BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS
Opinion No. 2001-2
(Inquiry No. )
Permissive Withdrawal of Counsel; Effect of Retainer Agreement; Escape Clause.
Client’s advance consent may be obtained in Retainer Agreement for an attorney to withdraw from representation in a personal injury action if the attorney discovers after investigation that the claim is not viable. Attorney has the obligation to advise the client at the time of the retention of any foreseeable ramifications of a later withdrawal by counsel.
EC 2-31 EC 2-32 DR 2-110 (A) DR 2-110 (C)(1) DR 2-110 (C)(5) EC 7-4 DR 7-102(A)(2)
Inquiring counsel seeks an opinion concerning the propriety of retainer agreements for negligence lawsuits containing so-called “escape clauses” which allow the attorney to withdraw from his representation of a client if at any time the attorney learns that the case is not viable. Inquiring counsel also raises the issue of the lawyer’s responsibility to the client if the attorney decides to withdraw shortly before the expiration of the Statute of Limitations, leaving the client with little or no opportunity to preserve the cause of action. Counsel provides the following Retainer Agreement clause with which he is concerned:
The undersigned, Client, residing at _________________________, New York, hereby retains _________________________________ L.L.P., (“the Firm”) to prosecute or Adjust a claim for damages arising from personal injuries sustained by the undersigned or my infant(s) or wrongful death, if an estate, as the case may be on ___________________, through the negligence of the defendant(s) or other persons.
. . .
This Retainer Agreement is subject to the Firm’s receipt and review of medical records; in the event, after review of those records, whether by an attorney or the Firm or an expert witness, the Firm believes the case is not viable, the Firm reserves the right to unilaterally discharge itself from representing the Client.
In a personal injury matter, may an attorney, in a Retainer Agreement, retain the right to withdraw from the representation if the attorney believes the claim is not viable?
Yes, provided the attorney reasonably believes that the claim is without basis in fact or is unwarranted under existing law, or a clear provision in the Retainer Agreement provides another basis for such a withdrawal. The attorney must also comply with DR 2-110(a)(1) and (2) which mandate that the attorney shall not withdraw from the representation until the attorney has taken steps to the extent reasonably practicable to avoid foreseeable prejudice to the rights of the Client, including: (1) the giving of due notice to the client; (2) allowing time for employment of other counsel; (3) delivering to the client all papers and property to which the Client is entitled; and (4) complying with all applicable laws and rules for the withdrawal.
The inquiry raises the issue of permissive withdrawal from legal employment and implicates two ethical principals which can come into tension with one another: the attorney’s affirmative obligation to undertake the Client’s representation to a successful completion in furtherance of the directive of Canon 2 to make legal counsel available; and the admonition of Canon 7 that legal advocacy is to be constrained to legally permissible means and objectives.
DR 2 – 110(C)(5) permits a lawyer to withdraw from representing a client if the “lawyer’s client knowingly and freely assents to termination of the employment.” The provision reflects the reality that the attorney-client relationship is, in the first instance, a contract, and the parties are free to walk away from the contract at any time on terms mutually agreed upon. The Code imposes no prohibition against the parties agreeing to terms within the Retainer Agreement which set forth the future conditions under which the relationship may be terminated. Nevertheless, the requirement of DR 2-110(C)(5) that the Client “knowingly” assent to the withdrawal, implies that the client understand at the time that the agreement is made, preferably in the Retainer Agreement, the foreseeable ramifications of a later withdrawal by counsel and the potential adverse consequences to the Client. Such a disclosure should include the possibility of forfeiture of the Client’s action, the Client’s continued obligation for disbursements, and the potential for liability to the adverse party for costs or sanctions. EC 2 -32 advises that “[a] decision by a lawyer to withdraw should be made only on the basis of compelling circumstances . . . “. The retainer clause submitted with the inquiry is phrased so as to allow the attorney to withdraw if, after a review of medical records, the attorney “believes the case is not viable”. Experience shows that accurate judgments of viability and potential merit are not well suited to litigation in general, nor personal injury litigation in particular. EC 7 – 1 provides that the duty the attorney owes commonly to the Client and to the legal system is to “represent the Client zealously”, but “within the bounds of the law”. The Client is presumptively entitled “to seek any lawful objective through legally permissible means; and to present for adjudication any lawful claim, issue, or defense.” In order that the client may be protected from the vagaries of a questionable, ill-considered, or premature judgment by the attorney on the merits of the case, this Committee believes that the attorney is bound to pursue the case unless the attorney’s investigation reveals that the material facts of the case are not as claimed by the Client, or that the case is unwarranted under existing law. The attorney must also make full disclosure of the basis for this conclusion to the Client.
The attorney must be mindful of the fact that the attorney’s withdrawal from representation is likely to result in some degree of prejudice to the Client’s cause. For this reason, the lawyer is ethically constrained to withdraw only on the basis of compelling circumstances or within the terms of a clearly written agreement. EC 2-32. If the attorney wishes to retain the right to withdraw in the event that the case is or becomes financially unattractive to the attorney the retainer should be drafted in such a manner as to make the basis for withdrawal clear to the client. Any withdrawal should be done in such a manner as to assure that the client’s rights are not unreasonably prejudiced.
The inquiry raises a concern over circumstances whereby the attorney’s withdrawal from representation shortly before the expiration of the Statute of Limitations creates the potential for a forfeiture of the Client’s claim. EC 2-32 provides that:
“A lawyer should not withdraw without considering carefully and endeavoring to minimize the possible adverse affect on the rights of the Client and the possibility of prejudice to the Client as a result of the withdrawal.”
DR 2-10(A)(2) further provides:
“Even when withdrawal is otherwise permitted or required under DR 2-10(A)(1), (B) or (C), a lawyer shall not withdraw from employment until the lawyer has taken steps to the extent reasonably practicable to avoid foreseeable prejudice to the rights of the Client, including giving due 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 and complying with applicable laws and rules.”
In the event that a forfeiture of the Client’s action is threatened by the expiration of the Statute of Limitations, the attorney may not withdraw from the representation without giving the Client adequate notice and sufficient time to employ other counsel. The Client should be given sufficient notice of when the withdrawal will occur, the reason for the withdrawal, and what steps, if any, that the Client can take to prevent it. Ideally, the lawyer should give the Client sufficient notice of the withdrawal to allow the Client to find another lawyer well in advance of the expiration of the Statute of Limitations. If this is not possible, the attorney’s obligation to avoid prejudice to the Client may require that the attorney procure any available toll to the Statute of Limitations, whether by agreement with the adverse party or the filing of a suit on behalf of the client with the appropriate court.
In the event the attorney has filed suit on the Client’s behalf, then the lawyer thereafter is obligated to comply with DR 2-110(A)(1) which requires that “if permission for withdrawal from employment is required by the rules of a tribunal, a lawyer shall not withdraw from employment in a proceeding before that tribunal without its permission.” Both Federal and New York State courts require permission for withdrawal if the attorney has appeared as counsel of record. See, United States District Courts: Southern and Eastern Districts Rule 1.4; Northern and Western Districts Rule 83.2; CPLR § 321(b)(2).