Laura Ellen Lewis v. Haskell Slaughter Young & Rediker, LLC , 582 F. App'x 810 ( 2014 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-14882
________________________
D.C. Docket No. 2:11-cv-00455-AKK
LAURA ELLEN LEWIS,
Plaintiff-Appellant,
versus
HASKELL SLAUGHTER YOUNG & REDIKER, LLC,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(September 11, 2014)
Before HILL and COX, Circuit Judges, and MIDDLEBROOKS,* District Judge.
_______________________
*Honorable Donald M. Middlebrooks, United States District Judge for the Southern District of
Florida, sitting by designation.
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PER CURIAM:
Laura Ellen Lewis appeals the district court’s order awarding attorneys’ fees
to her former attorney, Alicia Haynes and Haynes’ firm, Haynes & Haynes, P.C.
(collectively referred to as “Haynes”), after Haynes terminated their attorney-client
relationship and filed a motion for an attorney’s lien on Lewis’ judgment in this
employment-discrimination action. For the following reasons, we affirm the
district court’s fee award.
I.
Lewis and Haynes entered into an attorney-client relationship that was
codified in a contingency fee agreement, which provided that Haynes would
receive forty-five percent of any recovery obtained during her representation of
Lewis and that she would be entitled to a lien on the judgment. The contract
expressly waived a fee in the absence of any recovery. The agreement also
provided that Haynes could terminate the agreement if Lewis made it
“unreasonably difficult” for Haynes to represent her or for any other “just cause,”
but it did not specify what fee, if any, Haynes would obtain in the event of such a
termination.
Represented by Haynes, Lewis filed this employment-discrimination action
against Haskell Slaughter Young & Rediker, LLC, alleging violations of Title VII
of the Civil Rights Act of 1964 and various state law claims. During the discovery
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phase of this litigation, Lewis sent an email to an associate at Haynes’ firm
requesting various information about depositions and witnesses. Haynes
considered the e-mail to be derogatory, accusatory, and demanding. Shortly
thereafter, Haynes informed Lewis that she would be terminating their
attorney-client relationship. Haynes did not notify the district court of her
withdrawal until several weeks later. During the interim, Haskell Slaughter sent
Haynes an offer of judgment for $85,000, which Haynes forwarded to Lewis.
Lewis, represented by different counsel, filed a notice of acceptance of the
judgment, and, on the same day, Haynes filed a motion to withdraw and a notice of
attorney’s lien against the judgment, requesting quantum meruit recovery for her
work. Lewis opposed the fees request on the grounds that Haynes withdrew prior
to recovery and was not entitled to any fee.
The district court recognized that Alabama law does not directly address
the questions presented here. Nevertheless, it considered the laws of other states
and concluded that Haynes was entitled to attorneys’ fees in quantum meruit
because just cause existed for the termination of the attorney-client relationship.
The district court awarded Haynes $38,250. 1
II.
1
At an evidentiary hearing, Haynes expressly stated that she was not seeking recovery
under her contract with Lewis and was seeking recovery in quantum meruit in the amount of
$50,568.50. In additional briefing to the district court, Haynes voluntarily agreed to accept
$38,250, which was 45 percent of the $85,000 judgment.
3
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On appeal, Lewis contends that the district court abused its discretion by
awarding attorneys’ fees to Haynes. Lewis argues that Haynes forfeited her right
to any fee by unilaterally terminating the attorney-client relationship without just
cause. Additionally, Lewis asserts that the district court abused its discretion by:
(1) awarding fees under a quantum meruit theory, as Haynes had operated with
unclean hands; and, (2) by awarding an unreasonable amount of attorneys’ fees.
Moreover, Lewis contends that the district court erred by failing to enter a
judgment resolving the underlying suit between Lewis and Haskell Slaughter on
the date that she filed her notice of acceptance of judgment. 2
We review decisions regarding attorneys’ fees and costs for an abuse of
discretion. Friends of Everglades v. S. Fla. Water Mgmt. Dist., 678 F.3d 1199,
1201 (11th Cir. 2012). An abuse of discretion exists “only when a decision is in
clear error, the district court applied an incorrect legal standard or followed
improper procedures, or when neither the district court’s decision nor the record
provides sufficient explanation to enable meaningful appellate review.” Id.
The district court began by correctly observing that the rights and
obligations of a party to a contingency fee contract are governed by state law.
Zaklama v. Mount Sinai Med. Ctr., 906 F.2d 650, 652 (11th Cir. 1990). Alabama
law provides that, where a contingency fee arrangement exists, a law firm is not
2
We note that Haynes concedes that Lewis is entitled to a judgment on her employment-
discrimination claim, but contends that it is subject to her lien.
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entitled to any fee until the firm recovers on the underlying claim or some part of
it. As a result, abandonment of the suit before the litigation ends deprives the firm
of any right to compensation. Troy v. Hall & Farley, 47 So. 1035, 1036 (Ala.
1908) (holding that the firm was not entitled to compensation where it had
abandoned the case by not doing anything other than reading briefs and court
opinions filed in the case for years).
