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The client from hell

Feature Articles

Cite as: Jan/Feb 2015 89 (1/2) LIJ, p.42

Can a solicitor terminate a client engagement before completion of the matter?

By Michael Dolan

Ethics special issue

For the best part of a year you have been acting for a client in a very difficult and complex commercial matter. Your client has been extremely challenging and arguing about every second recommendation you have made. Increasingly, your client has been bombarding you and members of your team with letters, emails and telephone calls, and the tone of those communications is becoming ruder and more offensive. Despite this behaviour, your client has continued to pay your monthly interim accounts on time and without complaint. You now do not wish to continue the solicitor client relationship as it is beginning to affect the health and wellbeing of you and your staff. Can you terminate your client engagement?

An entire contract

A client may terminate a solicitor’s engagement at any time subject to any special conditions in the engagement agreement, but there are limitations on a solicitor’s ability to terminate. Although a client can terminate the engagement without giving any reason, the client remains liable to the solicitor for the legal fees and disbursements incurred to that point. If a client exercises the right to terminate the engagement prior to completion of the matter, the solicitor may normally exercise a general retaining lien over the client’s file and related documents.1

In the absence of an agreement with the client, a solicitor’s engagement is normally held to be an “entire contract” under which the solicitor agrees to act for the client in a particular matter until its completion and the client agrees to pay the solicitor for carrying out those services either on completion or on such other terms as may be agreed (e.g. upon receipt of monthly invoices from the solicitor).2 This is the position at common law.3

The professional conduct rules

Rule 6.1.3 of the Victorian Professional Conduct and Practice Rules provides that:

“A practitioner must complete the legal services required by the practitioner’s engagement, unless the practitioner terminates the engagement for just cause, and on reasonable notice to the client”.

Rule 6 appears as Rule 13 of the Australian Solicitors’ Conduct Rules in identical terms.

“Just cause”

“Just cause” may include:

  • a failure by the client to put a solicitor in funds to pay disbursements including counsel’s fees or the client committing a serious breach of a written fees agreement with the solicitor;
  • a delay or refusal to pay the solicitor’s agreed fees;
  • the client making material misrepresentations to the solicitor about the facts;
  • a request by the client for the solicitor to do something illegal or unethical;
  • a refusal by the client to give the solicitor instructions to enable the solicitor to carry out the retainer;
  • the client clearly indicating that another lawyer has been retained in the matter;
  • the client casting insulting imputations upon the solicitor’s character or conduct;
  • continued representation of the client placing the solicitor in clear conflict of interest;
  • the solicitor becoming likely to be a material witness in the case;
  • a potential negligence claim against the solicitor depending on the outcome of the case;
  • continued representation of the client having a serious adverse effect on the solicitor’s health; or
  • there being a complete breakdown in the solicitor client relationship.

Not “just cause”

What is probably not “just cause” may include:

  • the solicitor having an excessive workload;
  • the solicitor having better remunerative work;
  • the solicitor having lost interest in the case; or
  • the solicitor disliking the client.

“Reasonable notice”

What constitutes “reasonable notice” will depend upon the circumstances of each case.

If the retainer has been terminated for “just cause” and on “reasonable notice”, the client will be liable to pay the solicitor’s fees and disbursements incurred until that point.

As a general principle, a solicitor who discharges a client must hand over the client’s file to a new solicitor who holds it subject to the former solicitor’s lien.4

Judicial statements on “just cause”

In a 19th century decision in the English Court of Appeal the following statement was made:

“I should say that when a solicitor is in a position to show that the client has hindered and prevented him from continuing to act as a solicitor should act, then upon notice he should decline to act further; and in such a case the solicitor would be entitled to sue for the costs already incurred. But we have not now to deal with such a case. The sole question here is whether the solicitor is entitled without rhyme or reason to throw up his retainer having given due notice of intention to do so. I do not think that he is so entitled”.5

This decision set the standard for “just cause” in the cases that have followed both in the UK and Australia.

In 2000 the Supreme Court of South Australia addressed “just cause” as follows:

“The appellants maintain that Stanleys undertook an entire job and were not entitled to be paid when they were reluctant to continue the third set of proceedings. The Magistrate found at [28]:

“‘There had been a complete breakdown in the solicitor/client relationship. Mr Bourne said that he could not get a simple task done by a junior solicitor without criticism from the Everinghams, and by then he felt that he was in a conflict situation because he had no enthusiasm to act in the third judicial review and therefore he was not any longer prepared to act. By offering the Everinghams the option of going to another solicitor he felt that the conflict would resolve. I should point out that the third judicial review was in turn discontinued, apparently on the advice of Caldicott and Co’.

