Termination of Attorney-Client Contract

Fuston, Petway & French, LLP v. The Water Works Board of Birmingham, [Ms. 1180875, June 30, 2021] __ So. 3d __ (Ala. 2021). The Court, in a per curiam decision (Bolin, Wise, Sellers, Mendheim, and Stewart, JJ., concur; Parker, C.J., concurs in part and dissents in part; Shaw and Bryan, JJ., and McCool, Special Justice, dissents; Mitchell, J., recuses) affirms an order granting summary judgment in favor of the Water Works Board of the City of Birmingham regarding the Board’s termination of a contract for the provision of legal services with the law firm of Fuston, Petway & French, LLP (“the Firm”).

The Firm argues there is a genuine dispute as to whether a contractual provision requiring a supermajority vote to terminate the contract violates public policy and that genuine issues of material fact exist as to the whether the Board violated the supermajority provision by terminating the contract with the Firm without a supermajority of the Board voting to do so. The Court rejects these contentions, explaining that a contract between a lawyer and a client is not to be evaluated in the same way as commercial or other contracts:

At the outset, we note that " '[t]he attorney-client relationship is similar to the doctor-patient relationship in that it is a "close, personal relationship built upon trust and confidence." ' " Ex parte Dunaway, 198 So. 3d 567, 586 (Ala. 2014)(quoting Boykin v. Keebler, 648 So. 2d 550, 552 (Ala. 1994)).

In Gaines, Gaines & Gaines, P.C. v. Hare, Wynn, Newell & Newton, 554 So. 2d 445 (Ala. Civ. App. 1989), the Court of Civil Appeals held that a client may discharge an attorney with or without cause and that, in certain circumstances, the discharged attorney may recover compensation for services performed before the discharge. 554 So. 2d 447-48.

In Garmon v. Robertson, 601 So. 2d 987, 989 (Ala. 1992), this Court quoted Gaines with approval, explaining:

"The Court of Civil Appeals has correctly stated:

" 'It is well recognized that the employment of an attorney by a client is revocable by the client with or without cause, and that such discharge ordinarily does not constitute a breach of contract even with a contract of employment which provides for the payment of a contingent fee. There are, of course, well recognized procedures where a discharged attorney may recover compensation for the services rendered to that client before the discharge.'

"Gaines, Gaines & Gaines, P.C. v. Hare, Wynn, Newell & Newton, 554 So. 2d 445, 447 (Ala. Civ. App. 1989)."

In Cheriogotis v. White (In re Cheriogotis), 188 B.R. 996, 1000 n.4 (Bankr. M.D. Ala. 1994), the United States Bankruptcy Court for the Middle District of Alabama observed:

"The existence of an attorney-client relationship gives rise to special duties and responsibilities. 'A lawyer is a representative of clients, an officer of the legal system and a public citizen having special responsibility for the quality of justice.' Ala. Rules of Prof. Conduct (1994), preamble. A lawyer serves as a legal advisor, but his role is not merely limited to the law. There is a fiduciary duty with regards to the client's financial and other interests. A lawyer acts as an advocate, a negotiator, an intermediary, and an evaluator. These disparate duties have been codified in the code of professional conduct in each of several states. Eg. Ala. Rules of Prof. Conduct (1994). ...

"Moreover, the attorney-client relationship is a very personal relationship. It must be based on some established and known arrangement between the counselor and the counseled. Attorneys are not fungible goods that may be traded one for another like pre-adolescent boys trading baseball cards of their sports heroes. A lawyer, absent consent of the client, has no right to assign the representation of a client to another member of the bar. See Ala. Rules of Prof. Conduct (1994), Rule 1.5(e)(2).

"We need hardly add that an attorney's power to represent a client may be limited and a lawyer is dischargeable by the client as a matter of right and without cause or justification. Doggett v. Deauville Corp., 148 F.2d 881 (5th Cir. (Ala.) 1945); Gaines, Gaines, & Gaines, P.C. v. Hare, Wynn, Newell, & Newton, 554 So. 2d 445 (Ala. Civ. App. 1989)."

See also Alabama State Bar Ethics Opinion RO-93-21 (discussing fee agreements and noting that "non-refundable fee language is objectionable because it may chill a client from exercising his or her right to discharge his or her lawyer and, thus, force the client to proceed with a lawyer that the client no longer has confidence in"); Alabama State Bar Ethics Opinion RO-92-17 (discussing Gaines and stating: "[T]he client has the absolute right to terminate the services of his or her lawyer, with or without cause, and to retain another lawyer of their choice. This right would be substantially limited if the client was required to pay the full amount of the agreed on fee without the services being performed."); and 7A C.J.S. Attorney & Client § 326 (2015) ("The right of a client to terminate his or her relationship with a lawyer is necessarily implied in the attorney-client relationship, and the right is absolute.").

Rule 1.16(a), Ala. R. Prof. Cond., provides, in part:

"(a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client, if:

"....

"(3) The lawyer is discharged."

The Comment to Rule 1.16 provides, in part: "A client has a right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer's services. Where future dispute about the withdrawal may be anticipated, it may be advisable to prepare a written statement reciting the circumstances." That is, a client has the unqualified right to hire and fire attorneys at will with no obligation at all except to pay for completed services.

Ms. **23-27. Continuing, the Court expressly recognizes that the attorney-client relationship is treated different from a client’s relationships with other professions:

"This Court has the inherent authority to admit lawyers to the practice of law, to approve or disapprove any rule governing lawyers' conduct, to inquire into matters of any disciplinary proceeding, and to take any action it sees fit in disciplinary matters. Board of Comm'rs of the Alabama State Bar v. State ex rel. Baxley, 295 Ala. 100, 324 So. 2d 256 (1975); Simpson v. Alabama State Bar, 294 Ala. 52, 311 So. 2d 307 (1975)."

Ex parte Case, 925 So. 2d 956, 962-63 (Ala. 2005).

"The relationship of attorney and client is one of the most sacred relationships known to the law and places upon the attorney a position likened to a fiduciary calling for the highest trust and confidence, so that in all his relations and dealings with his client, it is his duty to exercise the utmost honesty, good faith, fairness, integrity and fidelity, and he may not at any time use against his former client knowledge or information acquired by virtue of the previous relationship. This rule is universal and hoary with age."

Hannon v. State, 48 Ala. App. 613, 618, 266 So. 2d 825, 829 (Crim. App. 1972).

Ms. *28. The Court also examines opinions concerning the nature of attorney-client contracts as evaluated in other states’ appellate decisions (Ms. **28-35), and concludes that requiring enforceability of the supermajority provision of the contract in this case would impede the City of Birmingham Water Works Board’s right to discharge its attorney with or without cause.

The relationship between the attorney and his or her client must be based on the utmost trust and confidence, and such trust and confidence is undermined by restrictions penalizing or impeding the client's right to terminate the relationship. As the United States Bankruptcy Court for the Middle District of Alabama recognized in Cheriogotis, supra, the attorney-client relationship is very personal and not "fungible goods that may be traded one for another." 188 B.R. at 1000 n.4. Applying general contract law to contracts governing the attorney-client relationship, especially with regard to the termination of the attorney-client relationship, ignores the unique relationship between an attorney and client. We recognize that the Board is an entity composed of members who act on behalf of the public by voting in order to conduct the business of the Board. However, the supermajority provision circumvents established Alabama public policy allowing a client to terminate the attorney-client relationship at any time, with or without cause. ...”

Ms. *36.

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