However, the attorneys in Troy voluntarily abandoned the case without just
cause. Id. In Howard v. McCarson, 110 So. 296, 297 (Ala. 1926), the Alabama
Supreme Court opined that where an attorney abandons his client “without
justifiable cause . . . he forfeits all right to compensation, even for services already
rendered . . . . ” (emphasis added). The district court noted that this language
implies that an attorney who withdraws with justifiable cause may be entitled to
recover reasonable compensation. The district court did not abuse its discretion in
reaching this conclusion.
Furthermore, in Triplett v. Elliott, 590 So. 2d 908, 910 (Ala. 1991), the
Alabama Supreme Court affirmed the award of fees to an attorney who was
discharged without cause, or otherwise prevented from full performance. The
Court held that under such circumstances, the attorney is entitled to be reasonably
compensated for services rendered before such discharge. Id. The Court said this
also appears to be the prevailing rule where the contract calls for a contingent fee.
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Id. Finally, the Court opined that a “presumption of correctness” accompanies the
trial court’s judgment when it has made findings of fact in actions regarding
attorneys’ liens. Id.
Although there appears to be no Alabama case in which it is the attorney
demanding fees who terminated the attorney-client relationship prior to a
successful recovery, from the foregoing cases we infer that the Alabama courts
would award fees to an attorney who withdraws with just cause prior to the
conclusion of a contingent fee contract. We conclude that the Alabama courts
would follow the modern majority rule that an attorney who withdraws from a case
for good cause or with appropriate justification may recover in quantum meruit for
services he rendered prior to the withdrawal. See In re Carlson, 263 F.3d 748, 750
(7th Cir. 2001) (establishing that a lawyer has a legally enforceable interest “in a
potential contingent fee . . . before judgment or settlement . . . even if he withdraws
rather than being terminated, provided that the withdrawal is for good cause.”).
The issue in this case, then, is whether Haynes withdrew with just cause.
This is, of course, a legal conclusion we draw from the facts of the case. See
Augustson v. Linea Aerea Nacional-Chile S.A., 76 F.3d 658, 663 (5th Cir. 1996).
Broadly speaking, “just cause exists when the client has engaged in culpable
conduct.” Id. Examples would be insistence on the assertion of a fraudulent
claim; failure to cooperate; refusal to pay; humiliation of the attorney or other
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similar conduct on the part of the client. Id. The focus is on the cause of the
attorney-client disagreement and the reason for the withdrawal. Id. The district
court findings of fact in this regard are presumed correct absent clear error.
Triplett, 590 So. 2d at 910.
In this case, the district court found that the evidence demonstrated that, at
the time she sent the email, Lewis no longer trusted or accepted the professional
decisions of Haynes and her firm. The court concluded that Lewis’ testimony at
trial that she called Haynes “clueless” indicated a complete lack of confidence in
Haynes. Furthermore, the evidence was that the parties’ relationship had
completely deteriorated to the extent that Haynes could no longer continue her
representation of Lewis. From these facts, the district court concluded that Haynes
was justified in her withdrawal from representation of Lewis and that it was no
longer in Lewis’ best interest that Haynes represent her.
Furthermore, the district court rejected Lewis’ claim that Haynes acted with
unclean hands in her conduct of the case or her withdrawal. The court engaged in
a lengthy and thoughtful consideration of the facts regarding this claim, including
the nature of the lawsuit and the various factors impacting settlement, and
concluded that Haynes and her firm conducted the litigation in a competent and
professional manner with “no evidence of wrongful or unprofessional conduct by
Haynes or [her firm].”
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Thus, under the rule the district court concluded that Alabama would follow,
Haynes and her firm are entitled to recovery in quantum meruit of just
compensation for services rendered. Haynes and her firm worked on this matter
for eighteen months and performed, among other things, settlement negotiations,
drafting of the EEOC charge and complaint, and extensive paper discovery. The
district court determined that $38,250.00 was a reasonable award in quantum
meruit. We find no abuse of discretion here.
III.
For the foregoing reasons, we affirm the judgment of the district court
awarding Haynes attorneys’ fees in the amount of $38, 250.00. The case shall be
remanded, however, so that the district court may enter a separate judgment for
Lewis nunc pro tunc as of April 26, 2012, the date she accepted defendant’s offer
of judgment.
AFFIRMED and REMANDED.
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MIDDLEBROOKS, District Judge, dissenting:
A lawyer is a fiduciary, entrusted to handle a client’s affairs with
competence, diligence, and loyalty. In the face of looming discovery deadlines,
and with virtually no discovery completed, lawyer Alicia Haynes emailed her
client: “I have decided the best course of action is to withdraw from your case
effective immediately . . . . Your file has been boxed and is in the lobby with the
receptionist.” Instead of seeking permission from the court to withdraw or taking
steps to protect the interests of her client, Ms. Haynes gave a “heads up” to
opposing counsel notifying him of her withdrawal. The opposing party promptly
filed an Offer of Judgment, exposing the client to costs if not accepted within
fourteen days. Only after a notice of acceptance was filed through other counsel
was permission to withdraw sought.
