June 2011 | Earn one hour of MCLE Credit in Legal Ethics
How to properly withdraw from a case
California Joan addresses the ethical issues raised by motions to withdraw and the recovery of quantum meruit fees from former co-counsel
©2011. All rights reserved.
Meryl Terpitude chased California Joan down the hall from the Firm’s coffee kitchen. “Help, Cali! My client has not paid the Firm’s bills for the last four months and refuses to sign a substitution of attorneys in the client’s superior court case. I guess the next step is a motion to withdraw,” Meryl said breathlessly.
“Yes, substitution may be effected ‘upon the order of the court, upon an application of an attorney, after notice to the client,’” Cali responded. (Code Civ.Proc., §284(2).) “As you know,” she added, “you have to make a motion to be relieved as attorney of record and demonstrate why a court order is required (i.e., why substitution by mutual consent is not obtained).” (Vapnek et al., Cal. Practice Guide: Professional Responsibility (The Rutter Group 2010) ¶¶ 10:97)
“Do you have a form I can use?” Meryl asked
“The form and content of attorneys’ motions to withdraw are governed by rule 3.1362, California Rules of Court,” Cali said. “A motion to be relieved must be made on Judicial Council form MC–051. (Cal.Rls. Ct. 3.1362(a)) The motion must be accompanied by a supporting declaration showing why a substitution of attorneys by consent could not be obtained. The declaration must be stated ‘in general terms and without compromising the confidentiality of the attorney-client relationship.’ The supporting declaration must be made on Judicial Council form MC–052.” (Cal.Rls.Ct. 3.1362(c))
“Thanks, Cali! You’re a peach!” Meryl exclaimed over his shoulder as he headed back to his office.
An hour later, Meryl popped into Cali’s office with his completed Judicial Council forms MC-51 and 52. “Can you look these over for me, Cali?” he pleaded.
Cali read the motion. As Meryl looked over her shoulder, she began to frown as she read his supporting declaration, at number two, which called for the reasons for the motion. Meryl’s response stated, in part:
“Client agreed to pay Firm an hourly rate of $350 per hour for all legal services performed by Meryl Terpitude, a partner. Attached is the written fee agreement executed by Client, demonstrating Client’s agreement to pay these fees and to reimburse Firm for incurred litigation costs and expenses.
“Over the past four months, Client has incurred legal fees and costs totaling $200,000. Client has failed and refused to pay these incurred fees and costs. Client has advised Firm that Client does not have the funds to pay Firm’s fees, costs and expenses. This constitutes a breach of Client’s agreement and obligation to the Firm as to expenses or fees pursuant to rule 3-700(C)(1)(f), California Rules of Professional Conduct.
“Mr. Terpitude advised Client to accept Defendant’s offered settlement, but Client stated, ‘there was no way’ that he would settle with Defendant. This refusal has made it unreasonably difficult to carry out the employment effectively pursuant to rule 3-700(C)(1)(d), Rules of Professional Conduct.”
Meryl furrowed his brow, anticipating Cali’s disapproval. “I told the absolute truth . . . What is wrong with what I wrote?”
Cali responded carefully, “Meryl, you are on the right track. In order to withdraw from a Client’s representation, you must have an ethical reason to withdraw, either under the mandatory provisions of rule 3-700(B) or the discretionary provision under rule 3-700(C). You have listed two discretionary reasons for withdrawal under rule 3-700(C).
“But even though you may have cause for withdrawal, you cannot disclose client confidential information in this publicly filed document.”
“My statements are general positions that the client has taken. I have not disclosed specific conversations we have had,” Meryl argued.
“First, a written fee contract is deemed to be a confidential communication,” Cali said. (Bus. & Prof. C., §6149, 6068(e)(1) & Evid. C.,§952) “Because it is confidential, it should not be attached to your declaration, which will be filed in the public record.”
“Second, you should also not discuss whether Client has the funds to pay our fees and costs. Client’s statement to us is confidential and a privileged communication. Even if it was not confidential, Client’s financial status may be confidential because the disclosure is embarrassing or detrimental to the client.
“Third, your advice to Client regarding the settlement is confidential and privileged.
“Fourth, the Client’s refusal to settle is confidential and privileged, particularly Client’s statement to you in response.”
“Fifth, communicating Client’s posture on settlement with Defendant may be harmful to Client’s interests, because it may prejudice Defendant’s willingness to explore settlement in the future or may cause the trial judge to think that Client is behaving unreasonably.”
Cali continued: “While an attorney cannot disclose confidential information in the withdrawal motion, a court is permitted to inquire into the good faith of an attorney. For example, the court is not required to accept a general claim of conflict and ‘rubber stamp’ a withdrawal motion where it appears the motion is being used as a delay tactic. Demonstrating ‘good faith’ may require counsel to describe, in general terms, the nature of the conflict.” (Manfredi & Levine v. Sup.Ct. (Barles) (1998) 66 Cal.App.4th 1128, 1133–1134)
Meryl was perplexed. “How can I keep all the facts and client communications confidential while still demonstrating my good faith to the court?”
