by Michael D. Stewart
This article addresses the rules governing California lawyers who seek to withdraw or disengage from representing a client in civil proceedings. It also discusses certain practice management tips regarding withdrawal. (Unless stated otherwise, references to “Rule” or “Rules” mean those contained in the California Rules of Professional Conduct, approved on May 10, 2018 by the California Supreme Court, which are renumbered and effective November 1, 2018. Because the new Rules use “lawyer” and not “member,” this article does the same.)
Representing a difficult client is sometimes part of the job. But there are times when we need to disengage from such a client. There are myriad reasons for doing so, some of which are mandatory and others discretionary. The client may ask us to do something that violates ethical rules. For example, the client may insist that the lawyer assert a non-meritorious claim or defense (see Rules 1.16(b)(1) and 3.1), or demand that the lawyer threaten an adversary with criminal, administrative, or disciplinary charges to obtain an advantage (see Rule 3.10), or that the lawyer not comply with the ethical duties concerning inadvertently transmitted writings (see Rule 4.4).
Even if the client is not difficult, changing circumstances may require us to cease representing the client. For example, the matter may morph into an area of law with which the lawyer does not possess sufficient competence and does not wish to, or cannot, acquire competence (see Rule 1.1), or a conflict of interest may develop (Rule 1.7). Or perhaps the client cannot or will not pay the lawyer’s invoices, in which case the lawyer is permitted to withdraw only after “giv[ing] the client a reasonable warning after the breach that the lawyer will withdraw unless the client fulfills the agreement or performs the obligation.” Rule 1.16(b)(5); but see California Central District Rule 83-2.3.2 (“Failure of the client to pay agreed compensation is not necessarily sufficient to establish good cause.)”.
The contingency fee lawyer who terminates the client but hopes to collect in quantum meruit from any later recovery will be precluded from doing so if he or she withdraws without justifiable cause. Estate of Falco, 188 Cal. App. 3d 1004, 1016, fn. 12 (1987) (“In cases involving permissive withdrawal it is within the discretion of the trial court, with heightened scrutiny consistent with the standards articulated here, to determine whether counsel’s withdrawal was justified for the purpose of awarding fees”); Ramirez v. Sturdevant, 21 Cal. App. 4th 904, 916 (1994) (an attorney may withdraw for any of the reasons stated in Rule 3700 (see Rule 1.16 as of November 1, 2018), but jeopardizes a quantum meruit recovery absent “justifiable cause”).
Even where withdrawal is proper, the lawyer may in a joint representation context wish to terminate one client and not the others. California courts have enforced advance waivers stating that the lawyer has the choice of continuing to represent one or more jointly represented clients if the lawyer terminates one of them. See Zador Corp. v. Kwan, 31 Cal. App. 4th 1285, 1301-02 (1995). Any such joint-representation waiver would need to be carefully drafted to properly warn all clients of the consequences of the lawyer’s termination right.
Nothing in the Rules expressly precludes the lawyer from terminating a disfavored client in order to resolve a conflict. In fact, comment 10 to Rule 1.7, entitled Conflict of Interest: Current Clients, states: “depending on the circumstances, the lawyer may have the option to withdraw from one or more of the representations in order to avoid the conflict.” However, a lawyer cannot drop a client simply to keep a better client, especially if the lawyer intends to be adverse to the dropped client. Truck Ins. Exch. v. Fireman’s Fund Ins. Co., 6 Cal. App. 4th 1050, 1057-58 (1992).
Even when permitted or even required to withdraw, a “lawyer shall not terminate a representation until the lawyer has taken reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client, such as giving the client sufficient notice to permit the client to retain other counsel, and complying with” other requirements discussed below. Rule 1.16(d). Indeed, avoidance of prejudice is the guiding light in terminating a client before the natural completion of the matter.