I agree with the majority that the case should be remanded for entry of
judgment nunc pro tunc as of April 26, 2012. However, I cannot join the majority
opinion affirming an award of attorney’s fees for two reasons:
(1) Under Federal Rule of Civil Procedure 68, upon the filing of the written
notice accepting the offer, judgment should have been immediately entered by the
clerk. The ancillary decision awarding fees is “beyond the pale of existing
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jurisdiction, and thus must be a nullity.” Broughten v. Voss, 634 F.2d 880, 883
(5th Cir. 1981).1
(2) Counsel’s unilateral and precipitous withdrawal without consultation
with the client or permission from the tribunal constituted abandonment of the suit
and precludes compensation. Not only did counsel terminate representation before
obtaining permission from the trial judge, but also the trial judge employed an
erroneous standard, first in granting the tardy motion to withdraw and then in
finding justification sufficient to warrant compensation.
For these reasons, as discussed in detail below, I respectfully dissent.
I.
In remanding this case so that the district court can enter judgment nunc pro
tunc as of April 26, 2012, the majority recognizes that pursuant to Federal Rule of
Civil Procedure 68, judgment should have been entered by the clerk immediately
upon filing of the notice accepting the offer of judgment. 2 A Rule 68 offer of
judgment and acceptance is self-executing. See Perkins v. U.S. W. Commc’ns, 138
F.3d 336, 338 (8th Cir. 1998) (“Rule 68 leaves no discretion in the district court to
do anything other than enter judgment once an offer of judgment has been
accepted.”); Mallory v. Eyrich, 922 F.2d 1273, 1279 (6th Cir. 1991) (“By directing
1
Bonner v. City of Pritchard, 666 F.2d 1206, 1209 (11th Cir. 1987) (en banc), adopted as
binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.
2
Rule 68 provides in part: “If, within 14 days after being served, the opposing party serves
written notice accepting the offer, either party may then file the offer and notice of acceptance,
plus proof of service. The clerk must then enter judgment.” Fed. R. Civ. P. 68.
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that the clerk shall enter judgment after proof of offer and acceptance have been
filed, the explicit language of the rule signifies that the district court possesses no
discretion to alter or modify the parties’ agreement.”). The district court’s
jurisdiction under 18 U.S.C. § 1331, which was based upon Title VII of the Civil
Rights Act of 1964, was therefore at an end and any relief from judgment could
only have been sought pursuant to Federal Rule of Civil Procedure 60. See
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S. Ct. 1673 (1994).
The district court lacked jurisdiction to decide the subsequently filed motion to
withdraw and notice of lien. 3
Under circumstances even less clear than those presented here, our
predecessor circuit has held that a district court lacked ancillary jurisdiction to
resolve a fee dispute between a party and withdrawing counsel. See Broughten,
634 F.2d at 882-83. Jurisdiction there involved the federal securities laws and,
during the course of the litigation, the plaintiff fell behind on payments to counsel
and the law firm moved to withdraw. Id. at 881. The trial judge required the
plaintiff to show cause why counsel should not be allowed to withdraw. Id. The
plaintiff responded that the law firm had used improper billing methods, the firm
3
We always have the “power” and “obligation” to examine the district court’s subject matter
jurisdiction. See Fitzgerald v. Seaboard Sys. R.R., Inc., 760 F.2d 1249, 1251 (11th Cir. 1985)
(citing Philbrook v. Glodgett, 421 U.S. 707, 95 S. Ct. 1893 (1975); City of Kenosha, Wis. v.
Bruno, 412 U.S. 507, 511, 93 S. Ct. 2222, 2225 (1973)). We review questions of subject matter
jurisdiction de novo. See Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 408 (11th Cir.
1999) (citations omitted).
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had agreed to go forward if she made payment of a certain amount (which had
been paid), and her lawsuit would be prejudiced if the firm were allowed to
withdraw. Id. After a hearing, the trial judge allowed the law firm to withdraw but
ordered that it was not entitled to any further fee. Id.
Writing for the Fifth Circuit, Judge Tjoflat found that the fee decision was
outside of the court’s jurisdiction and therefore a nullity. Id. at 883. In doing so,
he saw a distinction in the trial court’s role in cases where a client sought to
discharge and substitute counsel and those where a lawyer seeks to withdraw
voluntarily from representation. Id. at 882-83. Where a client seeks to change
counsel during the pendency of a case, Judge Tjoflat found the law “well settled”
that a district court could condition substitution on the payment of fees or the
posting of security. Id. at 882 (quoting Nat’l Equip. Rental, Ltd. v. Mercury
Typesetting Co., 323 F.2d 784, 786 (2d Cir. 1963)). However, where a lawyer
seeks to withdraw voluntarily, the trial judge’s responsibility is “to assure that the
prosecution of the lawsuit before it is not disrupted by the withdrawal of counsel,
and that the withdrawal of counsel is for good cause.” Id. at 882-83. “This by itself
is adequate to protect the interests of the parties before the court and assure fair
treatment of the court’s officers.” Id. at 883.
Here, upon the filing of the acceptance of the offer of judgment, the case
was over. There was no risk of disruption of the court’s schedule and any risk of
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harm to the client caused by the sudden and voluntary withdrawal that had already
occurred. The issue of any attorney fee that might be owed, together with any
claim for malpractice based upon the actions of counsel, was within the jurisdiction
of the state courts and beyond the subject matter jurisdiction of the district court.
