Ethics Corner Article
Dear Ethics Committee:
One of my clients paid me a retainer and we filed suit on his behalf. The retainer is now exhausted, and the client has not paid my invoice for several months. The client has also not responded to my emails, phone calls, or letters for several months. Can I withdraw under these circumstances?
The short answer is yes, subject to Rule 1.16 and any applicable court rules.
This is the first in a series of corners regarding ethical considerations in withdrawing from representation. This corner will provide an overview of Rule 1.6 and address the issue of withdrawal when the client stops paying the attorneys’ invoices and/or stops communicating with the attorney. Future corners will address ethical issues relating to motions to withdraw and some considerations regarding withdrawal in the transactional context.
Withdrawing from a matter can be fraught with legal and ethical risk. This article briefly describes the ethics rules relating to withdrawal. Rule 1.16 of the New Hampshire Rules of Professional Conduct describes the circumstances under which a lawyer must or may withdraw.
I. OVERVIEW OF RULE 1.16
A. Mandatory Withdrawal
Under Rule 1.16(a), lawyers are required to either decline to represent a client, or to withdraw, when the representation would result in a violation of the rules of professional conduct or other law; the lawyer’s physical or mental condition materially impairs their ability to represent client; or the lawyer has been discharged.
Lawyers have been subject to professional discipline for failing to withdraw when directed to do so. E.g., In Re Hawthorne, Docket # 00-145 (N.H. Prof. Cond. Comm. Nov. 18, 2004).
B. Discretionary Withdrawal
Under Rule 1.16(b)(1), a lawyer may withdraw if withdrawal can be accomplished without material adverse effect on the interests of the client. Even if there is an adverse impact on the client’s interests, the lawyer may still withdraw under Rules 1.16(b)(2)-(7) if (2) the client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes to be 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 presentation 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.
C. Applicable Court Rules
Under Rule 1.16(c), a lawyer seeking to withdraw must also comply with applicable court rules. E.g., Supreme Court Rule 32(2); Superior Court Rule 17(d) and (g); Rules of Criminal Procedure 5(h)-(j); Circuit Court General Rule 1.3(E) – (I). Rule 5(i) of the Rules of Criminal Procedure provides that unless the case is within 20 days of trial, appointed counsel who must withdraw due a conflict of interest under Rule 1.6(a), 1.9(a) and (b), and/or 1.10(a) may do so by forwarding a Notice of Withdrawal to the court. Rule 5(i) further provides that automatic withdrawal will not be granted if the basis for withdrawal is breakdown of the relationship, failure to pay fees, or any other conflict not specifically set forth in the specified rules. A court may order an attorney to continue representing a client notwithstanding good cause under Rule 1.16.
D. Protecting the Client’s Interests
Rule 1.16(d) provides that as a condition to termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect the client’s interests, including by giving reasonable notice, allowing time for employment of other counsel, surrendering the client’s file and property, and refunding any unused fee. Any termination of an attorney-client relationship may be considered harmful to the client due to the need to establish a relationship with a new attorney. Further, in the case of an hourly fee arrangement, the client may expend additional funds in getting the new attorney up to speed. For these reasons among others the decision to withdraw and the steps required to adequately protect the client’s interests should be carefully considered.
We address below the questions of withdrawal when the client stops paying and/or stops communicating. This issue is subject to the specific facts and circumstances of each matter, as well as review and approval by the court with respect to litigated matters. Supreme Court Rule 32(2); N.H. Rules of Crim. Proc. 5(h), (i) and (j); Superior Court Civil Rule 17(f). Under all circumstances of withdrawal or discharge, the lawyer must take reasonable steps to mitigate the consequences to the client. Rule 1.16, ABA Model Code Comment [9]; Richmond’s Case, 153 N.H. 729 (2006).
II. SPECIFIC CIRCUMSTANCES
A. Can I withdraw from a representation if the client stops paying me?
Yes, but subject to reasonable warning to the client, the potential need for court approval, and the need to protect the client’s interests.
