Rayos v. Hernandez, G.R No.

169079, February 12, 2007

FACTS: This is a Petition for Review of the Resolution of IBP dismissing Francisco
Rayos’ complaint for disbarment against Atty. Ponciano Hernandez. Wherein Atty
Hernandez was the counsel of Rayos in a Civil Case for damages against NAPOCOR.
RTC dismissed the complaint. Upon appeal, CA reversed the RTC decision and
awarded damages in favor of Rayos. SC affirmed the CA decision which became final
and executory. NAPOCOR issued a Check in the amount of 1,060,800.00 payable to₱
Rayos which was turned over to Atty. Hernandez as counsel. When Rayos demanded
the turnover of the check, Atty. Hernandez refused and justified his retention as a
means to ensure payment of his attorney’s fees. Rayos initiated this complaint for
disbarment for Atty. Hernandez’ failure to return the rest of the award in the amount of
557,961.21. ₱ In his answer Atty. Hernandez alleged
that they had a contract for
attorney’s fees on a contingent basis on 40% 60% sharing of the court award. Atty.
Hernandez was entitled to receive 60% of the award – 40% as attorney’s fees and 20%
as litigation expenses. He asserted that he deposited Rayos’ share of the 40% award in
a bank under Rayos’ name.
ISSUE: Whether Atty. Hernandez can and is justified in retaining the amount awarded to
Rayos to assure payment of his attorney’s fees.
RULING: NO. Money collected by an attorney on a judgment rendered in favor of his
client constitutes trust funds and must be immediately paid over to the client. The court
held that lawyering is not a money making venture and lawyers are not merchants.
CANON 16 provides - A lawyer shall hold in trust all moneys and properties of his client
that may come into his possession. In the case at bar, when respondent withheld and
refused to deliver the check representing the amount awarded by the court, which he
received on behalf of his client (petitioner herein), he breached the trust reposed on
him. The claim that Rayos failed to pay his attorney’s fees is not an excuse for Atty.
Hernandez’ failure to deliver the amount. It is true that a lawyer has a right under Canon
16.03. But the fact alone that a lawyer has a lien for fees on money in his hands
collected for his client, as above-stated, does not relieve him of his duty to promptly
account for the money received; his failure to do so constitutes professional misconduct.
Attorney's liens. — An attorney shall have a lien upon the funds, documents and papers of his client,
which have lawfully come into his possession and may retain the same until his lawful fees and
disbursements have been paid, and may apply such funds to the satisfaction thereof.

'The general or retaining lien is merely a passive right of retainer of papers or moneys reduced to
possession, whereas the charg- ing lien is rather an active right, enabling the attorney to take active
steps to charge the judgment or fund with his claim, and to secure the aid of the court for his pro- tection.

Rayos v. Hernandez, G.R No. 169079, February 12, 2007

FACTS:

This is a Petition for Review of the Resolution of IBP dismissing Francisco Rayos’ complaint for
disbarment against Atty. Ponciano Hernandez. Wherein Atty Hernandez was the counsel of Rayos in
a Civil Case for damages against NAPOCOR.RTC dismissed the complaint. Upon appeal, CA
reversed the RTC decision and awarded damages in favor of Rayos. SC affirmed the CA decision
which became final and executory. NAPOCOR issued a Check in the amount of 1,060,800.00 payable to

Rayos which was turned over to Atty. Hernandez as counsel. When Rayos demanded the turnover of
the check, Atty. Hernandez refused and justified his retention as ameans to ensure payment
of his attorney’s fees. Rayos initiated this complaint for disbarment for Atty. Hernandez’ failure to
return the rest of the award in the amount of557,961.21. ₱In his answer Atty. Hernandez alleged
that they had a contract for attorney’s fees on a contingent basis on 40% 60% sharing of the court
award. Atty. Hernandez was entitled to receive 60% of the award – 40% as attorney’s fees and 20%as
litigation expenses. He asserted that he deposited Rayos’ share of the 40% award in a bank under Rayos’
name.

ISSUE:

Whether Atty. Hernandez can and is justified in retaining the amount awarded toRayos to assure payment
of his attorney’s fees.
RULING:

NO. Money collected by an attorney on a judgment rendered in favor of his client constitutes trust funds
and must be immediately paid over to the client. The court held that lawyering is not a money making
venture and lawyers are not merchants. CANON 16 provides - A lawyer shall hold in trust all moneys and
properties of his client that may come into his possession. In the case at bar, when respondent withheld
and refused to deliver the check representing the amount awarded by the court, which he received on
behalf of his client (petitioner herein), he breached the trust reposed on him. The claim that Rayos failed
to pay his attorney’s fees is not an excuse for Atty. Hernandez’ failure to deliver the amount. It is true that
a lawyer has a right under Canon16.03. But the fact alone that a lawyer has a lien for fees on
money in his hands collected for his client, as above-stated, does not relieve him of his duty to promptly
account for the money received; his failure to do so constitutes professional misconduct.

