8.7 Contingency Fee Agreements - Withdrawal
If you are retained on a contingency fee basis and you wish to withdraw from representation, you must comply with both the Code of Conduct and the terms of your Contingency Fee Agreement.
Rules 3.6-2 governs contingency fee arrangements. The Commentary to this Rule states:
Although a lawyer is generally permitted to terminate the professional relationship with a client and withdraw services if there is justifiable cause as set out in Rule 3.7, special circumstances apply when the retainer is pursuant to a contingency agreement. In such circumstances, the lawyer has impliedly undertaken the risk of not being paid in the event the suit is unsuccessful. Accordingly, a lawyer cannot withdraw from representation for reasons other than those set out in Rule 3.7-5 (Obligatory Withdrawal) unless the written contingency contract specifically states that the lawyer has a right to do so and sets out the circumstances under which this may occur. [emphasis added]
This means that when you are drafting your Contingency Fee Agreement, you must address the circumstances under which you may want to withdraw and ensure that the Code permits you to withdraw. Lawyers are generally required to withdraw in certain circumstances. Rule 3.7-5 requires a lawyer to withdraw if
- discharged by the client,
- the client persists in instructing the lawyer to act contrary to professional ethics or
- the lawyer is not competent to continue to handle the matter.
These are acceptable grounds on which a lawyer can withdraw from a contingency fee retainer, or any other matter.
If seeking to withdraw for other reasons, the Contingency Fee Agreement must contemplate the reason for the withdrawal. The ability to withdraw from a contingency fee retainer is more restricted than in other retainers.
For example, the Code of Conduct provides that, in the normal course, a lawyer may only withdraw for good cause and with reasonable notice. Permissible grounds on which a lawyer may withdraw include loss of confidence and the non-payment of a retainer or fees. When withdrawing for reasons related to non-payment, a lawyer must consider whether the client’s interests will be prejudiced. As a general rule, a client should have sufficient time to retain and instruct new counsel and a lawyer must not put the client in a position of disadvantage or peril by withdrawing.
In the case of contingency fee retainers, however, if a lawyer is seeking to withdraw for reasons other than those which dictate mandatory withdrawal, these reasons must be contemplated by the Contingency Fee Agreement. If your fee agreement requires the client to pay for disbursements or other charges while the file is ongoing, and you may potentially wish to withdraw if the client fails to do so, this must be identified as a potential basis for withdrawal.
Similarly, you may wish to contemplate withdrawal in the event there is a loss of confidence. The Commentary to Rule 3.7-2 provides that a loss of confidence may result from the client deceiving the lawyer, or being persistently unreasonable or uncooperative. There may be difficulties in obtaining instructions from the client, on a timely basis or at all. There may also be a loss of confidence if the client refuses to accept or act on your advice on a significant point, such as settlement. These factors should be addressed specifically in your Contingency Fee Agreement. You may wish to consider what will happen if the client otherwise acts in way which prejudice the claim, or acts unilaterally without consulting you. You may also wish to contemplate what will happen in the event of an unexpected illness or leave of absence on your part.