Kaiser Blog

Bill Zapf is a litigator and legal ethics lawyer. His practice encompasses complex civil litigation, white-collar criminal defense, government investigations, and appeals. He has a particular focus and expertise in matters involving legal ethics, including legal malpractice and attorney disciplinary matters.

Most lawyers have been there: you do not want to continue representing a client, but the rules of professional conduct do not require you to withdraw. You might regret taking on the matter for any number of reasons—you may realize that the matter will not be profitable, the client may be unpleasant and difficult to work with, the matter may end up involving work you are not interested in undertaking, or you may not have time available due to personal or other circumstances.

Under what circumstances can you—for lack of a better term—fire the client?

ABA Model Rule 1.16(b), released last week, addresses the issue, providing a list of several circumstances under subparagraphs (2)-(7) in which a lawyer may withdraw from representation—for example, using the lawyer’s services to perpetrate a crime or fraud—but also permitting withdrawal under subparagraph (1) where it can be accomplished “without material adverse effect on the interests of the client.” D.C. Rule 1.16(b) has the same “adverse effect” language.

ABA Form Opinion 516 addresses what “material adverse effect on the interests of the client” means in the Rule. And there is even a rare dissent! In sum, the Opinion clarifies that the phrase means three things:

1. significant harm to the forward progress of the client’s matter;
2. significant increase in the cost of the matter; or
3. significant harm to the client’s ability to achieve the legal objectives that the lawyer previously agreed to pursue in the representation.

For example, delay caused by the search for new counsel may damage the client’s interests, such as a time-sensitive transactional representation that could risk the deal falling through. The original lawyer may have special skills that may be difficult or impossible to replace. Or, replacing counsel may result in additional expenses related to new counsel getting up to speed.

The Opinion allows for mediation of the adverse effects. The original lawyer can help find replacement counsel, help new counsel get up to speed, or reduce/refund fees for work that will need to be duplicated.

There is also guidance on situations that will not have a material adverse effect, although each of these requires a fact-specific analysis. For example, the matter may have just started, co-counsel may be able to complete the remaining work, or there may be a lull in work that will not require significant duplication of effort for new counsel to take over.

Importantly, Rule 1.16(b)(1) does not protect the client’s feelings—a client may really want to keep the lawyer, may be disappointed if the lawyer discharges them, or the client may believe the lawyer is being disloyal (at least where there is no conflict created by the departure and any new matter taken on by the lawyer). If ending the representation does not materially harm the client, the client’s disappointment is irrelevant. The Opinion notes, however, that the lawyer owes the client a full explanation for the withdrawal. See Rule 1.4 regarding communications.

There are special conflict considerations, of course, when the lawyer is severing the relationship to represent a party adverse to the client being let go. Under Rule 1.9(a), for instance, a lawyer may not represent a client materially adverse to a prior client in a substantially related matter without informed consent in writing. And many courts enforce the so-called “hot potato rule,” which may preclude a lawyer from dropping a client in order to represent another client adverse to the old client, even in an unrelated matter.

The Opinion comes out clearly that the hot potato rule, while judicially enforced for disqualification purposes, does not create an ethical violation under Rule 1.16(b)(1) (unless, of course, it causes a material adverse effect to the client).

As mentioned, there is also a dissent (in part). The main argument the dissent advances is that the Opinion does not go far enough in providing guidance about the hot potato rule, including that it does not address when dropping a client like a hot potato may inflict a material adverse effect on the client and when a situation may cause a mandatory withdrawal (e.g., when a conflict is “thrust upon” the lawyer). Such guidance will have to wait, however.

In sum, a material adverse effect under Model Rule 1.16(b)(1) may result if withdrawal harms the matter’s forward progress, if it creates a significant increase in cost, or if it harms the ability of the client to achieve the matter’s objectives. A lawyer’s motivation is irrelevant. And a lawyer may remediate the adverse effects to avoid a rule violation.