FRANCISCO L. ROSARIO v. LELLANI DE GUZMAN, GR No. 191247, 2013-07-10

Facts:
in August 1990, Spouses Pedro and Rosita de Guzman (Spouses de Guzman) engaged the legal
services of Atty. Francisco L. Rosario, Jr. (petitioner) as defense counsel in the complaint filed against
them by one Loreta A. Chong (Chong) for annulment of... contract and recovery of possession with
damages involving a parcel of land in Parañaque City,... Petitioner's legal services commenced from the
RTC and ended up in this
Court.
Spouses de Guzman, represented by petitioner, won their case at all levels. While the case was pending
before this Court, Spouses de Guzman died in a vehicular accident. Thereafter, they were substituted by
their children, namely: Rosella de
Guzman-Bautista, Lellani de Guzman, Arleen de Guzman, and Philip Ryan de Guzman (respondents).
September 8, 2009, petitioner filed the Motion to Determine Attorney's Fees[5] before the RTC. He
alleged, among others, that he had a verbal agreement with the deceased Spouses de Guzman that he
would get 25% of the market value of the subject land if... the complaint filed against them by Chong
would be dismissed. Despite the fact that he had successfully represented them, respondents refused his
written demand for payment of the contracted attorney's fees. Petitioner insisted that he was entitled to an
amount equivalent to 25%... percent of the value of the subject land on the basis of quantum meruit.
November 23, 2009, the RTC rendered the assailed order denying petitioner's motion on the ground that
it was filed out of time.
RTC stated that the said motion was filed after the judgment rendered in the subject case, as affirmed by
this Court, had long become final and... executory on October 31, 2007. The RTC wrote that considering
that the motion was filed too late, it had already lost jurisdiction over the case because a final decision
could not be amended or corrected except for clerical errors or mistakes. There would be a variance of
the... judgment rendered if his claim for attorney's fees would still be included.
Petitioner filed a motion for reconsideration, but it was denied by the RTC for lack of merit. Hence, this
petition.
Issues:
TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DENYING THE MOTION TO DETERMINE
ATTORNEY'S FEES ON THE GROUND THAT IT LOST JURISDICTION OVER THE CASE SINCE THE
JUDGMENT IN THE CASE HAS BECOME FINAL AND EXECUTORY
Ruling:
petition is GRANTED
Principles:
Preliminarily, the Court notes that the petitioner filed this petition for review on certiorari under Rule 45 of
the Rules of Court because of the denial of his motion to determine attorney's fees by the RTC.
Apparently, the petitioner pursued the wrong remedy. Instead of... a petition for review under Rule 45, he
should have filed a petition for certiorari under Rule 65 because this case involves an error of jurisdiction
or grave abuse of discretion on the part of the trial court.
petitioner violated the doctrine of hierarchy of courts which prohibits direct resort to this Court unless the
appropriate remedy cannot be obtained in the lower tribunals.[9] In this case, petitioner should have first
elevated the case to the
Court of Appeals (CA) which has concurrent jurisdiction, together with this Court, over special civil actions
for certiorari.[10] Even so, this principle is not absolute and admits of certain exceptions, such as in this
case, when it is demanded by... the broader interest of justice.
Indeed, on several occasions, this Court has allowed a petition to prosper despite the utilization of an
improper remedy with the reasoning that the inflexibility or rigidity of the application of the rules of
procedure must give way to serve the higher ends of justice. The... strict application of procedural
technicalities should not hinder the speedy disposition of the case on the merits.[12] Thus, this Court
deems it expedient to consider this petition as having been filed under Rule 65.
With respect to the merits of the case, the Court finds in favor of petitioner... having established that
petitioner is entitled to attorney's fees and that he filed his claim well within the prescribed period, the
proper remedy is to remand the case to the RTC for the determination of the correct amount of attorney's
fees. Such a procedural... route, however, would only contribute to the delay of the final disposition of the
controversy as any ruling by the trial court on the matter would still be open for questioning before the CA
and this Court. In the interest of justice, this Court deems it prudent to suspend the... rules and simply
resolve the matter at this level. The Court has previously exercised its discretion in the same way in
National Power Corporation v. Heirs of Macabangkit Sangkay:[
In the event of a dispute as to the amount of fees between the attorney and his client, and the intervention
of the courts is sought, the determination requires that there be evidence to prove the amount of fees and
the extent and value of the services rendered,... taking into account the facts determinative thereof.
Ordinarily, therefore, the determination of the attorney's fees on quantum meruit is remanded to the lower
court for the purpose. However, it will be just and equitable to now assess and fix the attorney's fees of...
both attorneys in order that the resolution of "a comparatively simple controversy," as Justice Regalado
put it in Traders Royal Bank Employees Union-Independent v. NLRC, would not be needlessly prolonged,
by taking into due consideration the accepted guidelines and... so much of the pertinent data as are
extant in the records.
A.  "Confidence" refers to information protected by the attorney-client privilege under applicable law, and "secret"
refers to other information gained in the professional relationship that the client has requested by held inviolate or
the disclosure of which would be embarrassing or would be likely to by detrimental to the client.