II.
In reviewing decisions involving conduct of lawyers, this Circuit applies the
“clearly erroneous” test while carefully examining the district court’s application
of relevant ethical standards. Brennan’s, Inc. v. Brennan’s Restaurants, Inc., 590
F.2d 168, 171 (5th Cir. 1979) (citing Woods v. Covington Cnty. Bank, 537 F.2d
804, 810 (5th Cir. 1976)). “District courts enjoy no particular functional advantage
over appellate courts in their formulation and application of ethical norms.”
Woods, 537 F.2d at 810.
Assuming the district court had subject matter jurisdiction, the fundamental
issue in this appeal is whether the law firm appropriately and with just cause
withdrew from representing its client. Any award of fees depends upon the answer
to this question. If counsel abandoned the representation without just cause, under
Alabama law, fees are precluded. Howard v. McCarson, 110 So. 296, 297 (Ala.
1926); Amason v. Harton, 89 So. 37, 37 (Ala. 1921); Troy v. Hall & Farley, 157
So. 1035, 1036 (Ala. 1908).
A. Background
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In March 2012, the case had been pending for thirteen months. 4 Plaintiff’s
counsel had filed five motions for extension of deadlines. In February 2012, the
trial judge indicated that no further extensions would be granted absent good cause,
and plaintiff’s subsequent motion (filed 2/24/12) had been denied except with
respect to expert reports. No depositions had been taken; no dispositive motions
had been filed; no expert reports had been exchanged.
4
The docket in the district court reflects the following:
2/8/11 Complaint
3/28/11 Answer
Scheduling Order
Discovery deadline 12/16/11
Dispositive motions deadline 1/31/12
Trial 4/12
9/30/11 Plaintiff’s Motion for Extension of Time for all deadlines by 60 days
Order granting extension
Discovery deadline 1/16/12
Dispositive motions deadline 2/29/12
Trial 5/21/12
10/26/11 Plaintiff’s Motion for Extension of Time for expert reports
1/17/11 Joint Motion for 90 Extension of Time (filed by Plaintiff)
Order Granting Motion in Part
Discovery deadline 3/2/12
Dispositive motions deadline 4/16/12
Trial 7/12
2/16/11 Plaintiff’s Motion for 60-Day Extension of Time to complete discovery
Order Granting Motion for Extension of Time
Discovery Deadline 4/30/12
Plaintiff’s expert reports due 3/30/12
Dispositive motions deadline 5/15/12
No further extensions will be granted absent good cause shown
2/22/12 Plaintiff’s Motion to Modify Court’s Order Extending Deadlines
Order Denying Motion to Modify Extending Deadlines except:
Plaintiff’s expert report due 3/30/12
Defendant’s expert report due 4/16/12
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On Friday, March 9, 2012, Ms. Lewis (the client) emailed Ms. Haynes’
associate, Ms. Cleveland: “[Haynes] rarely communicates with me, which makes
you my contact on outstanding issues. It’s unacceptable for you to be uninformed
on these things. Has there been no progress as to Becky, the expert, or depo prep
dates? . . . Just as there was no progress on the [motion] to compel for 2 weeks and
until I emailed to find out the discovery status. If no one tells me what’s going on,
I assume there has been no progress . . . all while time is passing.” Evidentiary
Hearing Notebook, at Tab 34. 5
5
The exchange leading up to the March 9, 2012 email is unremarkable and simply shows a client
asking for information (and lawyers not being very helpful):
Lewis to Cleveland: Hey I see they filed a [response] – they hadn’t as of 6 last
night and I was hoping that somehow they wouldn’t[.] Anyway, it’s just test
symbols for me on [P]acer, so will you send it to me, and our reply? . . . Thanks –
lel.
***
Cleveland to Lewis: Hi LEL! See attached, which was filed after 10:30 last
night.
***
Lewis to Cleveland: Thanks – just glancing at it, whatever they plan to produce
by “March 30” will not work since depos are scheduled (at least to my
knowledge) to start 3/26. Was the schedule ever finalized? Will you please send
me the reply when it’s ready?
***
Cleveland to Lewis: We hope to have it finalized next week, so please continue
to hold those dates. I’ll forward you what we file, and will keep you updated.
Thanks. Have a good weekend!
***
Lewis to Cleveland: OK- but I sent a second message to you – What about
Becky, the expert, and what about depo prep dates. . . . Where are you on those
things?
***
Cleveland to Haynes: Would you like to respond, or should I? Normally when I
do, she gets more saucy, and when you do, it seems to pacify her. You just have
that Midas touch!
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On Monday March 12, 2012, Ms. Haynes responded:
Based on your recent email message on Friday it appears you have no
confidence in the manner I am litigating your case. The tone of your
email was also very derogatory, accusatory, and demanding of me and
my staff. As such I have decided the best course of action is to
withdraw from your case effective immediately and for you to seek
new counsel. . . . I have drafted and filed a reply to the defendant’s
response in opposition to the motion to compel that we filed on your
behalf. We will take no further action on your behalf. . . . Your file
has been boxed and is in the lobby with the receptionist. You may
pick this up at your convenience. . . . We wish you the best of luck in
this endeavor.
