Firm may withdraw during litigation if it gives reasonable warning

Law Reporter, Mar 2003

Recent Cases

ATTORNEYS

Fidelity Nat'l Title Ins. Co. v. Intercounty Nat'l Title Ins. Co., 310 F.3d 537 (7th Cir. 2002).

The Seventh Circuit Court of Appeals held that a trial court should grant a law firm's request to withdraw from representing a civil litigant that has stopped paying its legal bills, unless the timing of the firm's motion to withdraw is coercive or the firm filed the motion without giving sufficient warning.

Here, five defendants in a civil lawsuit promised to pay their attorneys an hourly fee and to reimburse expenses, but then began to fall behind in paying their legal bills. The law firm informed the trial court that its clients had stopped paying and were making no efforts to engage new counsel. The court denied the firm's motion to withdraw, indicating that the firm had to keep representing the clients unless a new lawyer filed an appearance on their behalf, no matter how much the representation was costing and how little the clients had paid.

Reversing, the Seventh Circuit found that the ABA Model Rules of Professional Conduct permit withdrawal when a client fails substantially to fulfill an obligation regarding the lawyer's services, after reasonable warning that the lawyer will withdraw. The clients' failure to cover about $470,000 in legal fees and expenses satisfies that provision, the court said.

The rules also allow withdrawal when the representation will result in an unreasonable financial burden on the lawyer. The prospect of providing future uncompensated services worth roughly $500,000 satisfies that test, especially considering that the firm has only four lawyers, the court ruled.

The court also found that the motion should have been granted under the trial court's local ethics rules, which permit withdrawal if the client substantially fails to fill an agreement or obligation to pay expenses or fees.

The Seventh Circuit rejected the lower court's holding that the motion had been filed too late in the litigation. Here, the court found, the firm did not act in an opportunistic manner, such as seeking to withdraw without warning, while discovery deadlines were looming, or on the first day of trial. Instead, the firm moved to withdraw after the end of discovery during a quiet period before trial.

Firm's Counsel

*Myron M. Cherry, Chicago, Ill.