A Cautionary Tale: Solicitors Ceasing to Act

Introduction:  Withdrawal of solicitor

Most of the time we focus on the rules of engagement.  But what about the rules of disengagement – especially when the time for hearing is imminent?

A solicitor must give a client at least 28 days’ notice of an intention to withdraw from a case if a hearing date has been fixed. If the required notice is not given, the solicitor must obtain the court’s leave to cease acting.   This means a notice of motion must be filed with evidence in support setting out the facts.  The solicitor who seeks leave to withdraw must also appear at the hearing of the application.  But seeking leave is by no means guaranteed.   A very careful and considered application needs to be prepared to justify such a serious step.


The rule

UCPR r 7.29(2) provides:

(2) Except by leave of the court, a solicitor may not file or serve notice of the change unless he or she has filed and served on the client a notice of intention to file and serve the notice of change:
(a) in the case of proceedings for which a date for trial has been fixed, at least 28 days before doing so…

The rule recognises that a change in solicitor shortly before a hearing may cause “significant prejudice to the client” and the community also has an interest in the timely resolution of proceedings.  It also recognises that lawyers owe duties to the court and not merely to their client and that law is a profession not merely a business.

Recent decision refusing leave

In the recent decision, Sweet Angels Family Day Care Scheme Pty Ltd v Department of Education [2021] NSWSC 957, Justice Parker refused an application by a solicitor to withdraw.   Such an order is somewhat rare, but not unheard of (e.g., leave was refused in Cha v Oh (No 21) [2009] NSWDC 130 and in Nuclear Utility Technology and Environmental Corporation Inc v Australian Broadcasting Corporation (New South Wales Supreme Court, McCallum J, 28 April 2008).

Facts

The proceedings were set down for hearing commencing next Monday (9 August 2021).  The hearing date had been set down for almost a year.   In July 2021, the plaintiff’s then solicitor withdrew from acting.  On 21 July 2021, a new solicitor commenced acting for the plaintiff.  But just over a week later, the new solicitor filed an application under rule 7.29(2) seeking to withdraw.  The application was refused.   In refusing leave, the Court stated,

“…difficult as it is for [the solicitor] to have an unwilling client, I think I must refuse his application to withdraw. I have every sympathy for [the solicitor] but I feel bound to point out that it was ultimately his decision to accept instructions on the company’s behalf less than 28 days before the trial was due to begin.”

When can a solicitor cease to act?

The circumstances in which a solicitor may cease to act are well established (e.g., Plenty v Gladwin (1986) 67 ALR 26).  Good cause for termination of the retainer includes the client’s failure to provide funds for costs and disbursements and where the client prevents the solicitor from properly carrying out the duties required by the retainer (e.g., Super 1000 Pty Ltd v Pacific General Securities Ltd [2007] NSWSC 171 and Underwood Son & Piper v Lewis [1894] 2 QB 306 at 314).

However, the question of entitlement to withdraw less than 28 days prior to the hearing typically requires something more than mere failure to put the lawyer in funds.  In In the matter of S M Project Developments Pty Ltd (in liquidation) [2017] NSWSC 1010, Black J noted that leave to withdraw on the day of the hearing had been granted in Super 1000 Pty Ltd where a client had failed to provide funds for the trail, despite the comparatively late seeking of such costs. However, Black J commented (at [3]):

“…it does not seem to me that that case establishes any general proposition that, however late the application, however longstanding the problem, however significant the potential adverse implications for the administration of justice, and whatever other rights the solicitor may have, a solicitor will always be granted leave to cease to act, when an application is made for such leave shortly before a hearing where the client has not placed that solicitor in funds. Any such general proposition would, it seems to me, be inconsistent with the Court’s obligations under s 56 of the Civil Procedure Act 2005 (NSW) to exercise its discretion in the particular circumstances in order to promote the just, quick and cheap resolution of the real issues in dispute in the proceedings.”

Take home

Timing is critical when it comes to a solicitor ceasing to act.  If it is within 28 days of a hearing, the Court’s leave must be required.  While lack of funds is a recognised basis for ceasing to act, not acting on that lack of funds earlier may mean that the Court refuses leave.  In any event, very good reasons backed up by detailed evidence are essential in any application seeking leave to cease to act having regard to the gravity of the issue.  In the present case, the Court commented that the evidence in support was “very uninformative”.  Effectively, all it stated was that the solicitor had had a client conference whereby it was “agreed” that “they” no longer wanted to instruct the solicitor in the case.   It was clearly unpersuasive.

If leave is refused, the consequences are that (unless the client appoints another solicitor), that solicitor will be required to continue acting.   Obvious serious business ramifications can arise from this.  They can be avoided if a more timely approach is followed.

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