B.  Except when permitted under DR 4-101(C), a lawyer shall not knowingly:

1. Reveal a confidence or secret of his client.

2. Use a confidence or secret of his client to the disadvantage of the client.
3. Use a confidence or secret of his client for the advantage of himself or of a third person unless the
client consents after full disclosure.

C.  A lawyer may reveal:

1. Confidences or secrets with the consent of the client or clients affected, but only after a full
disclosure to them.
2. Confidences or secrets when permitted under Disciplinary Rules or required by law or court order.
3. The intention of his client to commit a crime and the information necessary to prevent the crime.
4. Confidences or secrets necessary to establish or collect his fee or to defend himself or his
employees or associates against an accusation of wrongful conduct.

D.  A lawyer shall exercise reasonable care to prevent his employees, associates, and others whose services are
utilized by him from disclosing or using confidences or secrets of a client, except that a lawyer may reveal the
information allowed by DR 4-101(C) through an employee.

RULE 130, RULES OF COURT

Section 24. Disqualification by reason of privileged communication. — The following persons cannot

testify as to matters learned in confidence in the following cases:

(b) An attorney cannot, without the consent of his client, be examined as to any communication
made by the client to him, or his advice given thereon in the course of, or with a view to,
professional employment, nor can an attorney's secretary, stenographer, or clerk be examined,
without the consent of the client and his employer, concerning any fact the knowledge of which
has been acquired in such capacity;
FEDERICO SUNTAY vs. ATTY. RAFAEL SUNTAY A.C. NO. 1890 August 7, 2002

Facts:

This complaint for disbarment was filed by complainant against his nephew, Atty. Rafael Suntay, alleging
that the latter was the former’s legal counsel, adviser and confidant who was privy to all his legal, finance
and political affairs.

However, since they parted ways because of politics and respondent’s overweening political
ambitions, respondent had been filing complaints and cases against complainant, making use of
confidential information gained while their attorney-client relationship existed, and otherwise harassing
him at every turn.

Apparently, Atty. Rafael Suntay acted as counsel for clients in cases involving subject matters (two
fishponds) regarding which he had either been previously consulted by complainant or which he had
previously helped complainant to administer as the latter’s counsel and confidant.

Respondent made use of the information he gained while he was the lawyer of complainant as
basis for his complaint for the building of illegal dikes. His possession and examination of Transfer
Certificate of Title and the blueprint plan provided him the information that there used to be two
creeks traversing the fishpond covered by the title. Since he helped in the administration of the fishpond,
he also came to know that the two creeks had disappeared. Thus, he gained the data which became the
basis of his complaint when he was a lawyer and part administrator of complainant. Under the
circumstances, there is a violation of professional confidence.

The IBP found respondent guilty and recommended that he be suspended from the practice of law for two
years for immoral conduct. The Court finds the IBP recommendation to be well taken.

Issue:
Whether or not Privilege communication of attorney-client relationship was violated

Ruling:
Atty. Rafael Suntay is suspended from the practice of law for two years for violating the confidentiality of
lawyer-client relationship and for unethical conduct.

A lawyer shall preserve the confidences and secrets of his clients even after termination of the
attorney-client relation. Communications between attorney and client are, in a great number of litigations,
a complicated affair, consisting of entangled relevant and irrelevant, secret and well known facts.

In the complexity of what is said in the course of the dealings between an attorney and a client, inquiry in
the nature suggested would lead to the revelation, in advance of the trial, of other matters that might only
further prejudice the complainant’s cause.

The following was violated:

Rule 21.01.

a lawyer shall not reveal the confidences or secrets of his client except:

a)when authorized by the client after acquainting him of the consequences of the disclosure;
b)when required by law;

c)when necessary to collect fees or to defend himself, his employees ro associates or by judicial action.

Rule 21.02.

a lawyer shall not, to the disadvantage of his client, use information acquired in the course of
employment, nor shall he use the same to his own advantage or that of a third person, unless
the client with full knowledge of the circumstances consents thereto.
 Mercado v. Vitriolo (Short title) AC # 5108 | May 26, 2005 Petitioner: Rosa F. Mercado
Respondent: Att. Julito D. Vitriolo (Rule 130, Section 24b)
FACTS

Mercado filed a complaint against Atty. Vitriolo, seeking his disbarment for maliciously instituting a case
for falsification of public document against her based on confidential information gained from their
attorney-client relationship.

Mercado's husband filed a civil case for annulment of their marriage with RTC which was dismissed.

Atty. Anastacio P. de Leon, then counsel of Mercado, died so Atty. Vitriolo entered his appearance as
collaborating counsel.

It also appears that Atty. Vitriolo filed a criminal action against Mercado for falsification of public document
for false entries in the Certificates of Live Birth of her children.
Mercado denied using any other name than Rosa F. Mercado and insisted that she has gotten married
only once. Mercado alleged that said criminal complaint disclosed confidential facts and information
relating to the civil case for annulment, then handled by the lawyer as her counsel so that the lawyer is
guilty of breaching their privileged and confidential lawyer-client relationship.