Attorneys may withdraw from representation for the client’s nonpayment subject to court approval and the specific facts and circumstances. Nonpayment of fees may constitute an unreasonable financial burden or failure to fulfill an obligation. Reasonable warning to the client will be required. The attorney may wish to review the case of Gibbs v. Lappies, 828 F. Supp. 6 (D.N.H. 1993). Insurance defense counsel sought to withdraw two months prior to trial because the insurance carrier became insolvent and there was no prospect the firm would be paid. The court found that the insured/client had violated no obligation owed to the law firm, and that her interests would be prejudiced if the firm withdrew under the circumstances. The court denied the motion to withdraw. In State v. Emanuel, 139 N.H. 57 (1994), the trial court permitted defense counsel to withdraw six days prior to trial based solely upon a fee dispute. The Court held “a fee dispute may be sufficient ‘good cause’ to allow a criminal defense attorney to withdraw from representation on the eve of trial”, but a trial court must inquire into the facts surrounding the dispute to determine the potential prejudice to the defendant. It must be noted that Emanuel predates the adoption of Rule 5(i) of the Rules of Criminal Procedure and Emanuel may no longer be useful precedent. See also Fidelity Nat’l Title Ins. Co. of New York v. Intercounty Nat’l Title Ins. Co., 310 F.3d 537 (7th Cir. 2002) (trial court abused discretion in refusing to permit withdrawal of 4-lawyer firm owed $470,000 in fees and costs). Motions to withdraw in this context are subject to the confidentiality obligations in Rule 1.6, which provides a lawyer may disclose information only “to the extent the lawyer reasonably believes is necessary” to accomplish one of the purposes specified. See In Re Gonzalez, 773 A.2d 1026 (D.C. 2001) (attorney admonished for filing motion to withdraw for nonpayment of fees in which the lawyer stated the client had also made misrepresentations to the attorney); ABA Formal Op. 476 (Dec. 19, 2016). This issue will be discussed more fully in the second article in this series. The courts may also be more likely to permit withdrawal in cases where the attorney has expended significant effort with little or no payment, and less likely to permit withdrawal in cases in which the client made significant payments but then ran out of funds.
B. Can I withdraw if the client stops communicating with me?
Yes, but subject to reasonable warning to the client, the potential need for court approval, and the need to protect the client’s interests.
An attorney may withdraw from representation if the client ceases communicating with the attorney. From time to time, clients stop communicating with their attorneys and do not respond to the attorney’s diligent efforts to reestablish communications. E.g., Crane v. Crane, 657 A.2d 312, 318 (D.C. 1995). Crane was a domestic relations matter. Mrs. Crane asked the court to review the files of Mr. Crane’s attorneys for evidence of a trust he allegedly created. Mr. Crane, whose last known address was in Nepal, did not respond to the motion. Mr. Crane’s attorney filed a motion to withdraw, which the trial court granted over Mrs. Crane’s objection. The Appellate Court affirmed. The Appellate Court held that “[w]here a client refuses to communicate with his attorney and makes no arrangement to pay the attorney for past services, the attorney’s motion to withdraw will ordinarily be granted.” Although Crane arose from a situation where the client both failed to communicate and pay, in principle the attorney may be permitted to withdraw based solely upon the failure to communicate. Such withdrawals create a dilemma for the attorney, who may believe that withdrawing is likely to prejudice the client’s legitimate interests, but who may feel unable to adequately serve the client’s interests without direction. Withdrawal may be permitted under Rule 1.16(b)(6) because the client has rendered the representation unreasonably difficult or under Rule 1.16(b)(7) as other good cause.
This Ethics Corner Article was submitted for publication to the NHBA Board of Governors at its November 18, 2021 Meeting. The Ethics Committee provides general guidance on the New Hampshire Rules of Professional Conduct and publishes brief commentaries in the Bar News and other NHBA media outlets. New Hampshire lawyers may contact the Committee for confidential and informal guidance on their own prospective conduct or to suggest topics for Ethics Corner commentaries by emailing the Ethics Committee Staff Liaison.