Evidentiary Hearing Notebook, at Tab 35.
On March 16, 2012, Ms. Haynes followed up her email with a certified letter
to her client:
This will confirm our conversation of March 12, 2012, where I
informed you I am withdrawing from your case effective immediately.
I drafted and filed a reply to the defendant’s response in opposition to
the motion to compel that we filed on your behalf. We will take no
further action on your behalf unless court filings require immediate
attention. I will officially withdraw with the court from your case on
April 2, 2012. Please let me know if you need assistance finding
counsel.
***
Haynes to Cleveland: Tell her I am handling and out of town until [n]ext
week[.]
***
Cleveland to Lewis: Alicia is handling these matters. She is out of town until
next week. I’ll follow up with her and let you know. Thanks.
Evidentiary Hearing Notebook, at Tabs 33, 34.
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I have also enclosed a copy of the current docket sheet in this matter
for your review in regard to deadlines and the status of pending
motions.
Your file has been boxed and is in the lobby with the receptionist.
You may pick this up at your convenience.
Evidentiary Hearing Notebook, at Tab 36. Ms. Haynes did not file a motion to
withdraw on April 2, 2012, as promised. On April 9, 2012, she emailed her client:
Laura Ellen, Have you had a chance to locate other representation? I
have not had anyone contact me about your client file nor have you
picked up your file. I am planning on withdrawing with the court
today and your other counsel should be apprised so they can file a
notice of appearance. Thanks, Alicia.
Evidentiary Hearing Notebook, at Tab 40.
Then, in what she described as a “heads up,” Ms. Haynes told her opposing
counsel, “I [will] be withdrawing from the file.” Evidentiary Hearing Tr. at 10.
Opposing counsel quickly responded with an offer of judgment under Rule 68. 6
On April 26, 2012, new counsel appeared for Ms. Lewis. That same day, Ms.
Lewis accepted the offer of judgment and then Ms. Haynes sought court approval
to withdraw as counsel.
B. “Your file has been boxed and is in the lobby with the receptionist”
This Court has said that before granting a motion to withdraw, “it is
incumbent on the court to assure that the prosecution of the lawsuit before it is not
6
The operation of this Rule, particularly with respect to an abandoned plaintiff seeking new
counsel late in litigation, both ratchets up the pressure on the plaintiff and works to discourage a
new lawyer from taking her case.
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disrupted by the withdrawal of counsel and that the withdrawal of counsel is for
good cause.” Mekdeci v. Merrell Nat’l Labs., 711 F.2d 1510, 1521-22 (11th Cir.
1983) (quoting Broughten, 634 F.2d at 882-83)). Under standards employed by the
federal courts, withdrawal should be denied where the client’s rights will be
prejudiced by the delay caused by replacing counsel and where the trial calendar of
the court will be dislocated so as to impede the interest of justice. Id. at 1522 n.17.
In evaluating conduct of lawyers, this Court has looked to the Code of
Professional Responsibility, ABA Canons, Ethical Considerations and Disciplinary
Rules, Local Rules, and state case law. See id.; Woods, 537 F.2d at 810.7
Recently, in deciding whether lawyers effectively abandoned their client in an
Alabama death penalty case, the Supreme Court relied in part on the Restatement
(Third) of Law Governing Lawyers (1998). See Maples v. Thomas, 132 S. Ct. 912,
922-23 (2012) (citing 1 Restatement (Third) of Law Governing Lawyers § 31 cmt.
f (1998)).
Local Rule 83.1(e) of the United States District Court for the Northern
District of Alabama prohibits the withdrawal of counsel without the court’s
approval and states: “attorneys shall be held at all times to represent the parties for
whom they appear of record . . . until, after formal motion and notice to such
7
Alabama law does not address what constitutes just cause for a lawyer to voluntarily withdraw
from representation and preserve an entitlement to compensation. The Alabama Supreme Court
declined our invitation to provide guidance.
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parties and to opposing counsel, they are permitted by order of court to withdraw
from such representation.” N.D. Ala. L.R. 83.1(e); see also ABA Model Code of
Professional Responsibility, DR 2-110(A)(1) (1980) (lawyer may not withdraw
without permission when tribunal rules so provide); Restatement (Third) of Law
Governing Lawyers § 31(1) (2000) (“[a] lawyer must comply with applicable law
requiring notice to or permission of a tribunal when terminating a representation”);
Id. § 31 cmt. c (“the lawyer should ordinarily continue to act for the client until the
tribunal has approved withdrawal”; “A lawyer seeking leave of a tribunal to
withdraw should avoid disclosure of confidential client information to the extent
feasible.”).
Ms. Haynes’ communication to her client that she was withdrawing from
representation “effective immediately” and that “your file has been boxed and is in
the lobby with the receptionist” was a blatant violation of the rules of court and the
laws governing counsel. In failing to timely file a motion to withdraw, she denied
the trial judge the opportunity to exercise his responsibility to determine whether
withdrawal so late in the litigation would prejudice Ms. Haynes’ client or,
alternatively, to extend the deadlines to allow the client to obtain new counsel. In
ceasing representation yet failing to seek permission from the court, the client was
placed in limbo. This effectively left the client stranded at a very vulnerable time
in the litigation. Then, inexplicably, Ms. Haynes made it worse by giving
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opposing counsel a “heads up” advising of her client’s precarious and defenseless
posture.
