After a lawyer's firm dissolves and a judgment is vacated, must the lawyer keep representing the client at a new trial, and what are the duties around the contingency fee?

Plain-English summary

The inquiring lawyer had been a partner in a two-member firm that represented a plaintiff on a contingency retainer and obtained a judgment, then a settlement stipulation. More than a year later the defendants, with new counsel, moved to vacate the judgment and set aside the stipulation based on newly discovered evidence; the lawyer (by then at a new firm, the old firm dissolved) opposed the motion "as a courtesy," and the court vacated the judgment and set aside the stipulation. The client was inclined to return the settlement money and go to trial rather than appeal. The lawyer asked whether she had to return the portion of the settlement she had retained as her contingency fee, and whether she was obligated to represent the client at a new trial given that the firm that signed the retainer had dissolved.

The committee concluded that both questions turn on the interpretation of the retainer agreement and on entitlement to fees under a contingency retainer before a judgment becomes final, which are questions of law and fact beyond its jurisdiction; it pointed the lawyer to the relevant judicial decisions and noted New York courts construe attorney-client agreements most favorably to the client.

The committee then offered ethical comments. On future practice, it cited EC 2-19's counsel to reach a clear, written understanding on a contingent fee. On the duty to continue, it cited DR 7-101(A)(2): a lawyer shall not intentionally fail to carry out a contract of employment, but may withdraw as permitted under DR 2-110, DR 5-102, and DR 5-105, and noted that even on dissolution every member of a firm retained by a client is obligated to fulfill the retainer. The committee suggested the lawyer consider whether her opposition to the motion to vacate created a new attorney-client relationship requiring continued representation. If the lawyer concludes she has no obligation to represent the client at trial, she must advise the client promptly to avoid prejudice (DR 7-101(A)(3)) and advise on protective procedural steps. If she concludes she is obligated, she must remember that the client may terminate the relationship at any time but the lawyer may withdraw only as the Code permits, and that a client's refusal to appeal against the lawyer's advice is not, without more, good cause to withdraw, because the client controls the decision whether to appeal. Finally, the committee underscored DR 2-110(A)'s requirement to take reasonable steps to avoid foreseeable prejudice before withdrawing.

Currency note

This opinion was issued in 1988, before New York replaced the Code of Professional Responsibility (the Disciplinary Rules cited here) with the New York Rules of Professional Conduct, effective April 1, 2009. Declining or terminating representation is now governed by Rule 1.16, fees (including contingent fees) by Rule 1.5, and the allocation of decision-making authority between lawyer and client by Rule 1.2. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Did the committee decide whether the lawyer could keep her contingency fee?

A: No; the committee concluded that entitlement to the fee under the contingency retainer is a question of law and fact beyond its jurisdiction, pointing the lawyer to the relevant judicial decisions.

Q: Does a firm's dissolution end the lawyer's obligation to the client?

A: The committee concluded that even on dissolution, every member of a firm retained by a client is obligated to fulfill the retainer, citing DR 7-101(A)(2), though whether the original retainer requires continued representation is a legal question.

Q: If the lawyer concludes she need not continue, what must she do?

A: The committee concluded she must promptly advise the client of that conclusion to avoid prejudice under DR 7-101(A)(3) and advise on any procedural steps to protect the client's interest.

Q: Can the lawyer withdraw because the client refuses to appeal against her advice?

A: The committee concluded no; the client controls the decision whether to appeal, and a refusal to appeal, without more, is not good cause for withdrawal under the Code.

Background and rules framework

The opinion applied New York Code DR 7-101(A)(2) and (3) (carrying out the contract of employment and avoiding prejudice) and DR 2-110(A), (B), and (C) (withdrawal), informed by EC 2-19 (clear contingent-fee understandings) and EC 7-7 and EC 7-8 (the client's control over decisions affecting the merits). These correspond to ABA Model Rule 1.16 (declining or terminating representation), Model Rule 1.5 (fees), and Model Rule 1.2 (allocation of authority between client and lawyer).

Citations and references

Rules of Professional Conduct:

• New York Code DR 7-101(A)(2), DR 7-101(A)(3), DR 2-110(A)-(C); EC 2-19, EC 7-7, EC 7-8 (applied in the opinion)
• MR 1.16 (declining or terminating representation); MR 1.5 (fees); MR 1.2 (scope and allocation of authority)

Cases:

• Shaw v. Manufacturers Hanover Trust Co., 68 N.Y.2d 172 (1986), completion of representation under a retainer
• Jacobson v. Sassower, 66 N.Y.2d 991 (1985), client's right to terminate the relationship
• Hallock v. State of New York, 64 N.Y.2d 224 (1984), authority over decisions in a case

Other opinions cited:

• N.Y. City 1986-6: the client's control over decisions affecting the merits and duties on withdrawal

See also

• NYC Bar Formal Op. 1988-7: Mortgage on a Client's Property to Secure a Fee
• NYC Bar Formal Op. 1990-1: Representing Both the Sponsor and the Cooperative Corporation After a Conversion

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-1988-4/