“If a court requires disclosure of additional information to demonstrate that the motion is brought in good faith, counsel can request an in camera hearing to provide the court with additional details,” Cali replied. “However, a court is not required to offer such a hearing sua sponte. Moreover, if an in camera hearing is granted, the client must be given an opportunity to be heard.” (Id., p. 1136)
Cali then offered Meryl some form language to use in the supporting declaration to show the reason for withdrawal without disclosure of confidential information and to request an in camera hearing:
“The specific facts which give rise to this motion are confidential and required to be kept confidential pursuant to Business and Professions Code §6068(e), rule 3-100(A), California Rules of Professional Conduct, and by the attorney-client privilege (Evid. C., §§950 et seq.). In the event that this court desires further information to ascertain the good faith basis for this motion and for withdrawal, it is respectfully requested that the court have an in camera hearing outside of the presence of all other parties so that the specific facts demonstrating good cause for this withdrawal may be demonstrated to the court. (Manfredi & Levine v. Superior Court (1998) 66 Cal.App.4th 1128, 1136-1137; 3-700(B) or (C))”
In circumstances where disclosure of the facts supporting withdrawal to the trial judge may create prejudice to the client (e.g., where a client has committed perjury or fabricated evidence and is unwilling to take corrective measures), it would be prudent to request that the in camera hearing be conducted by another judge or bench officer.
Meryl waved his hand in thanks and ran back to his office to finish his motion. An hour later, Cali’s ethically challenged partner was back with a different question. “Cali, I was co-counsel with Dan Doorite in a personal injury matter for Paula Plaintiff. Dan had a contingency agreement with Paula and a fee splitting agreement with me providing that I would get 60 percent of his contingency fee and he would keep 40 percent. Paula fired him and entered into a new agreement with me. I settled the case for $1 million, but Paula did not want to pay Dan any attorney’s fees. Dan just sued me for a quantum meruit fee of 40 percent of my fee. Will his quantum meruit cause of action stand?”
“Did you comply with rule 2-200?” Cali asked.
“Absolutely. Paula signed our fee sharing agreement after full disclosure. You looked over the agreement and assured me that it complied with rule 2-200,” Meryl reassured her.
“You are in luck, Meryl,” Cali said, and went on to tell Meryl about a recent case in Meryl’s favor.
In 1998, Kathleen Klawitter retained attorney Christopher Olsen, under a contingency fee agreement, to represent her in a personal injury action arising from an injury on a golf course. In 2002, Olsen associated more experienced trial counsel, Joseph F. Harbison III, into the case, after the two attorneys reached a fee splitting agreement. (Under the agreement, if the case settled at mediation, the attorneys would split the fees equally; if the case was tried, Harbison would get two-thirds and Olsen would get one-third; in all other contingencies, Harbison would get 60 percent and Olsen 40 percent of the fees.) Klawitter consented in writing to this fee split. (Olsen v. Harbison (2010) 191 Cal.App.4th 325,328-329.)
Shortly thereafter, Klawitter terminated Olsen’s representation and retained Harbison under a completely new fee agreement. After Klawitter’s case settled for $775,000, Olsen received no attorney’s fees and he sued Harbison for quantum meruit at the rate 40 percent of Harbison’s fees, among a number of other causes of action. (Id., p. 329.)
The Court of Appeal held that Olsen could not maintain a cause of action against Harbison for quantum meruit from a valid fee sharing agreement in compliance with rule 2-200, California Rules of Professional Conduct. In this case, the fee splitting arrangement terminated when Klawitter terminated Olsen’s representation and entered into the new agreement with Harbison. (Id.)
Olsen might have a quantum meruit cause of action against his former client, Klawitter, since she had a direct attorney-client relationship with him. (Id., p. 332; Fracasse v. Brent (1972) 6 Cal.3d 784, 786, 790–791.) This case is contrasted with Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, 456, 464, in which two law firms worked on a client’s case without obtaining the written consent of the client for a fee sharing arrangement consistent with rule 2–200. That case permitted one firm to recover quantum meruit, for legal services it rendered on the client’s behalf, from the other firm. (See also Cohen v. Brown (2009) 173 Cal.App.4th 302, 319–320.) In Strong v. Beydoun (2008) 166 Cal.App.4th 1398, an attorney who failed to obtain the client’s consent to a fee splitting arrangement with co-counsel and was terminated by co-counsel before recovery could not recover the reasonable value of her legal services from the former client, who had never hired that attorney or consented to her association. However, the attorney could recover the reasonable value of her services from former co-counsel.
After listening to Cali’s recitation of the Olsen case, Meryl did his happy dance. Then he ran back to his office to warn Paula that Dan might sue her next for the reasonable value of his services.
• Ellen R. Peck, a former State Bar Court judge, is a sole practitioner in Escondido and a co-author of The Rutter Group California Practice Guide: Professional Responsibility.
This self-study activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of one hour of legal ethics.
The State Bar of California certifies that this activity conforms to the standards for approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.