ETHICSearch receives 200-300 calls per month from ABA member lawyers, non-member lawyers and the general public. The following are some of the more unusual, interesting and frequently asked questions. ETHICSearch welcomes reader comments. If you are familiar with materials relevant to the inquiries in this or past columns, please send them to me c/o The Professional Lawyer.

Inquiry:
A lawyer has been representing a client on a contingent fee basis. The trial is now concluded, and the jury has begun deliberations. The client has discharged the lawyer. Is the lawyer still entitled to his contingent fee under the terms of the original fee agreement?

Response:
Most ethics opinions and caselaw in this area state that if a client discharges his lawyer in the midst of a contingent fee case without good cause, the lawyer is entitled to be compensated on a quantum meruit basis. See, e.g., Morris v. Detroit, 472 N.W. 2d 43 (Mich. App. 1991); Clerk of Superior Court of Guilford County v. Guilford Builders Supply Co., 361 S.E. 2d 115 (N.C. Ct. App. 1987).

There is authority which states that the lawyer may still hold the client to the contingent fee agreement if the matter is substantially completed. See Barr v. Day, 879 P.2d 912, 918 (1994):

The purpose of the substantial performance exception is to prevent clients from firing their attorneys immediately prior to the occurrence of the continency in order to avoid the contingency fee.

See also, e.g., Farrar v. Kelly 440 So. 2d 939 (La. Ct. App. 1983); Philadelphia Bar Association, Professional Guidance Committee Opinion 94-59 (1994).¹ Farrar provides some insight into the meaning of substantial performance in the context of contingent fee agreements. The opinion states:

A client has the absolute right to discharge his attorney and after being discharged the attorney cannot recover in full measure the contracted for fee provided in a contingency contract without providing all or substantially all of the services contemplated by the contract . . . . In the instant case, the plaintiff attorneys had performed substantially all of the services contemplated by the contract . . . . The only thing that remained to be done at the time the attorneys were discharged was to have the formal judgment signed, and this was substantially accomplished. Having done substantially all of the work contemplated by the contract, plaintiffs are entitled to the full fee provided by the contract.

Inquiry:
Law firm A has merged with law firm B. Prior to the merger, some of law firm A’s partners decided to leave firm A and form their own firm. Law firm B now has possession of closed and/or dormant client files that were generated by the lawyers that left firm A.

What are firm B’s lawyer’s obligations with regard to these files? Can they discard them? Must they attempt to notify the former clients and/or the lawyers who generated the files for instructions?

Response:
ETHICSearch receives many inquiries about file retention. Occasionally, ETHICSearch receives inquiries from clients who were represented in a matter in the past and now need access to their file, but are unable to locate the lawyer who represented them. The lawyer has either died or retired, and his practice has either been dissolved or has merged with another firm.

Central to the resolution of this inquiry are a lawyer’s ethical obligations with respect to closed or dormant client files. For general ethics guidelines on file retention policy, see ABA Informal Opinion 1384 (1977) (Disposition of a Lawyer’s Closed or Dormant Files Relating to Representation of or Services to Clients).² For guidance on a sole practitioner’s obligations to have a plan in place to provide for the disposition of client files and property in the event of his or her death, see ABA Formal Opinion 92-369 (1992).

Nassau County Bar Association 93-23 (1993) discusses the joint ethical obligations of the lawyers who were formerly partners in a now dissolved law firm. The lawyers who withdrew made arrangements to store their inactive files with the lawyers who remained to form a successor law firm. The members of the successor firm then contacted their former partners and gave them a list of the files that were in storage. The former partners instructed the successor firm to send them certain files and to destroy the rest. The members of the successor firm inquired as to their obligations with regard to the remaining files in their possession. The opinion stated:

Neither the fact that the law firm has dissolved, nor the fact that inquiring counsel and his present partners have no knowledge of the files which remain in their custody, changes their obligations with respect to the files . . . .

Moreover, if there are any members of inquiring counsel’s current firm who are not members of the predecessor law firm in the present firm in dissolution, they are nonetheless equally ethically bound since the present firm, of which they are members, has custody of the files . . . . [A]n attorney voluntarily assuming custody of the files of another lawyer’s client has the same ethical obligations for the files as if they were his or her own files.

Thus, while the private contractual agreement may have the effect of allocating among the former partners the economic burden of dealing with particular files . . . it cannot shift the ethical burden which is joint and several as to (a) all the former partners, both “withdrawing partners” and those remaining at the successor firm and (b) any new partners of the successor firm.

Nassau County Bar Association Opinion 89-43 (1989) dealt with a situation where a law firm had custody of client files of a deceased partner who had acquired the files from another lawyer now deceased who was not a member of the firm. The opinion stated:

It is no answer to the discharge of custodial counsels’ obligations under the Code of Professional Responsibility to complain that the benefits of their passive custody of the documents are not commensurate with the present burdens. Such burdens do not flow solely from an attorney-client relationship, and are not dependent on the payment of fees; rather, the burdens of custody as prescribed by the Code are inherent in the lawyer’s enjoyment of his professional status, and his concomitant obligations to the public generally. Once the burden is assumed, by actively (or passively) taking custody of funds or property belonging to any “client,” those burdens must be fully discharged even if the benefits of the custody were minimal or non-existent.

Endnotes

1. This opinion stated that a lawyer who represented a client in a workers’ compensation matter that settled and who was discharged after beginning negotiations to have the claim paid in a lump-sum is entitled to be paid according to the contingency agreement.

2. See also the following articles that have appeared in the ABA Law Practice Management Section’s Legal Economics and Law Practice Management magazines and the Business Law Section’s Business Law Today magazine:

1) Client Files: to destroy or not to destroy—that shouldn’t be the question, Legal Economics, vol.7 #1 Jan/Feb 1981, p. 17.

2) File Destruction System, Legal Economics, Sept/Oct 1982 vol. 8 #5 p. 21.

3) Problems and Solutions in Records Management, Legal Economics, Sept/Oct 1983, vol. 9, # 5 p. 45.

4) Legal Records Management: Beyond the Case File, Legal Economics, Sept/Oct ‘85, vol. 11 #5, p. 45.

5) Miles of Files, Law Practice Management, September 1989, vol. 15, #6, p. 41.

6) File Retention Schedules, Law Practice Management, Jan./Feb 1990 vol. 16 #1, p. 24.

7) Getting Rational About Records, Business Law Today, Vol. 3 No. 3, Jan/Feb 1994.\

"Ask ETHICSearch" is intended to stimulate awareness of ethical problems and illustrate the varying approaches of different jurisdictions. It is not intended as legal advice.

The ABA Model Rules of Professional Conduct and the opinions discussed are advisory only; the ethics rules, laws and court decisions of your jurisdiction may dictate a different result.

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