New ABA Opinion Regarding Withdrawal
Under Rule of Professional Conduct 1.16(b)(1): Material Adverse Effect
There comes a time in every lawyer’s career when a client representation just isn’t working out and it’s time to end the attorney/client relationship. The Rules provide for this eventuality in Rule 1.16, titled “Declining or Terminating Representation.” Rule 1.16(a) mandates that a lawyer end, or ask the court for permission to end, the representation under four specific circumstances. In contrast, Rule 1.16(b) permits a lawyer end, or ask the court for permission to end, the representation under two other sets of circumstances. The first is “good cause,” enumerated in Rule 1.16(b)(2-7). The second, which is the subject of new ABA Formal Opinion 516, is where “withdrawal can be accomplished without material adverse effect on the interests of the client.”
You read that correctly – the Rule permits lawyers to unilaterally terminate representation for any reason or no reason at all, so long as the termination “can be accomplished without material adverse effects on the interests of the client.” In fact, the Opinion states that “The lawyer’s motivation for withdrawal is not relevant under Model Rule 1.16(b)(1).”
ABA Formal Opinion 516 is the attempt of the ABA’s Standing Committee on Ethics and Professional Responsibility’s attempt to define “material adverse effect.” The Opinion definition is: “significant harm to the forward progress of the client’s matter, significant increase in the cost of the matter, or significant harm to the client’s ability to achieve the legal objectives that the lawyer previously agreed to pursue in the representation.”
The Opinion suggests that lawyers may “remediate these adverse effects and withdraw in a manner that avoids or mitigates the harm that the Rule seeks to prevent.” In terms of cost, I suppose that one option would be to refund a portion of fees to avoid “significant increase” in the overall costs of the matter. In order to avoid significant harm to the forward progress of the client’s matter, lawyers could consider referral to qualified counsel or seeking a delay in proceedings (see, e.g., Rule 1.16(d)).
The Opinion goes on to address the so-called “hot potato” situation, in which a lawyer terminates one representation in order to accept another representation that would – but for the withdrawal – have been impossible due to conflict with the first representation. Hot-potato terminations are prohibited in almost every state that has considered the issue. However, the Opinion states that the language of the Rule actually permits such a termination: “Therefore, under the Model Rules, if the lawyer’s withdrawal does not cause ‘material adverse effect’ to the client’s interests in the matter in which the lawyer represents the client, a lawyer may withdraw to be able to accept the representation of a different client, including to avoid the conflict of interest that might otherwise result.”
Be cautious! The ABA Opinion is not binding on courts (or even disciplinary authorities). The prohibition on hot-potato terminations is typically found in case law. See, e.g., Truck Ins. Exch. v. Fireman’s Fund Ins. Co. (1992) 6 Cal.App.4th 1050, 1056-1057 (“A law firm that knowingly undertakes adverse representation may not avoid disqualification by withdrawing from the representation of the less favored client before the hearing.”) That case law will not be affected by this Opinion. Therefore, before a lawyer attempts to withdraw from one representation in order to accept another, previously conflicted, representation, thorough research and review of the jurisdiction’s case law is required. As a result of this Opinion, case law may change over time. The question to ask – before attempting this sort of withdrawal – is “do I want to be the one to try to
make new law?”
In addition, it’s important to remember that while every state has adopted the ABA’s Model Rules, most states have made changes to those rules, so be sure to consult your jurisdiction’s rules before proceeding.
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