So long as the lawyer represents the client, she cannot refuse to follow the client’s instructions regarding settlement. The question, then, is whether the lawyer may terminate the lawyer-client relationship because the client wants to repudiate a settlement.
Unlike clients, who have a nearly absolute right to discharge their lawyers for no reason at all and without regard to the inconvenience or financial loss it might cause for the lawyer, lawyers must look to the Oregon Rules of Professional Conduct to determine when it is permissible for the lawyer to end the relationship. Oregon RPC 1.16(b) 1 allows a lawyer to withdraw if:
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 that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement;
5) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer’s services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled;
6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client; or
7) other good cause for withdrawal exists.
Courts are generally in agreement that a client’s right to refuse settlement is unqualified, absolute, and by itself, not good cause for withdrawal.2 The prohibition cannot be avoided by having the client give settlement authority to the lawyer or agree in advance that the lawyer may withdraw if the client rejects a reasonable settlement offer. It is also generally considered improper to have a fee agreement that penalizes the client financially, such as by converting a contingent fee to an hourly fee if the client refuses a settlement.3 The question, then, is whether a client’s repudiation of a settlement might be permissible under RPC 1.16(b). (Because a client’s rejection of a settlement is unlikely to be criminal or fraudulent, this discussion will be limited to the reasons listed in paragraphs (b)(1), (b)(4), (b)(6) or (b)(7).)
Paragraph (b)(1) allows a lawyer to withdraw for any reason or for no reason, so long as there will be no material adverse effect on the client’s interests. This rule had no counterpart in the former Oregon Code of Professional Responsibility, and it reflects the newer view that allowing withdrawal only for "cause" or with client consent unfairly limits the rights of lawyers without any corresponding meaningful protection of clients.4
Whether the lawyer’s withdrawal will have a materially adverse effect on the client’s interests will depend on the facts of the particular case. The client might be considerably inconvenienced in searching for another lawyer; the client might have to pay what are essentially duplicate fees for the successor to become familiar with the matter; an equally qualified lawyer might be unavailable or only at significant expense to the client; delay necessitated by the change in counsel could materially prejudice the client’s rights in the matter; or the nature of confidential information pertinent to the matter might reasonably make the client reluctant to retain another lawyer. There may also be less obvious or intangible harm to the client if the lawyer withdraws in the middle of a case, and a cautious (or risk-averse) lawyer will always favor the client where the question is close. Given this precaution, withdrawing because the client is repudiating a settlement will require careful evaluation of the surrounding circumstances to determine whether it can be accomplished without material adverse effect on the client.5
By contrast to RPC 1.16(b)(1), the remaining provisions of RPC 1.16(b) permit withdrawal for cause even where it will have a material adverse effect on the client’s interests. Precisely for that reason, lawyers must exercise caution when basing withdrawal on any of these reasons. The Restatement of the Law Governing Lawyers §32(4) prohibits withdrawal on any of these bases "if the harm that withdrawal would cause significantly exceeds the harm to the lawyer or others in not withdrawing." In other words, according to the Restatement, sometimes a lawyer just needs to "suck it up" and continue the representation if withdrawal will be more harmful to the client than continuing the representation would be for the lawyer.
RPC 1.16(b)(4) permits withdrawal if the client’s action is "repugnant" or if the lawyer has a "fundamental disagreement" with it. "Repugnant" is not a defined term in the rules, but action is not repugnant merely because it offends the lawyer’s sensibilities. Such a broad reading of the word would allow lawyers to abandon clients any time the relationship is unpleasant for the lawyer. That would turn the lawyer-client relationship on its head, making the lawyer the master of the client’s objectives. Similarly, a lawyer does not have a "fundamental disagreement" with a client merely because the client refuses to follow the lawyer’s advice or chooses a course the lawyer believes is unwise, particularly where the decision (settlement) is one that is squarely within the client’s sole control.
Withdrawal under RPC 1.16(b)(4) thus is proper only when the client’s proposed course of action is so extreme that it threatens the lawyer’s ability to provide effective representation. See, e.g., United States v. Travers, 996 FSupp 6 (SD Fla 1998)(court allowed withdrawal because the client repeatedly disparaged the lawyer, filed suit against the lawyer, refused to meet with the lawyer and insisted that the lawyer file frivolous motions).
In Red Dog v. State, 625 A2d 245 (1993), the court held that the client’s decision not to appeal his death sentence was a legitimate decision, but a lawyer who cannot in good conscience represent a client under that circumstance should seek to withdraw. Similarly, in In re Rose Lee Ann L., 718 NE 2d 623 (Ill. 1999), the court held that the lawyer should have been allowed to withdraw from representing parents in a wardship proceeding when he could not in good conscience advocate the parents’ position because of his fear that they would harm the child.