Atty. Vitriolo maintains that his filing of the criminal complaint does not violate the rule on privileged
communication between attorney and client because the bases are the two certificates of live birth which
are public documents and in no way connected with the confidence taken during his engagement as
counsel.

The IBP Board of Governors approved the report finding the lawyer guilty of violating the rule on
privileged communication between attorney and client, and recommending his suspension from the
practice of law for one (1) year.

Upon receiving a copy of the IBP report and recommendation, Mercado wrote CJ Davide a letter of
desistance however, the court said that the letter imparting forgiveness is inconsequential in disbarment
proceedings.

ISSUE/S

W/N Atty. Vitriolo violated the rule on privileged communication between attorney and client.

RULING

In engaging the services of an attorney, the client reposes on him special powers of trust and confidence.
Their relationship is strictly personal and highly confidential and fiduciary. The relation is of such delicate,
exacting and confidential nature that is required by necessity and public interest.

On the rule on attorney-client privilege . the factors essential to establish the existence of the privilege.
(1) There exists an attorney-client relationship, or a prospective attorney-client relationship, and it is by
reason of this relationship that the client made the communication.
(2) The client made the communication in confidence.
(3) The legal advice must be sought from the attorney in his professional capacity.

Applying all these rules to the case at bar, the evidence on record fails to substantiate complainants
allegations. Mercado did not even specify the alleged communication in confidence disclosed.

All her claims were couched in general terms and lacked specificity. She contends that respondent
violated the rule on privileged communication when he instituted a criminal action against her for
falsification of public documents because the criminal complaint disclosed facts relating to the civil case
for annulment then handled by the lawyer but did not spell out these facts which will determine the merit
of her complaint. The Court cannot be involved in a guessing game as to the existence of facts which the
complainant must prove.

Indeed, Mercado failed to attend the hearings at the IBP. Without any testimony as to the specific
confidential information allegedly divulged without her consent, it is difficult, if not impossible to determine
if there was any violation of the rule on privileged communication. Such confidential information is a
crucial link in establishing a breach of the rule on privileged communication between attorney and client. It
is not enough to merely assert the attorney-client privilege. The burden of proving that the privilege
applies is placed upon the party asserting the privilege.
DISPOSITION IN VIEW WHEREOF, the complaint against respondent Atty. Julito D. Vitriolo is hereby
DISMISSED for lack of merit. SO ORDERED.

Terminating The Attorney-Client Relationship

When and how to terminate the relationship with your client without breaking any rules and while
preserving your rights to fees you have earned

Steven Glickman

2019 February

This article addresses the manner in which the attorney-client relationship can be terminated, either by
the lawyer, the client, or by operation of law.

Establishing that the attorney-client relationship never existed

Talking with a client over the phone, informally at a party, or through email, text, or other social media,
could potentially give rise to the existence of an attorney-client relationship. An attorney-client relationship
can arise by inference from the conduct of the parties, even without a fee payment or a formal agreement.
(Lister v. State Bar (1990) 51 Cal.3d 1117, 1126.) There are multiple factors that go into establishing
whether an attorney-client relationship existed. With this in mind, it is important to develop a custom and
practice of rejecting a case. Although there is no formal approved method to be followed in every
situation, here is the procedure practiced by our office:

Telephone or other informal contact

When rejecting a case, it is important to remind the client of the statute of limitations that seems most
applicable to the case with giving the client the proviso that there may be a shorter statute of limitations
and thus it is important to contact another attorney.

Written contact, including email

Whenever there is any written contact with a client, our practice is to send a rejection letter. Sometimes
the statute of limitations is relatively obvious (for instance, a car accident) and sometimes it is not.

In-person meeting

With an in-person meeting, it is also imperative to send out a rejection email or letter.

The bottom line: the best way to not get into a situation where you have to terminate the attorney-client
relationship is to make it clear that one never existed from the start.

Termination by client

The client has an absolute right to terminate the lawyer at any time. (Fracasse v. Brent (1972) 6 Cal.3d
784, 790.) Generally, when a client discharges a lawyer, the lawyer is entitled to be paid for the lawyer’s
services.
An attorney may have a damage claim against a third party who induces the attorney’s client to terminate
the attorney-client relationship. (See Abrams & Fox, Inc. v. Briney (1974) 39 Cal.App.3d 604, 608; Herron
v. State Farm Mut. Ins. Co. (1961) 56 Cal.2d 202, 206.)

Withdrawal by lawyer

An attorney may not withdraw from representation until the attorney has taken “reasonable steps to avoid
reasonably foreseeable prejudice to the rights of the client, such as giving the client sufficient notice to
permit the client to retain other counsel.” (California Rules of Professional Conduct, (“Rule”) 1.16(d).)

An attorney does not have an absolute right to withdraw; even where grounds for termination exist, the
attorney must still comply with the procedures set forth in the Rules of Professional Conduct; the attorney
is subject to discipline for failure to do so.

