Permissive Withdrawal from the Representation of a Client?- Yes, But No “Hot Potato” Withdrawals

When an attorney or law firm seeks to withdraw from representing a client, steps must be taken to ensure that there will not be an adverse effect on the client.  Withdrawal from representation, including the duty to avoid reasonably foreseeable prejudice to the client, is addressed in the California Rules of Professional Code (CRPC), rule 1.16.  This article reviews the requirements applicable to lawyers under the CPRC, including the requirements for attorneys to continue to comply with the other applicable provisions of the CRPC.

Rule 1.16(a) governs situations where a lawyer’s withdrawal from the representation is required.^[1] This brief article, however, addresses situations where, although not mandated, a lawyer is permitted to withdraw. There are many reasons why a lawyer may seek to withdraw from representing a client.  However, once the attorney-client relationship has been formed, withdrawal from a representation must comport with rule 1.16(b).  Rule 1.16(b) sets forth the permissive reasons (although not an exclusive list) for withdrawing or terminating representation of a client; for example, a client pursuing a criminal or fraudulent course of conduct; a difficult client preventing effective representation; client breaching a material term of the contract; or the inability to work with co-counsel.

A recent opinion issued by the Standing Committee on Ethics and Professional Responsibility of the American Bar Association, Formal Opinion 516 (4/2/25) (the “ABA Opinion”), provides guidance on applying ABA Model Rules of Professional Code 1.16(b).  California lawyers must be aware, however, that the model rule differs in significant respects from CPRC 1.16.  This is particularly evident in the ABA Opinion’s discussion regarding withdrawing to avoid a conflict of interest, which appears to be contrary to the requirements of California law, as discussed below.

Even if a lawyer seeks to withdraw pursuant to one of the situations set forth in CRPC 1.16(b), the lawyer must do so in a manner that will not harm or cause prejudice to the client.  Specifically, rule 1.16(d) provides:

A lawyer shall not terminate a representation until the lawyer 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 and complying with paragraph (e).

Paragraph (e) of rule 1.16 further requires that upon the client’s request, the lawyer return all client materials and property^[2] to the client (subject to certain limitations) and to refund any unearned fees paid by the client in advance.  Given the definition of “client materials and property,” paragraph (e) can be seen as an adjunct to the duty to avoid prejudice to the client.

The ABA Opinion concerns a provision not included in CRPC 1.16(b).  Model Rule 1.16(b)(1) provides a lawyer may withdraw if the “withdrawal can be accomplished without material adverse effect on the interest of the client.”  This might, at first glance, appear to parallel CRPC 1.16(d), the requirement to avoid reasonably foreseeable prejudice. However, although the other provisions of Model Rule 1.16(b) identify specific reasons for withdrawing,^[3] paragraph (b)(1) of the Model Rule identifies no reason for the lawyer seeking withdrawal. Instead, pursuant to paragraph (b)(1), the lawyer may withdraw if the lawyer can demonstrate that it “can be accomplished without material adverse effect on the interests of the client.” This is in contradistinction to the CRPC, which requires that the lawyer have a permitted or mandatory reason for the withdrawal (i.e., under 1.16(a) or (b)).

Under the CPRC, “reasonable” when used in relation to conduct by a lawyer, is defined as “the conduct of a reasonably prudent and competent lawyer.” CRPC 1.0.1(h).  “Competence” in providing legal services is defined as applying “the (i) learning and skill, and (ii) mental, emotional, and physical ability reasonably necessary for the performance of such service.”^[4] Thus, in withdrawing from a representation under the CRPC, a lawyer must take reasonable steps to ensure that the client will not be adversely affected by the withdrawal.  Further, once a lawyer has withdrawn from the representation, the lawyer still owes certain duties to the former client and cannot engage in any representation related to the same or substantially related matter or use or reveal confidential information obtained in the prior representation. (See CRPC 1.9).

Appling Model Rule 1.16(b)(1), the ABA Opinion reaches two conclusions that are not applicable to California lawyers.  First the ABA Opinion concludes that a lawyer, just as the client, can withdraw for any reason (or no reason), so long as it will not have a “material adverse effect” on the client’s interest.^[5]  Second, and more importantly, it actually concludes, in contravention of the well-settled lawyer’s core duty of loyalty (at least under California law), that “a lawyer may withdraw to be able to accept the representation of a different client, including to avoid the conflict of interest that might otherwise result.”  Although the ABA Opinion includes a rare dissenting opinion, the CRPC and long-standing California case law have prohibited lawyers and law firms from dropping one client like a “hot potato” so that the lawyer or law firm can take on another client representation.  Under this “hot potato” rule, the lawyer practicing in California cannot terminate a current client to avoid a conflict of interest and represent another client that will be adverse to the other client. Thus, California lawyers will be ill advised to follow this advice provided in the ABA Opinion.^[6]

The duty of loyalty remains even after the termination of the representation.  Comment [1] clarifies the scope of CRPC 1.9, citing to two California Supreme Court cases,^[7] stating:

After termination of a lawyer-client relationship, the lawyer owes two duties to a former client.  The lawyer may not (i) do anything that will injuriously affect the former client in any matter in which the lawyer represented the former client, or (ii) at any time use against the former client knowledge or information acquired by virtue of the previous relationship. 