In the transactional setting, the withdrawing lawyer need not seek or obtain court approval. However, unlike in litigation where the withdrawing lawyer generally seeks a substitution or files a motion to withdraw, the transactional attorney needs to ensure the client does not mistakenly believe the lawyer is handling a matter when the lawyer is in fact no longer doing so, especially if there is a long-term relationship. A polite disengagement letter can serve as a clear line of demarcation. Some lawyers insert into their engagement letters a provision stating that unless the lawyer and client otherwise agree in writing, the representation will terminate upon completion of the matter. However, that provision might not address the situation where the matter is not complete, or where completion is difficult to ascertain. (The same situation can arise where the potential client consults with, but does not formally engage, the lawyer. In that case, the lawyer may wish to confirm with the non-client in writing that he or she has not been engaged to represent the non-client and is not acting as their lawyer.)
In litigation, the lawyer can only withdraw by following the rules of the “tribunal.” Rule 1.16(c). In state court, the lawyer may withdraw with the client’s consent by filing and serving an executed substitution of attorney form. Cal. Civ. Proc. Code § 284(1). In federal court, the lawyer must file and serve a noticed application. California Central District Rule 83-2.3.2 (“An attorney may not withdraw as counsel except by leave of court” via a noticed “motion . . . supported by good cause.”). If the state court lawyer’s client is not inclined to consent to the lawyer’s withdrawal, the lawyer should explain to the client the possible inferences the adversary may make if the lawyer is forced to file a motion. Rule 1.4(b) (“A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions . . . .”).
Assuming the client refuses to consent to withdrawal, the lawyer will be required to file a motion to be relieved as counsel using the Judicial Council forms required by California Rule of Court, Rule 3.1362(a) and (c). A lawyer is well-advised to strictly comply with Rule 3.1362 and applicable laws governing the process. In particular, the withdrawing lawyer must not disclose attorney-client communications (Rule 1.16, comment 4) or other client secrets, and at least one California decision allows the lawyer to seek the court’s in camera review of such communications to the extent necessary to establish a basis for withdrawal. See Manfredi & Levine v. Superior Court, 66 Cal. App. 4th 1128, 1136 (1998) (“we trust the court will accommodate counsel with an in camera hearing if requested.”). Note that the California and ABA ethics committees have differing views on in camera review. Compare Cal. Bar Formal Opinion 2015-192 (“Because a court cannot order an in camera inspection . . . it logically follows that a court may not review information that unquestionably is privileged—like the communications between Attorney and Client here—for purposes of ruling on a motion to withdraw.”) with ABA Formal Opinion 476 (suggesting in camera review is appropriate).
In all cases (transactional, litigation, consensual, or contested), the withdrawing “lawyer promptly shall refund any part of a fee or expense paid in advance that the lawyer has not earned or incurred.” Rule 1.16(e)(2). Additionally, the lawyer “must promptly . . . release to the client” the file, including the “correspondence, pleadings, deposition transcripts, experts’ reports and other writings, exhibits, and physical evidence, whether intangible, electronic or other form, and other items reasonably necessary to the client’s representation, whether the client has paid for them or not.” Rule 1.16(e)(1).
The withdrawing lawyer may wonder if he or she needs to send the client their “work product,” often consisting of certain notes or internal emails reflecting the lawyer’s impressions, conclusions, opinions, research or theories. Cal. Civ. Proc. Code § 2018.030(a). It bears noting that the work-product doctrine can protect certain information from disclosure to an adversary or third-party; it does not bestow ownership of the work product on the lawyer. In assessing what work product the lawyer may need to send the client upon withdrawal, some lawyers focus on what “items [are] reasonably necessary to the client’s representation” under Rule 1.16(e)(1). Although Rule 1.16, entitled Declining or Terminating Representation, does not expressly mention work product, comment four to Rule 1.4 states that in the context of the lawyer’s general duty to communicate with the client, the “obligation of the lawyer to provide work product to the client shall be governed by relevant statutory and decisional law.”
Some argue that the duty to send the client work product is broader than the touchstone of “reasonably necessary to the client’s representation,” but the issue is not settled. Some lawyers insert provisions in their engagement agreements stating that their work product is not part of the client’s file. While a lawyer may not contract around the California Rules of Professional Conduct, such a provision may help define what is and is not part of the “client file,” and may also inform the client’s expectations.