Fee agreements requiring a client to pre-sign a Substitution of Attorney form in pro per, which the attorney
can file whenever he or she chooses, are improper. However, it is not improper for the fee agreement to
provide that the lawyer, upon notice to the client, may withdraw as counsel at any time as long as the
attorney does not abandon the client or withdraw at a critical point. (Ramirez v. Sturdevant (1994) 21
Cal.App.4th 904, 915.)

An attorney must maintain and preserve client confidences even when seeking to be relieved as counsel.
(Cal. Rules of Court (CRC), rule 3.1362(c).)

Withdrawal is mandatory under the following conditions:

(1) When litigation is for an improper purpose, or without probable cause;

(2) When representation will result in a violation of the Rules of Professional Conduct;

(3) When the lawyer’s mental or physical conditions render it unreasonably difficult to carry out the
representation effectively; or

(4) Where the client discharges the lawyer. (Rule 1.16(a).)

There are a number of grounds for permissive withdrawal including the following:

(1) The client insists on presenting an unwarranted claim or defense;

(2) The client seeks to pursue criminal or fraudulent course of conduct;

(3) The client insists that the lawyer pursue a course of conduct that is criminal or fraudulent;

(4) The client, by other conduct, renders it unreasonably difficult for the lawyer to carry out the
representation effectively;

(5) The client breaches a material term of an agreement and the lawyer has given the client a reasonable
warning after the breach that the lawyer will withdraw unless the client fulfills the agreement;

(6) The client knowingly and freely assents to the termination of the representation;

(7) The inability to work with co-counsel indicates that the best interest of the client likely will be served by
withdrawal;

(8) The lawyer’s mental or physical condition renders it difficult for the lawyer to carry out the
representation effectively;

(9) A continuation of the representation is likely to result in a violation of the State Bar rules;

(10) The lawyer believes in good faith that the court will find the existence of other good cause for
withdrawal.

The most common ground is probably the personality clash, where there is the breakdown in the attorney-
client relationship. This ground is good cause for allowing the attorney to withdraw. (Estate of Falco v.
Decker (1987) 188 Cal.App.3d 1004, 1014.)

Inability to locate the client is also good cause for withdrawal. (See Bodisco v. State Bar (1962) 58 Cal.2d
495, 497.)
The permissive withdrawal may affect the attorney’s quantum meruit fee recovery in a contingency-fee
case. Thus, while a personality clash with a client may provide good cause for withdrawal, it is not
necessarily “justifiable cause” warranting the withdrawing attorney’s recovery of attorney’s fees. An
attorney who withdraws without justifiable cause forfeits the attorney’s right for quantum meruit recovery
for services rendered prior to the withdrawal. (Estate of Falco, supra, 188 Cal.3d at p. 1014.)

Procedure for withdrawal

Whether the withdrawal is mandatory or permissive, the attorney must still obtain court approval for
withdrawal. Most importantly, before withdrawing, the attorney must take reasonable steps to avoid
foreseeable prejudice to the client’s rights, including giving the client due notice, allowing for employment
of other counsel, returning the client’s files and papers, and complying with applicable laws and rules.

If there is no litigation pending, the basis requirement still remains that the lawyer may only withdraw after
the lawyer has avoided foreseeable prejudice to the client.

Where litigation is pending, the request for withdrawal can only be accomplished by substitution with the
client’s consent, or by a motion to be relieved.

Substitution of counsel with the client’s consent can be made at any time, even on the eve of trial; court
permission is not required. (Code Civ. Proc., § 284(1); Hock v. Superior Court (1990) 221 Cal.App.3d
670, 674.)

The substitution by court order requires a motion to be relieved. The form is governed by CRC Rule
3.1362. In bringing the motion, the duty of confidentiality applies and cannot be revealed in the motion.
(CRC, Rule 3.1362(c).) The Court, however, may require a demonstration of a good faith basis for the
motion. This may require that counsel describe, in general terms, the nature of the conflict. (Manfredi &
Levine v. Superior Court (1998) 66 Cal.4th 1128, 1133-1136.) The court may require an in-camera
hearing to provide the court with further details.

The motion requires mandatory forms approved by Judicial Council that include the following forms: MC-
051, MC052, and MC053.

The court will carefully scrutinize the supporting declaration to establish the service address for the client.
Thus, be sure to take appropriate steps to prove the mailing address is the current address.

If there is no current address, a reasonable effort must be made to locate the client, including providing a
declaration detailing the efforts that are made. If, despite diligent efforts, the client cannot be located, then
the client may be served in compliance with Code of Civil Procedure § 1011(b) which authorizes delivery
of the moving papers to the clerk on behalf of the client. If that basis for service is being made, the
envelope should be addressed as follows:

[CLIENT’S NAME]

c/o Clerk of the Superior Court

[INSERT COURT ADDRESS]

The back of the envelope should bear the following information:

Service is being made under Code of Civil Procedure § 1011(b) on a party whose residence is unknown.
[INSERT NAME OF CLIENT]

[INSERT CASE NAME AND CASE NUMBER]

Once the motion to be relieved is granted, the order is not effective until it has been served on the client
and a Proof of Service of the signed order has been filed.

