There are many reasons why a lawyer should decide to end a retainer. Knowing when to part ways with a client and how to do it, is an important part of your risk management toolkit.
Understanding Your Ethical Duty
At the LPLC, when we talk to lawyers with a claim against them, many tell us they knew they should have terminated the retainer and withdrawn from the matter. There are many reasons why a lawyer should decide to end a retainer. Knowing when to part ways with a client and how to do it, is an important part of your risk management toolkit.
Practitioners are bound by an ethical duty to complete the client engagement unless there is ‘just cause’ and ‘reasonable notice’ to terminate the client’s retainer, as stated in Rule 13 of the Australian Solicitor Conduct Rules 2015 (Vic) .
Start with Careful Client and Matter Selection
Before accepting a matter, carefully select your clients and the work you undertake. Practitioners should avoid accepting work beyond their expertise and ensure that they have the necessary resources (such as time and staff) to handle the matter effectively. LPLC refers to this as the ‘Engagement Habit’ and we have developed an Engagement Decision Tool to help you with this process. However, even with careful selection, issues can arise. Be alert to ‘red flags’ such as repeated unreturned phone calls, ignored correspondence, consistent failures to provide instructions, frequent challenges to your advice, or mounting invoices that have not been paid as required. Addressing these issues early can prevent them from escalating and reduce the need to terminate the retainer. Clear communication with your client is crucial to resolving issues before they become unmanageable. If, despite your best efforts, the relationship continues to break down, it may be in both the interests of you and the client to terminate the engagement.
Ethical and Practical Considerations
Under Rule 13, a solicitor must only terminate a retainer if there is ‘just cause’ and ‘reasonable notice’. Rule 13.2 and 13.3 add further requirements for solicitors representing clients facing serious criminal charges or where a client's legal aid has been withdrawn.
The term ‘just cause’ is not defined, but it may include situations such as the client's failure to pay accounts in accordance with the cost agreement, provide timely instructions, or any scenario where the practitioner risks breaching legal or professional obligations. A breakdown in the trust necessary for the solicitor-client relationship may also justify termination. Conversely, Dal Pont notes that issues such as an excessive workload or not enough staff are unlikely to qualify as just cause (G E Dal Pont, Lawyers Professional Responsibility, (7th ed. 2021) at [3.205]). This highlights the importance of ensuring you have the time, resources and expertise to take on a matter before accepting it.
‘Reasonable notice’ will depend on the circumstances of each case. For example, if a conflict of interest arises, termination may require a shorter notice period than if the client has failed to pay invoices. When considering this issue, the client must not be disadvantaged due to the termination. As such, once you have decided to terminate a retainer you should act promptly.
As part of effective client communication, discuss the basis for termination with the client before taking any formal steps. After this discussion, provide the client with written notice specifying when legal services will cease and any upcoming key dates in the matter. This discussion helps ensure that the client is not caught off guard by the written notice.
For litigation matters, you will need to be aware of relevant court rules and practice notes when you are terminating the retainer, such as the County Court of Victoria's guidelines on filing a Applications to File a Notice of Ceasing to Act. In some jurisdictions, where a court has set a trial date, you will need to obtain the leave of the court to cease acting in the matter.
When terminating the retainer, consider any third parties you need to notify. These include the courts and other solicitors involved in the matter. In many situations this can be done by filing and serving a notice of solicitor ceasing to act.
Risk Management Tips
Before accepting a new client
Ensure your firm has the necessary resources, expertise, and time to handle the case effectively. It's better to decline a client than to risk handling their matter poorly.
Clearly define termination conditions
Your retainer agreement should clearly outline the conditions under which you will cease to act. This sets clear expectations and what is expected of the client.
Identify and address ‘Red Flags’ early
Identify and address potential issues as soon as they arise to prevent escalation. Effective communication and early intervention can significantly reduce the likelihood of needing to terminate the engagement. This proactive approach is key to managing the retainer effectively and setting clear expectations for the client.
Earlier the better
If you do decide to terminate, the earlier you give notice, the more time the client has to make alternative arrangements which reduces the risk of allegations of prejudice or undue disadvantage by the client.
Terminate decisively
If unresolved issues persist, terminate the retainer decisively and in accordance with Rule 13.
Document everything
Keep thorough records of all communications and actions related to the engagement and termination. Proper documentation is crucial for defending your conduct if your decision to terminate is challenged.
By carefully managing client engagements from the outset and addressing issues promptly, you can often avoid the need to terminate a retainer. However, when termination becomes necessary, following the guidelines in Rule 13 and best practices will help protect your interests and those of your client.
Other resources
Michael Dolan The client from hell Victorian Law Institute Journal (42-45)
G E Dal Pont, Lawyers Professional Responsibility, (7th ed. 2021) Chapter 3 The Lawyer Client Relationship