Because Rule 1.16(e)(1)’s production mandate is so broad (all “deposition transcripts, experts’ reports and other writings”), it could include items that are subject to a protective order. Imagine, for example, withdrawing from a trade secrets case and sending the former client its business competitor’s “attorneys-eyes only” business plan. Fortunately, compliance does not mean having to choose between a duty to the former client and the possible violation of a court-entered protective order. In fact, the Rule resolves that issue by stating transmittal of the client file is “subject to any applicable protective order, non-disclosure agreement, statute or regulation.” Rule 1.16(e)(1). As a practical matter, the withdrawing lawyer will need to remove such items from those being sent to the client if required by the protective order. However, in order “to avoid reasonably foreseeable prejudice to the rights of the client” (Rule 1.16(d)), the withdrawing lawyer should anticipate how his or her successor can step into the withdrawing lawyer’s role and be subject to the benefits and burdens of the protective order or non-disclosure agreement.
Depending on the context of the withdrawal, the lawyer and client may not be parting on ideal terms. The lawyer may not have been paid, or the client may have accused the lawyer of mistakes, or worse. The lawyer nevertheless has a duty to ensure that his or her withdrawal will not prejudice the client. The withdrawing lawyer should notify the client, perhaps in a cover letter sent along with the file transmission, of any upcoming or urgent items, dates, or deadlines. Simply assuming successor counsel will review the file contents and learn of such dates is risky, and under certain circumstances might run afoul of Rule 1.16(d).
Some question whether the withdrawing attorney has a duty of cooperation with the former client’s new lawyer. An official comment to the current version of the applicable rule (CRPC 3700) differs from Rule 1.16 (which, along with the other Rules, is not effective until November 1, 2018). In addressing what steps the lawyer should take to avoid prejudice to the client, the existing comment to CRPC 3-700 states:
What such steps would include, of course, will vary according to the circumstances. Absent special circumstances, “reasonable steps” do not include providing additional services to the client once the successor counsel has been employed and [the rule governing transmittal of the client file and return of unearned fees] has been satisfied.
Rule 1.16’s omission of the above-quoted comment might suggest the withdrawing attorney could, under certain circumstances, have an ongoing duty of cooperation with successor counsel. However, Rule 1.16 itself does not expressly address any such duty, and retains from its predecessor (CRPC 3-700) the general proviso that the lawyer “shall not withdraw from employment until the [lawyer] has taken reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client.”
Lawyers also may wonder whether they can charge the former client for costs incurred in duplicating and keeping a copy of the client’s file. If the engagement letter with the client allows the lawyer to charge for such duplication, Rule 1.16 does not prohibit such charge. Of course, the question is whether pursuing reimbursement from the former client is prudent. As mentioned earlier, the circumstances may be that the withdrawing lawyer and the former client are parting on less than ideal terms, and pursuing a relatively small payment may be not only unfruitful but unwise. Regardless, the lawyer cannot condition transmittal of the client file to either the client or successor counsel upon payment. Rule 1.16(e)(1).
If the terminated client fails to pay the lawyer, then the lawyer may need to consider whether to take collection efforts. While most insurance carriers would advise against pursuing collection, the lawyer may well be fully entitled to payment. When pressed for payment, the former client (or his or her lawyer) may respond by claiming that the former lawyer failed to adequately represent the client’s interests and is therefore not entitled to payment.
Whether or not to pursue payment depends on many factors and is beyond the scope of this article. However, disengagement can result in the lawyer and former client reaching an agreement regarding payment and the client’s possible claims against the lawyer. Not surprisingly, Rule 1.8.8(a) precludes a lawyer from prospectively limiting the lawyer’s malpractice liability to a client. However, Rule 1.8.8(b) does allow the lawyer to settle a malpractice claim or potential claim if either the client is represented by an independent lawyer concerning the settlement, or the withdrawing lawyer advises the client in writing to seek the advice of an independent lawyer and provides the client with a reasonable opportunity to seek that advice. Rule 1.0.1, entitled Terminology, does not define “independent,” but the withdrawing lawyer would be well-advised to avoid referring the former client to a friend for purposes of settlement representation.
Michael D. Stewart is a partner and Deputy General Counsel of Sheppard, Mullin, Richter & Hampton LLP, in Costa Mesa. He is also a member of the OCBA’s Professionalism & Ethics Committee. The views expressed herein are his own. He can be reached at firstname.lastname@example.org.