What this means is that even having withdrawn from representing a current client, effectively making the client a former client, a lawyer still owes the lawyer-generated former client a duty of loyalty.  The ABA Opinion, however, suggests otherwise and should not be followed by California attorneys.  The ABA Opinion concludes that material adverse effect is “one which, despite a lawyer’s efforts to remediate negative consequences, will significantly impede the forward progress of the matter, significantly increase the cost of the matter and/or significantly jeopardize the client’s ability to accomplish the objectives of the representation.” ^[8] It further concludes “the adverse effect must relate to the client’s interest in the matter in which the lawyer represents the client.”  This conclusion ignores the duty of loyalty provided in California case law and CRPC 1.7 and 1.9. 

The analysis in the ABA Opinion is consistent with CRPC 1.16(b), until it concludes that under the ABA Model Rules of Professional Conduct, a lawyer may represent an adverse party.  The ABA Opinion states: “When a lawyer withdraws under Rule 1.16(b)(1), the lawyer’s motivation is irrelevant.”  It opines that “although Rule 1.16(b)(1) derives from judicial decision, the provision parts company with the case law regarding whether a lawyer may withdraw from representing a client to avoid the conflict of interest that has resulted, or would result, from direct adversity to that client.^[9]  The ABA Opinion provides that the “hot potato” principle is derived from neither Rule 1.16 nor any other professional conduct.  The ABA Opinion provides that even though it is not in the rules, “courts might consider it disloyal for the lawyer to withdraw for the purpose of advocating against the now-former client even in an unrelated matter.”^[10]. The ABA Opinion goes at great length regarding the distinction between the ABA Model Rules of Professional Conduct and the requirements for a court issuing a disqualification motion, and concludes that due to this distinction, the “hot potato” doctrine would not be applied in every case. 

But the hot potato doctrine is still valid in California courts.  Therefore, in complying with CPRC 1.16(b), and California case law, California lawyers may withdraw for the enumerated reasons to terminate a client, subject to the provisions of CPRC 1.16(c) and (d).  However, contrary to the ABA Opinion, California lawyers generally cannot terminate one client to avoid a conflict of interest with another client.  Such a reason for termination violates the duty of loyalty to the client and could in some instances “be reasonably foreseeable prejudice to the rights of the client.”^[11]  In addition to the foregoing, the client may be denied the representation by the lawyer that the client thought they were hiring when they engaged the attorney.

By:  Dianne Jackson McLean, Esq., partner at Goldfarb & Lipman LLP.  Ms. Jackson McLean is a member of the Ethics Committee of the California Lawyers Association.  The views expressed herein are her own.

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[1] Situations requiring mandatory withdrawal include the lawyer’s knowledge that a client seeks to bring an action without probable cause and for the purpose of harassing or maliciously injuring another person, knowledge that the representation will result in a violation of the CRPC or the State Bar Act, where the lawyer’s physical or mental condition makes it unreasonably difficult for the lawyer’s effective representation, or when the client discharges the lawyer.

[2] CRPC 1.16(e)(1) defines “client materials and property” to include: “correspondence, pleadings, deposition transcripts, experts’ reports and other writings,* exhibits, and physical evidence, whether in tangible, electronic or other form, and other items reasonably* necessary to the client’s representation, whether the client has paid for them or not.”

[3] For example, Model Rule 1.16(b)(3) permits withdrawal where “the client has used the lawyer’s services to perpetrate a crime or fraud,” and paragraph (b)(4) permits withdrawal where “the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement.”

[4] See CRPC 1.1.

[5] The lawyer’s motivation for withdrawal is not relevant under Model Rule 1.16(b)(1).

[6] See, e.g., Fred L. Wilks, Orange County Bar Association, September 2022 entitled “Ethically Speaking-Navigating the Boundaries of the Hot Potato Rule” which provided “One would be hard pressed to find a client who viewed it as anything but disloyal for their lawyer to terminate them for the purpose of accepting an adverse representation. It would also seem anomalous that the hot potato rule—a rule designed to prevent a breach of the duty of loyalty—could be avoided with deft, though transparently disloyal, timing on the part of the lawyer.” See also American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton, 96 Cal. App. 4th 1017 (2002), and Flatt. V Superior Court, 9 Cal. 4th 275 (1994).

[7] Oasis West Realty, LLC v. Goldman, 51 Cal. 4th 811 (2011); Wutchumna Water Co. v. Bailey, 216 Cal. 564 (1932).

[8] See page 2 of the ABA Opinion.

[9] See page 6 of the ABA Opinion.

[10] See Page 7 of the ABA Opinion.

[11] CRPC 1.16(d)