In this vulnerable position, opposing counsel presented a Rule 68 offer of
judgment. According to the Supreme Court, application of Rule 68 requires
plaintiffs to “think very hard” about whether continued litigation is worthwhile.
Marek v. Chesny, 473 U.S. 1, 11, 105 S. Ct. 3012, 3017 (1985). This Court has
explained that Rule 68 operates with a two-part approach as follows:
First, Rule 68 allows a defendant to make a firm, non-negotiable offer
of judgment. Unlike traditional settlement negotiations, in which a
plaintiff may seek clarification or make a counteroffer, a plaintiff
faced with a Rule 68 offer may only accept or refuse. If he accepts,
the court automatically enters judgment in his favor; if he refuses, the
case proceeds. Second, the Rule encourages plaintiffs to accept
reasonable offers through what is referred to as its “cost-shifting”
provision, which forces a plaintiff who refuses an offer and then
ultimately recovers less at trial than the offer amount to pay the costs
incurred from the time of the offer.
Util. Automation 2000, Inc. v. Choctawhatchee Elec. Co-op., Inc., 298 F.3d 1238,
1240-41 (11th Cir. 2002).8
Ms. Haynes breached her duty to her client in curtailing representation and
then waiting until the offer of judgment was made and accepted to seek approval to
8
Rule 68 can present particular problems for plaintiffs and their counsel in civil rights and
employment discrimination claims. Marek is demonstrative. The plaintiff, suing under 42
U.S.C. § 1983, rejected an offer of judgment for $100,000 “including costs now accrued and
attorney’s fees.” Id. at 1241 n.3 (quoting Marek, 473 U.S. at 9, 105 S. Ct. 3012). The case went
to trial and plaintiff was awarded $60,000. Plaintiff filed a request for costs and attorney’s fees
totaling around $171,000 ($32,000 for costs and fees incurred prior to the offer and $139,000
incurred after the offer). The parties agreed on the $32,000. However, the defendants opposed
the $139,000, relying on Rule 68’s cost-shifting provision, and the Supreme Court agreed. Id.
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withdraw from the court. It is hard to imagine a more total abandonment of a
client’s cause. Based on counsel’s failure to withdraw and her abandonment of her
client, any request for fees should have been denied.
C. The District Court Failed to Apply the Correct Legal Standard
It is unclear what standard the district court employed in considering
whether Ms. Haynes was entitled to fees. The court expressly said it was adopting
the standard announced by the Fifth Circuit in Augustson v. Linea Area Nacional-
Chile S.A., 76 F.3d 658 (5th Cir. 1996), applying Texas law. 9 See Order at p.14.
Under the rule set forth in Augustson, “an attorney [who], without just cause,
abandons his client before the proceeding for which he was retained has been
conducted to its termination, or if such attorney commits a material breach of his
contract of employment, he thereby forfeits all right to compensation.” Augustson,
76 F.3d at 662 (quotations omitted). Whether “just cause” exists will depend on
the facts of each particular case, and “[g]enerally, just cause exists when the client
has engaged in culpable conduct.” Id. at 663 (citations omitted). 10
As the Fifth Circuit pointed out, “[t]he objectives of a hearing on cause to
withdraw differ from the objectives of a hearing on attorney’s fees, and because of
9
The district court adopted the Fifth Circuit standard applying Texas law based on the absence
of Alabama law. See supra n.7.
10
The Augustson court gave examples of cases from various jurisdictions where just cause was
found. These include “where the client attempts to assert a fraudulent claim; fails to cooperate;
refuses to pay for services; degrades or humiliates the attorney; or retains other counsel with
whom the original attorney cannot work.” Id.
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these differences circumstances can arise that would authorize a trial court to
permit counsel to withdraw but retain no fee.” Id. at 664. “When considering a
motion to withdraw, a trial court is given broad discretion in order to protect the
best interests of the client.” Id. That is similar to the standard employed in this
Circuit: withdrawal should be denied where the client’s rights will be prejudiced or
where the court’s calendar will be disrupted. See Mekdeci, 711 F.2d at 1521-22;
Broughten, 634 F.2d at 882-83. “In such a setting, the court generally focuses on
the presence of circumstances harmful to the attorney-client relationship, and
inquiry into the cause of these circumstances is irrelevant. At a lien hearing,
however, the focus of attention is on the cause of attorney-client problems.”
Augustson, 76 F.3d at 664.
In Augustson, as here, withdrawing counsel had taken no depositions and
retained no expert witnesses to testify at trial. Id. at 661. The trial judge found
that the clients had either lost faith or never had faith in the lawyer’s ability
sufficient to trust the firm’s judgment. Id. at 662. 11 Nevertheless, the Fifth Circuit
held that, at least where a lawyer could continue without violating ethical
obligations, cause to withdraw under Texas Disciplinary Rule of Professional
11
Unlike this case, in Augustson, counsel sought and obtained permission from the court to
withdraw, citing Texas Disciplinary Rule of Professional Conduct 1.15(b). See Tex. Disciplinary
R. Prof. Conduct 1.15(b)(4), (6) (allowing withdrawal where “a client insists upon pursuing an
objective that the lawyer considers repugnant or imprudent or with which the lawyer has
fundamental disagreement,” or where “the representation will result in an unreasonable financial
burden on the lawyer or has been rendered unreasonably difficult by the client”).