Special rules for withdrawal upon completion of “limited scope representation”

In both general civil cases and in family law cases, the judicial council rules permit an attorney to limit the
scope of representation to an appearance in a specified matter. (For instance, a hearing on a specific
motion.) There is a Judicial Council form to be relieved upon completion of the limited scope
representation (MC-955) as well as a form for an objection and also the Order (MC-956 and MC958).
The timing of the withdrawal of the attorney may impact the statute of limitations for legal-malpractice
cases. The statute of limitations is tolled if the cause of action accrues while the attorney is representing
the client until the representation is terminated. This is not necessarily the date that the order is entered
granting the attorney’s withdrawal. Rather, it is the date when the client has or reasonably should have no
expectation the attorney will provide further legal services. (GoTek Energy, Inc. v. SoCal IP Law Group,
LLP (2016) 3 Cal.App.5th 1240, 1247-1248.)

If an attorney improperly withdraws, then the attorney is subject to discipline for failure to comply with the
Rules of Professional Conduct, or any other law. An attorney may also be liable for malpractice if the
withdrawal is made under the circumstances that breach the attorney’s duty of care. For instance,
withdrawing just before the statute of limitations runs, without opportunity to engage replacement counsel.
Thus, if you intend to withdraw shortly before the statute of limitations is going to run, you should offer to
prepare a pro per complaint for the client to avoid the statute of limitations running.

Termination by operation of law

The attorney’s representation obviously terminates by death or incapacity of the attorney. However, even
though one lawyer at the firm has handled all of the legal work, the client contract is really for services of
all members of the firm. Thus, the firm is obligated to continue the representation unless and until the
client discharges the firm, or the firm properly withdraws. (Little v. Caldwell (1894) 101 Cal.5th 53, 559-
560.)

If you are the opposing party and know that the attorney has died or is suspended, then as an opposing
party, you may, by written notice, require the client to engage new counsel or appear in pro per before
any further proceedings. (Code Civ. Proc., § 286.) If you fail to give notice as an opposing party, no
proceedings may be had against a lawyerless client. (Aldrich v. San Fernando Valley Lumber (1985) 170
Cal.App.3d 725, 742.)

Termination by completion of engagement

The attorney-client relationship comes to a natural conclusion when the attorney has completed the
services for which the attorney was employed. In litigation cases, this is ordinarily the entry of judgment.
(Maxwell v. Cooltech, Inc. (1997) 57 Cal.App.4th 629, 632.) However, the attorney’s post-judgment work
on the case establishes continuous representation for purposes of tolling attorney malpractice statute of
limitations.

In our retainer agreement, we have the following clause relating to the scope of our work:

... before the LAW CORPORATION takes any action on any Appeal, both the CLIENT and the LAW
CORPORATION must agree to proceed with the Appeal.

At the conclusion of a case, it is prudent practice to send a termination letter to the client.

The Rules of Professional Conduct do not specify how long an attorney should keep a client’s files.
However, there is a five-year retention rule for client accounting records. (Rule 1.15(c)(2).) There is an
open question as to whether this five-year rule applies to all client files; the Los Angeles Bar Association
Formal Opinion 475 recommends the five-year retention period “by analogy” to the Rules of Professional
Conduct.

Most files can be destroyed but, generally, a client should be notified. Alternatively, the client can be
notified that unless the client requests the return of the file, the file will be maintained for a certain time
and/or then destroyed. With the advent of scanning files, it is easy to provide the client, at his or her
request, with a complete copy of the file on a disc. We provide that opportunity to the client in our closing
letter.

Law firm break-ups

If the law firm breaks up, and if the lawyer is no longer able to represent the client due to the break-up,
the departing lawyer must comply with the withdrawal provisions discussed above. Partners leaving a law
firm are permitted to solicit any person with whom they have a prior professional relationship. However,
lawyers leaving the firm may not send announcements to firm clients with whom they have no personal
relationships. A departing firm lawyer who wrongfully persuades the firm’s clients to leave the firm and
switch to the departing lawyer’s new firm is exposed to potential tort liability for intentional interference
with contractual relations and interference with prospective economic advantage. (Reeves v.
Hanlon (2004) 33 Cal.App.4th 1140, 1154-1155.) Additionally, a departing firm lawyer who takes firm
clients may also be liable for negligent interference with prospective economic advantage. (Davis v.
Nadrich (2009) 174 Cal.App.4th 1, 9.)

Attorney’s obligations upon termination of representation

The prime duty is to avoid prejudice to the client. Thus, at a minimum, the attorney should advise the
client of such things as any upcoming dates and deadlines in the client’s matter. Until the Substitution of
Attorney form has been filed or until the court order granting withdrawal is effective, the attorney remains
obligated to act competently to protect the client’s interests.

