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FORMAL OPINION 1986-6

COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS

July 14, 1986

ACTION: Formal Opinion

OPINION:

A lawyer was retained "to prosecute or adjust a claim for damages" on a contingent fee basis. He and his client entered into a standard printed-form retainer agreement, which gave the lawyer the "exclusive right to take all legal steps to enforce [his client's] claim. . . ." The retainer agreement does not mention appeals. The case was tried before a jury, which rendered a verdict for the defendant. The client has asked the lawyer to pursue an appeal from the adverse jury verdict, and takes the position that, under the fee agreement, he is obligated to do so without further compensation. The lawyer asks if he is ethically obligated to pursue an appeal from the adverse jury verdict. While we do not opine on the legal issue of how the retainer agreement here should be construed, we note that there is a duty under DR 7-101(A)(2) to honor any contractual obligations the lawyer may have under the agreement, subject to the qualifications discussed below.

DR 7-101(A)(2) provides that a lawyer shall not intentionally "[f]ail to carry out a contract of employment entered into with a client for professional services, but he may withdraw as permitted under DR 2-110, DR 5-102, and DR 5-105." Lawyers, therefore, have an ethical obligation to perform professional services they contract to provide until their completion, absent good cause for withdrawal. See Hansen v. Wightman, 538 P.2d 1238, 1250 (Wash. App. 1975).

The scope of an attorney's ethical obligation under DR 7-101(A)(2) is defined by the applicable retainer agreement. If, for example, a lawyer was contractually obligated under the retainer agreement to handle the contemplated appeal, his contractual obligation would give rise to an ethical duty to undertake the appeal. Conversely, if a lawyer was not obligated by contract to handle the appeal, he would be under no separate ethical obligation to undertake it. The determination of what services are covered by any particular retainer contract raises questions of law and fact beyond the Committee's jurisdiction, turning on the language of the agreement and on the understanding and intent of the parties.

In considering whether a lawyer is required under a retainer agreement to undertake an appeal from an adverse jury verdict, it should be borne in mind that New York courts tend to construe attorney-client agreements "most favorably for the client." Greenberg v. Bar Steel Construction Corp., 22 N.Y.2d 210, 213 (1968). See Jacobson v. Sassower, 66 N.Y.2d 991 (1985). The lawyer may also wish to consider various judicial decisions which discuss the extent of lawyers' obligations under contingency agreements. See, e.g., Holzberg v. Feuerstein, 104 A.D.2d 971 (2d Dep't 1984); Vitale v. LaCour, 92 A.D.2d 892 (2d Dep't 1983); Matter of Wise (Smedley), 172 App. Div. 491 (1st Dep't 1916); Mrozinski v. Marinello, 46 Misc. 2d 637 (Sup. Ct. Nassau Cty. 1965); Ellis v. Mitchell, 193 Misc. 956 (Sup. Ct. N. Y. Cty. 1948), aff'd, 275 App. Div. 767 (1st Dep't 1949); Slepin v. Beck, 84 Misc. 254 (Sup. Ct. N.Y. Cty.), appeal dismissed, 164 App. Div. 886 (1st Dep't 1914); Matter of Sherburne, 129 Misc. 2d 56, 59 (Surr. Ct. Queens Cty. 1985). See generally 7 Am. Jur. 2d � 259 (1980); 13 A.L.R.3d 673 (1967). In addition, a case currently pending before the New York Court of Appeals raises somewhat related issues. Shaw v. Manufacturers Hanover Trust Co., 66 N.Y.2d 604 (1985) (granting leave to appeal).

Three further comments should be considered. First, even if it is determined that a contractual (and hence ethical) obligation exists to handle the appeal, nevertheless under DR 7-102(A)(2) a lawyer has an obligation to refrain from knowingly "advanc[ing] a claim or defense that is unwarranted under existing law, except that he may advance such claim or defense if it can be supported by good faith argument for an extension, modification, or reversal of existing law." Cf. Fed.R.Civ. P. Rule 11.

Second, if it is determined that no contractual obligation exists to handle the appeal, the lawyer should so advise the client without delay to avoid any prejudice. See DR 7-101(A)(3). Such advice should include information concerning any procedural steps that should be taken to protect the client's interests.

Finally, with respect to the drafting of any future retainer agreements, we call attention to EC 2-19, which wisely advises lawyers to reach a "clear agreement with . . . client[s] as to the basis of the fee charges to be made," and to "reduce to writing the understanding of the parties regarding the fee."