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Conduct 1.15(b) did not necessarily establish cause to recover compensation. Id. at
664. The Augustson court found that counsel had no justification or cause to
withdraw that would preserve an entitlement to compensation:
A contrary rule would also encourage attorneys to withdraw from
“bad” cases on the grounds that the client uncooperatively insists on
going to trial, allowing the attorney to avoid the risks of representation
without losing the benefits of an eventual recovery. It is in such “bad”
cases that a client will have the most trouble finding another attorney,
and the existence of an attorney’s lien will make the search all the
more difficult.
Id. 12
In the instant case, the district court failed to consider the cause of the
attorney-client problems and reached a result inconsistent with Augustson. Instead,
the district court relied almost entirely on the state of the attorney-client
relationship at the time of withdrawal. The court, citing an unpublished decision
from the Seventh Circuit, found there to be “sufficient cause” for an attorney to
terminate the attorney-client relationship because “Lewis no longer trusted or
accepted the professional decisions of Haynes and the Firm.” See Goyal v. Gas
Tech. Institute, 389 F. App’x 539, 544 (7th Cir. 2010) (citing an Illinois state court
holding which provides “an attorney may withdraw from a contingent fee case and
seek reasonable compensation for his services when a client’s actions in rejecting
12
No modern reported Texas case in a contingency fee case has ever found just cause sufficient
to permit an attorney to withdraw but still be compensated. See David Hricik, Dear Lawyer: If
You Decide It’s Not Economical to Represent Me, You Can Fire Me as Your Contingent Fee
Client, But I Agree I Will Still Owe You a Fee, 64 Mercer L. Rev. 363, 379 (2013).
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his attorney’s professional judgment result in a complete breakdown of the
attorney-client relationship”). 13 Further, the district court found “sufficient
evidence supporting Haynes and the Firm’s entitlement to just compensation for
services rendered,” and then found “no evidence that Haynes or the Firm acted
outside of the professional norms for zealously pursuing Lewis’ interests in the
underlying matter.”
Other cases cited by the district court are inconsistent with its decision. For
example, the district court cited a Missouri Supreme Court decision, where the
court reversed an award of attorney’s fees with a remand for specific findings. See
Int’l Materials Corp. v. Sun Corp., Inc., 824 S.W.2d 890 (Mo. 1992). There,
examples of the type of client conduct that could justify withdrawal preserving
entitlement to compensation included perjury by the client; a client accusing the
attorney of dishonesty; a client’s refusal to communicate; or a total breakdown in
communication between the attorney and client caused by the client. Id. at 894.
The district court also looked to a Montana case, but there the Montana Supreme
13
The attorney-client breakdown in Goyal occurred because of the client’s refusal to settle. The
Seventh Circuit found that the attorney’s withdrawal and collection of fees was justified under
Illinois law because the “complete breakdown” in the attorney-client relationship was caused by
the client’s recalcitrance in negotiating the case in the manner the attorney thought best. Id. at
543 (quoting Kannewurf v. Johns, 632 N.E.2d 711, 714 (Ill. App. Ct. 1994)). Moreover, in
Goyal, the retainer agreement provided for counsel’s withdrawal and collection of fees if the
client unreasonably withheld consent to a settlement. Id. at 540-41.
However, as the district court in this case pointed out, Goyal’s holding is contrary to the
rulings in Augustson and the majority of jurisdictions, where “the failure of the client to accept a
settlement offer does not constitute just cause for a withdrawing attorney to collect fees.”
Augustson, 76 F.3d at 663. Nevertheless, the district court appears to have applied the minority
Illinois standard to this case.
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Court also reversed an award of attorney’s fees, concluding good cause did not
exist for withdrawal. See Bell & Marra, PLLC v. Sullivan, 6 P.3d 965, 971-72
(Mont. 2000) (financial concerns of the attorneys was not good cause to withdraw
justifying compensation).
Just cause that can preserve entitlement to compensation as defined in the
decisions listed above—and by most other jurisdictions that have considered the
issue—requires egregious, intentional client conduct that frustrates the ability of a
lawyer to complete representation. See, e.g., Faro v. Romani, 641 So. 2d 69 (Fla.
1994) (the existence of grounds for withdrawal does not translate into an attorney’s
right to be paid for work performed unless client’s conduct makes continued
performance impossible or would cause the attorney to violate an ethical rule); 14
Staples v. McKnight, 763 S.W.2d 914 (Tex. App. 1988) (attorney’s withdrawal
because she thought client intended to present perjured testimony not sufficient
justification to warrant compensation where actual falsity of testimony was not
established); Estate of Falco v. Decker, 188 Cal. App. 3d 1004, 1014 (1987)
(“While a personality clash between the parties may provide good reason for
allowing the attorney to withdraw, it is not necessarily a justifiable reason for
purposes of awarding fees.”). If a single email sent by a client questioning the
14
The district court says that it declined to follow the “more stringent” Florida standard set forth
in Faro. Yet, Faro is cited with approval in the Fifth Circuit’s opinion in Augustson that the
district court purports to adopt. See Augustson, 76 F.3d at 663.