The discharged attorney, absent special circumstances, does not need to provide additional services to
the client once successor counsel has been employed and the attorney has released the client’s files.
Upon termination for any reason, the attorney has a duty to release the client’s files. (Rule 1.16(e)(1).)
This rule requires that all client materials and property be released and defines “client materials and
property” as “correspondence, pleadings, deposition transcripts, expert’s reports, and other writings,
exhibits, and physical evidence, whether intangible, electronic, or other form, and other items reasonably
necessary to the client’s representation whether the client has paid for them or not.”

An unresolved question is whether or not work product of the attorney is within the documents that need
to be turned over. Work product that has previously been communicated to the client needs to be turned
over, but work product not previously communicated to the client is an open question.

When turning over the files, the attorney has an obligation to release the items, not to create them or
change the application. (California State Bar Formal Opinion 2007-174.) The lawyer may charge the client
for copying the file if the fee agreement so provides. However, the lawyer cannot condition delivery of the
client’s file on the client’s payment of copying expenses.

Unreasonable delay in releasing or refusal to turn over the client’s file is grounds for discipline.
Additionally, where failure to return the client’s file results in damages to the client, the attorney may incur
civil liability for malpractice. The bottom line is that the attorney cannot hold the files to extort a disputed
fee or to create a lien that is contrary to public policy. (Academy of Calif. Optometrists v. Superior
Court (1975) 51 Cal.App.3d 999, 1006.)

Once notified of termination, the attorney must promptly return to the client any part of any fee paid in
advance that has not been earned. (Rule 1.16(e)(2).)

Enforcing and litigating the attorney fee lien

Separate action required

Where an attorney with a contractual lien on the client’s recovery is discharged or withdraws prematurely
from the action, the attorney must file an independent action against the former client to establish the
existence of the lien, to determine the amount of the lien, and to enforce it. (Carroll v. Interstate Brands
Corp. (2002) 99 Cal.App.4th 1168, 1173; Valenta v. Regents of Univ. of Calif. (1991) 231 Cal.App.3d
1465, 1467.)

This is true even where the fees are from settlement proceeds held by the successor attorney – a
separate action still must be field for declaratory relief against the client to determine the amount of the
lien. (Mojtahedi v. Vargas (2014) 228 Cal.App.4th 974, 977-979 [without first establishing lien rights in
independent action, lawyer had no basis to claim successor attorney fraudulently withheld fees].)

A separate action is also required when competing liens exist, even where the client does not dispute the
attorney’s lien. (Brown v. Sup.Ct. (2004) 116 Cal.App.4th 320, 329.)

Filing notice of lien in the underlying action

Although an independent action may be necessary to enforce the lien, attorneys can prevent the former
client from “settling around” their lien by filing a notice of lien in the pending action. (Valenta,  231
Cal.App.3d at pp. 1469-1470; see also Carroll, 99 Cal.App.4th at p. 1176.)

Here is the simple notice of lien language, to be sent to the insurance company pre-litigation or filed with
the court in the pending action:
NOTICE IS HEREBY GIVEN that the [name of law firm], hereby asserts a lien on any recovery of plaintiff
[name of plaintiff] in this matter for costs and attorneys’ fees. Any settlement draft in this matter must
include the [name of law firm] as a payee.

Dealing with funds subject to a disputed attorneys’ lien

(1) Attorney’s possession of settlement funds subject to disputed attorney’s lien: Where an attorney has
possession of settlement proceeds subject to a disputed attorney’s lien, the proceeds must be placed in a
client trust account until the dispute is resolved. (Rule 4-100(A)(2).) By contrast, the attorney may not
withhold the undisputed portion of the client’s funds because of a fee dispute. The undisputed amount
must be paid promptly to the client upon demand. (Friedman v. State Bar (1990) 50 Cal.3d 235, 240-241.)

(2) Settlement draft jointly payable to attorney and client trap: Settlement drafts are often made jointly
payable to the client and the client’s present and former attorneys. Where the former attorney has a lien
on the settlement proceeds, endorsing the draft will result in waiver of the former attorney’s lien rights.
(Matter of Feldsott (Rev.Dept. 1997) 3 Cal. State Bar Ct.Rptr. 754, 758; Cal. State Bar Form.Opn. 2009-
177.) Under such circumstances, refusing to endorse a settlement draft does not violate Rule 4-100(B)(4).
(Matter of Feldsott, supra, 3 Cal. State Bar Ct.Rptr. at 758; Cal. State Bar Form.Opn. 2009-177.)
However, refusing to endorse the draft without proper justification (i.e., without a valid lien) can result in
discipline. (See Matter of Kaplan (Rev.Dept. 1993) 2 Cal. State Bar Ct.Rptr. 509, 521-522 [attorney
disciplined for unreasonable refusal to endorse settlement draft (no lien asserted)].)

(3) Prompt action to resolve a lien must be taken: The current attorney faced with a former attorney with
valid lien rights in settlement proceeds must (i) take prompt and reasonable action to resolve a dispute
with his or her former client over the amount to which the attorney is entitled; (ii) promptly disburse any
undisputed amount to which the client is entitled through a method upon which the attorney and client
agree; and (iii) consult governing legal authorities and make a reasonable determination of the amount to
which the lawyer is entitled under the circumstances. If the former client and lawyer cannot agree, the
lawyer has an affirmative obligation to promptly seek resolution of the dispute through arbitration or
judicial determination, as appropriate. (Cal. State Bar Form.Opn. 2009-177.)

