CI-973

September 14, 1983

SYLLABUS

It is not unethical for a lawyer to accept compensation for legal services from one other than the client provided the client has consented to such arrangement after full disclosure and the third party does not attempt to direct, regulate or otherwise interfere with the professional judgment of the lawyer in rendering legal services to the client.

A lawyer may withdraw from employment upon the client's deliberate disregard of an agreement to pay for fees or expenses, provided that: (a) the attorney first give the client reasonable notice and ample time to employ substitute counsel; (b) the lawyer deliver to the client all papers and property to which the client is entitled; (c) the unused portion of fees paid in advance and unearned are refunded to the client; and (d) if a tribunals's permission for withdrawal is required, it first be obtained.

Attorney withdrawal under circumstances where the client lacks financial ability to pay fees and costs is not ethically justified in the absence of other conduct which makes it unreasonably difficult for the attorney to effectively conclude the case.

The practice of having a client presign a stipulation for the lawyer's withdrawal in the event of the client's financial inability to pay legal fees and expenses of litigation is unethical.

References: MCPR DR 5-107(A) and (B), DR 2-110(A), (B) and (C); CI-870.

TEXT

A corporation and one of its managers have been sued for wrongful discharge, and are represented by separate counsel. The corporation has agreed to indemnify its manager for the manager's defense costs, subject to the caveat that if the manager's actions did not arise within the scope of employment, the corporation may cease payment of legal fees and costs for the manager.

The manager's lawyer fears that should the employer discontinue financial assistance, the manager may not be able to afford the lawyer's services. The lawyer proposes to have the potential client sign an undated consent for the lawyer's withdrawal in the event that the corporation discontinues payment and the manager is unable to pay.

MCPR DR 5-107(A) and (B) state:

"(A) Except with the consent of his client after full disclosure, a lawyer shall not:

"(1) Accept compensation for his/her legal services from one other than his/her client.

"(2) Accept from one other than his/her client anything of value related to his/her representation of or his/her employment by his/her client.

"(B) A lawyer shall not permit a person who recommends, employs, or pays him/her to render legal services for another to direct or regulate his/her professional judgment in rendering legal services."

A lawyer may not accept compensation for legal services from one other than a client unless the client has consented after full disclosure and the third party does not attempt to direct, regulate or otherwise interfere with the professional judgment of the lawyer in rendering legal services to the client.

A stipulation to the attorney's withdrawal in the event of a client's financial inability to pay legal fees or expenses was discussed in CI-870, which states:

"The Code does not explicitly prohibit a client from consenting to an attorney's withdrawal from representation in advance of a dispute or the client's breach of a lawyer agreement, however, in the Committee's opinion the practice of having the client presign a Stipulation for the Attorney's Withdrawal in the event of later dispute or inability to pay legal fees for reason(s) beyond the control of the client is at best unprofessional and borders on overreaching. The practice is similar, in impact, to having the client sign a promissory note containing a confession of judgment clause (prohibited in many jurisdictions) and should not be ethically condoned."

While a lawyer is not required to accept employment from every person seeking professional representation, the acceptance of employment implies that the attorney will conduct the matter to its conclusion and may only withdraw for justifiable cause. MCPR DR 2-110(B) sets forth four situations in which lawyer withdrawal from a case is mandatory and DR 2-110(C) establishes a variety of situations in which the attorney may wish to consider permissive withdrawal.

MCPR DR 2-110(C) permits withdrawal when the client deliberately disregards an agreement with respect to the payment of attorney fees or expenses. See DR 2-110(C)(1)(f). The word "deliberate" is significant and does not permit any lawyer to withdraw in every instance of client failure to meet the lawyer's expectations on payment of fees or reimbursement of costs. A client's deliberate disregard of an obligation to pay legal fees justifies the attorney's withdrawal, however, a lawyer should not withhold services necessary to protect the client's interests in an attempt to coerce payment. Lawyers are professional people, and as such are expected to maintain higher standards of conduct than those sometimes displayed in the ordinary commercial world. Accordingly, withdrawal under circumstances where the client lacks financial ability to meet the contractual requirements of a fee arrangement is not always justified in the absence of "other client conduct" which makes in unreasonably difficult for the attorney to effectively conclude the case. See DR 2-110(C)(1)(d).

Even under circumstances where DR 2-110(C)(1)(f) would warrant a lawyer's withdrawal, DR 2-110(A) requires that reasonable notice be given to the client, allowing ample time to employ substitute counsel; that the lawyer deliver to the client all papers and property to which the client is entitled; that the unused portion of fees paid in advance and unearned be refunded to the client; and, that if a particular tribunal requires leave of court (which is the general rule), it must first be obtained.