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handling of her case and expressing discontent about repeated delay constitutes just
cause, the standard becomes meaningless. Demanding clients are not unusual. If
just cause can be applied in this manner, it simply becomes a license to walk away
from what a lawyer might think is a bad case.
The district court appears to have simply determined whether Ms. Haynes
should have been permitted to permissively withdraw. Section 32 of the
Restatement (Third) of the Law Governing Lawyers describes the circumstances
where a lawyer can voluntarily withdraw from representation. The rationale for
lawyer withdrawal rules is that, except in limited circumstances, a lawyer must
persist despite unforeseen difficulties and carry through the representation for its
intended conclusion. Id. § 32 cmt. c. “A lawyer who withdraws, or tries to
withdraw, other than as allowed by this Section is subject to professional discipline
and breaches a duty to the client.” Id. § 32 cmt. a (internal citations omitted).
The portion of Section 32 pertinent in this case is (3)(h), which provides: “a
lawyer may withdraw from representing a client if . . . the representation has been
rendered unreasonably difficult by the client or by the irreparable breakdown of the
client-lawyer relationship.” Id. § 32(3)(h). Withdrawal under this subsection is
subject to Subsections (4) and (5). Subsection (4) states that “a lawyer may not
withdraw if the harm that withdrawal would cause significantly exceeds the harm
to the lawyer or others in not withdrawing.” Id. § 32(4). Subsection (5) provides
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that “a lawyer must comply with applicable law requiring notice to or permission
of a tribunal when terminating a representation.” Id. § 32(5).
“Before withdrawing a lawyer must seek to protect the interests of the client
by communicating, if feasible, with the client concerning the basis for withdrawal
and requesting any corrective action that the client might be able to take.” Id. § 32
cmt. h(i) (internal citation omitted). Further, Comment n to Section 32 provides:
a lawyer may be required to consult with a client when a lawyer is
considering permissive withdrawal under § 32(3). For example, a
lawyer may receive an instruction of the client that the lawyer
considers to render the representation unreasonably difficult (see §
32(3)(h)) . . . . The lawyer must consult with the client about the
instruction, if withdrawal can be accomplished only with material
adverse effect on the client (compare § 32(3)(a)) and if it reasonably
appears that reconsideration or other action by the client could, within
a reasonable time, remove the basis for the withdrawal.
Id. § 32 cmt. n.
“Whether material adverse effect results is a question of fact. The client
might have to expend time and expense searching for another lawyer. The
successor lawyer might have to be paid what in effect are duplicated fees for
becoming familiar with the matter.” Id. § 32 cmt. h(ii). “In considering
permissive withdrawal (Subsection (3)), a lawyer should take into account whether
the tribunal may refuse permission. The tribunal may do so, for example, because
of adverse effect on the court’s docket.” Id. § 32 cmt. d.
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In reviewing whether Ms. Haynes’ withdrawal would have a material
adverse effect on her client, I turn to the timing of Ms. Haynes’ withdrawal.
Counsel’s withdrawal came at the end of discovery, when the district court had
already warned that no further extensions would be granted. Consider the
predicament facing Ms. Haynes’ client as she sought new counsel. Before
undertaking representation, a lawyer would have to assess whether it would be
possible to complete discovery, find and retain an expert and file an expert report,
deal with the expected dispositive motion, and prepare for trial in the limited time
remaining. Would the trial judge agree to yet another extension of the deadlines?
With time ticking on the offer of judgment, a prospective lawyer would also have
to consider whether it would be possible to give the client informed advice and if
the offer was refused: “Will I be paid for my work?” The record demonstrates that
Ms. Haynes’ withdrawal would have had a material adverse effect on her client,
suggesting withdrawal should not have been permitted.
The district court failed to apply the rigorous “just cause” standard sufficient
to preserve an entitlement to compensation as described in Augustson and followed
in the majority of jurisdictions. Instead, it seems to have simply determined (on an
after-the-fact basis) whether there was sufficient cause to allow counsel to
permissively withdraw. Even under that relaxed standard, there was no
consideration of the material adverse effect suffered by the client.
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III.
In sum, judgment should have been entered on April 26, 2012, and the
district court lacked jurisdiction to decide the attorney fee dispute. Moreover, Ms.
Haynes failed to seek permission to withdraw from the district court as required by
the local rules, the Code of Professional Conduct, and decisions of this Court. She
failed to consult with her client before terminating the representation, made no
showing that she considered whether her client would suffer materially adverse
effects by reason of her late termination, and harmed her client by notifying
opposing counsel of her intention to withdraw. The trial judge applied an
uncertain standard and erroneously awarded compensation to a lawyer who
abandoned her client. As a matter of law, there was no justification or cause to
withdraw that afforded an entitlement to compensation. I, therefore, respectfully
dissent.
29