Litigating the lien fee amount

A discharged attorney in a contingent fee case is entitled to quantum meruit fees based upon a pro rata
share of the contract price.

In Fracasse, the Supreme Court held that an attorney discharged with or without cause may recover fees
in quantum meruit for the reasonable value of services rendered up to the time of the
discharge. Fracasse did not hold that quantum meruit fees must be calculated according to an hourly rate.
Rather, it referred to Los Angeles v. Los Angeles-Inyo Farms Co. (1933) 134 Cal.App. 268, 276, for a list
of factors which “should be taken into consideration in determining a reasonable fee.”

Those factors are: “The nature of the litigation, its difficulty, the amount involved, the skill required in its
handling, the skill employed, the attention given, the success or failure of the attorney’s efforts, the
attorney’s skill and learning, including his age and experience in the particular type of work demanded.”

Fracasse also stated that “To the extent that such discharge occurs ‘on the courthouse steps,’ where the
client executes a settlement obtained after much work by the attorney, the factors involved in a
determination of reasonableness would certainly justify a finding that the entire fee was the reasonable
value of the attorney’s services.” (Id., 6 Cal.3d at 791.)

Cazares v. Saenz (1989) 208 Cal.App.3d 279, considered the methodology for calculating a discharged
law firm’s right to its share of a contingent fee. The Cazares court held that the quantum meruit recovery
for the reasonable value of attorney services under a partially performed contingent fee contract is not
determined by the prevailing hourly rate for attorneys but is the attorney’s pro rata share of the contract
price. (Id., at p. 288.)

Cazares held, “[T]he proper application of the Fracasse rule is to use an appropriate pro rata formula
which distributes the contingent fee among all discharged and existing attorneys in proportion to the time
spent on the case by each. Such a formula insures that each attorney is compensated in accordance with
work performed, as contemplated by Fracasse...”

Mardirossian & Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 272 held that: “The most useful
starting point for determining the amount of a reasonable fee is the number of hours reasonably
expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective
basis on which to make an initial estimate of the value of a lawyer’s services.”

Not that Mardirossian did not address the issue of how to determine quantum meruit fees owed to a
discharged attorney under a contingent-fee agreement. In Mardirossian, the parties agreed to a 50
percent contingent fee, but also agreed that if the attorney was discharged prior to any settlement offer,
the attorney would be paid a specified hourly rate.

FELICISIMO M. MONTANO vs. INTEGRATED BAR OF THE PHILIPPINES and Atty. JUAN
S. DEALCA

A.C. No. 4215       May 21, 2001

FACTS:

The complainant hired the services of Atty. Juan S. Dealca as his counsel in collaboration with
Atty. Ronando L. Gerona in a case pending before the Court of Appeals docketed wherein the
complainant was the plaintiff-appellant.

The parties agreed upon attorney’s fees in the amount of P15,000.00 fifty percent (50%) of
which was payable upon acceptance of the case and the remaining balance upon the
termination of the case. Accordingly, complainant paid respondent the amount of P7,500.00
representing 50% of the attorney’s fee.

Thereafter, even before respondent counsel had prepared the appellant’s brief and contrary to
their agreement that the remaining balance be payable after the termination of the case, Atty.
Dealca demanded an additional payment from complainant obliged by paying the amount of
P4,000.00.

Prior to the filing of the appellant’s brief, respondent counsel again demanded payment of the
remaining balance of P3,500.00. When complainant was unable to do so, respondent lawyer
withdrw his appearance as complainant’s counsel without his prior knowledge and/or
conformity.

Thus this complaint charging respondent with misconduct and praying that he be «sternly dealt
with administratively.»

ISSUE: W/N respondent committed misconduct and violated provisions of the CPR?

HELD:

Yes. The Court finds respondent’s conduct unbecoming of a member of the legal profession.
Under Canon 22 of the Code of Professional Responsibility, a lawyer shall withdraw his services
only for good cause and upon notice appropriate in the circumstances. Although he may
withdraw his services when the client deliberately fails to pay the fees for the services, under the
circumstances of the present case, Atty. Dealca’s withdrawal was unjustified as complainant did
not deliberately fail to pay him the attorney’s fees. In fact, complainant exerted honest efforts to
fulfill his obligation. Respondent’s contemptuous conduct does not speak well of a member of
the bar considering that the amount owing to him was only P3,500.00. rule 20.4 of Canon 20,
mandates that a lawyer shall avoid controversies with clients concerning his compensation and
shall resort to judicial action only to prevent imposition, injustice or fraud. Sadly, for not so large
a sum owed to him by complainant, respondent lawyer failed to act in accordance with the
demands of the Code.

The Court, however, does not agree with complainant’s contention that the maximum penalty of
disbarment should be imposed on respondent lawyer. In the present case, reprimand is deemed
sufficient.

Respondent was REPRIMANDED.