RPC 1.16(b)(6) permits withdrawal if the continued representation will result in an unreasonable financial burden on the lawyer. Courts don’t look favorably on withdrawal for this reason and have implied a requirement that the financial burden be unanticipated and significant. It may result from an unexpected unfavorable pretrial ruling, a sudden inability of the client to pay, or an unexpected change in the scope or complexity of the representation. Courts are loathe to allow a lawyer to withdraw from a case merely because it appears less profitable than originally anticipated6 or where the lawyer has lost confidence in the case.7 In the words of one court, "[a lawyer’s] obligations do not evaporate because the case becomes more complicated or the work more arduous or the retainer not as profitable as first contemplated." Kreigsman v. Kriegsman, 375 A2d 1253 (NJ 1977).
RPC 1.16(b)(6) also allows withdrawal if the client’s conduct renders the representation "unreasonably difficult." Here, too, the standard is high, in that the client’s conduct must be egregious and interfere significantly with the lawyer’s role. Examples include a client’s threats to sue for malpractice unless the lawyer pursues the client’s improper claims, a client’s failure to respond to the lawyer’s calls and letters, and a client’s refusal to provide necessary information to the lawyer. That the lawyer is unhappy or frustrated with the client’s decision regarding settlement will not likely meet that test.
The "other good cause" basis for permissive withdrawal under RPC 1.16 has traditionally meant that antagonism between lawyer and client has caused the breakdown of the lawyer-client relationship to the extent that the lawyer cannot provide effective representation. Some of the cases recognize that a client’s refusal to accept a reasonable settlement offer might cause so much antagonism, but those cases also usually involve a client making unrealistic demands or questioning the lawyer’s handling of the case.8
The tension that arises when a client rejects or repudiates what the lawyer believes is a good and reasonable settlement is natural. Although we generally recognize that the client has sole authority over whether to settle, the client’s refusal is more than a repudiation of the offer. It is also a repudiation of our professional advice, our stock-in-trade and the very thing the client ostensibly hired us for. The more personally involved we are in giving the advice, the more likely we will be to take offense at the client’s decision and view it as a breakdown in the relationship. Whether that conclusion can be justified will depend on the circumstances of the case. We can avoid some of the angst of the situation by endeavoring not to take the client’s repudiation personally, and by reminding ourselves that our obligation is to do the client’s bidding and pursue the client’s interests.
1. Oregon RPC 1.16(a) enumerates the reasons when a lawyer must withdraw from a representation; paragraphs (c) and (d) of the rule impose other obligations in connection with termination of a representation. This article is not an exhaustive discussion of all the requirements attendant to withdrawal.
2. See ABA/BNA Lawyer’s Manual on Professional Conduct §31:1101, p. 11, and cases cited therein.
3. See Jones v. Feiger, Collison & Kilmer, 903 P2d 27 (Colo. 1994); Connecticut Informal Ethics Op. 95-24; Nebraska Ethics Op. 95-1; North Carolina Ethics Op. 145 (1993); but cf. Oregon Formal Ethics Op. No. 2005-54, suggesting that it cannot be said as a matter of law that all such agreements are improper.
4. One commentator has suggested that this freedom to withdraw whenever there is an absence of harm to the client is a "startling departure" from traditional rules of contract. Perillo, The Law Of Lawyers’ Contracts Is Different, 67 Fordham LRev 443, 449 (1998). Although the lawyer’s withdrawal might constitute a breach of contract, the absence of any material adverse effect would make any breach nominal. Similarly, the absence of harm to the client suggests there is no public interest in disciplining the lawyer. See Restatement of the Law Governing Lawyers §32, Comment h(ii).
5. Even in situations where the lawyer is satisfied that withdrawal will not have a material adverse effect on the client, if the matter is in litigation, the lawyer may need the court’s permission to withdraw. If permission is denied, the lawyer must continue the representation, notwithstanding a legitimate basis for withdrawal. RPC 1.16(c).
6. See Haines v. Liggett Group Inc., 814 FSupp 414 (NJ 1993); cf. Smith v. RJ Reynolds Tobacco. Co., 630 A2d 820 (NJ 1993), where the state court allowed law firm involved in the same tobacco litigation to withdraw: "There comes a time when even the most vigorous representation cannot succeed and the costs will far exceed any recovery."
7. Rusinow v. Kamara, 920 FSupp 69 (NJ 1996) (disenchantment with client and case does not justify withdrawal; people with no tolerance for "risk, doubt, and ingratitude should not be trial lawyers").
8. See, e.g., McGuire v. Wilson, 735 FSupp 83 (SDNY 1990).
ABOUT THE AUTHOR
Sylvia Stevens is general counsel for the Oregon State Bar. She can be reached at (503) 620-0222, or toll-free in Oregon at (800) 452-8260, ext. 359, or by e-mail at email@example.com. Ethics opinions are published and updated on the bar’s website at http://www.osbar.org/ethics/toc.html
© 2008 Sylvia Stevens