“The instructions came to an end by mutual consent. Mrs Everingham refused even to speak to a junior solicitor who was sent to a routine listing conference by Stanleys. In my opinion, the Everinghams were not entitled to avoid paying their solicitors by reason of the circumstances in which the relationship came to an end.”6

Some years later in the US, the Supreme Court of Utah considered the issue of “good cause” or “just cause”:

“We have long held that ‘[w]hile a party may discharge his [or her] attorney with or without cause, [an] attorney should not withdraw from a case except for good cause’. Accordingly, the legal standard applicable to determining whether an attorney’s withdrawal is justified is whether the attorney had good cause. Whether good cause exists is a fact-intensive inquiry based on the reasons for withdrawal and the actions of the parties prior to withdrawal. If, based on the parties’ actions, the withdrawal is for good cause, the attorney may seek his fees earned up until the time of the voluntary withdrawal. (‘[U]nless an attorney has just grounds to withdraw, he waives his retaining lien by thus terminating his services.’) In order to do this however, the attorney must have proof of the work done and demonstrate that the work was of value to or benefitted the client” (references from the court omitted).7

More recently, the Supreme Court of Victoria gave consideration as to whether there had been a complete breakdown of trust between the client and the solicitors.8

An associate justice had given the solicitors leave to withdraw stating that “it would not be in the interests of justice to allow a situation to continue whereby these solicitors were forced to act on the record in circumstances where the evidence squarely points to a complete breakdown of the professional relationship”.

The trial judge dismissed an appeal from the decision of the associate justice. In doing so, His Honour said:

“The evidence as a whole . . . demonstrates an irretrievable breakdown of trust and confidence between Mr Tomasevic and the firm. That was apparent to the associate justice and is apparent to me. In these circumstances, it would not serve the interests of justice for the firm to be forced to continue to act for Mr Tomasevic”.

In that case the plaintiff suffered from psychiatric problems and had trust issues with his solicitors from the outset. The plaintiff refused to follow reasonable legal advice and demanded constant information about his case despite the solicitors advising him that this would increase his solicitor client costs.

The solicitor handling the case swore in an affidavit that she believed that the relationship between the plaintiff and the firm had “irretrievably broken down”. eave to withdraw as solicitors on the record was sought and granted on that basis.

LIV Ethics Committee ruling

This important issue for solicitors was considered recently by the LIV Ethics Committee.9

From 1 March 2013 a firm had been acting for a plaintiff in a legal professional negligence claim against five lawyer defendants. The client had previously engaged at least 12 barristers and six different law firms. The action had commenced in 2003. A mediation had been unsuccessful, and the case was proceeding to trial. The firm had faced considerable problems in acting for the client in the conduct of the litigation and was of the view that there had been an irretrievable breakdown in the solicitor client relationship such that it wished to terminate its engagement and cease acting. The firm sought guidance from the Ethics Committee as to whether it could discharge the client.

The Ethics Committee ruled that in its opinion and on the information presented:

“The Ethics Committee cannot determine the contractual rights and obligations between a solicitor and its client as these are matters of substantive contract law. Such a determination can only be made by a court however the Committee can provide ethical guidance.

“The firm has established on balance ‘just cause’ to terminate its engagement by the client to act on its behalf in the proceedings;

“If the firm terminates its engagement by the client, then it must do so ‘on reasonable notice’ to the client;

“Termination of its client engagement by the firm at a time when the proceedings are still at an interlocutory stage would appear to satisfy the ethical requirement for ‘reasonable notice’ to be given to the client; and

“Given the past and ongoing disputes about legal costs between the firm and the client during the course of its engagement a conflict of interest now exists which requires the firm to cease acting.”

This ruling provides important ethical guidance to solicitors seeking to terminate their client engagement where the solicitor client relationship has broken down irretrievably.

Conclusion

Terminating a client engagement is an extremely serious step for a solicitor to take and may adversely affect the right of a solicitor to exercise a general retaining lien over a client’s file and other documents to secure payment of outstanding professional fees and disbursements. It may also have potential breach of contract consequences for the solicitor. It is not a step which any solicitor should take lightly.

Before doing so it would be well worth taking a step back to ask yourself: Why do I want to terminate my client engagement? Can I resolve the situation in another way, e.g. by a frank discussion with my client or the assistance of a trained mediator? What are the potential downsides for both my client and me in terminating the engagement? What professional obligations do I owe to my client?


MICHAEL DOLAN is the acting manager of the LIV Ethics department. He is an experienced litigation solicitor and has practised in the city and country, and as in-house counsel.

  1. McKenzie v Director-General of Conservation & Natural Resources (2001) VSC 220; Ahmed v Russell Kennedy (a firm) (2000) VSC 41; Heather French v Carter Lemon Camerons LLP (2012) EWCA Civ 1180.
  2. Baker v Legal Services Commissioner [2006] QCA 145 at [2]-[3]; Ahmed v Russell Kennedy [2000] VSC 41.
  3. Underwood, Son & Piper v Lewis (1894) 2 QB 306 Richard Buxton (Solicitors) v Huw Llewelyn Paul Mills-Owen and The Law Society [2010] EWCA Civ 122).
  4. McKenzie v Director-General of Conservation & Natural Resources (2001) VSC 20 per Gillard J at [68].
  5. Underwood, Son & Piper v Lewis (1894) 2 QB 306 AL Smith LJ.
  6. Everingham v Mullins (2000) SASC 448 per Williams J at [12] and [13].
  7. Hartwig v Johnsen (2008) UT 40.
  8. Tomasevic v Melbourne Injury Lawyers [2014] VSC 434) per Hargrave J.
  9. LIV Ethics Committee Ruling 4850, September 2014.

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