There are several bases on which the relationship between a lawyer and a client is regulated and governed. One basis is the general provisions of contract law, which govern the contractual terms of engagement entered into between a lawyer and a client. Another basis is lawyer-specific legislation, such as the Legal Practitioners Ordinance in the Hong Kong Special Administrative Region and the Lawyers Law in mainland China. A third basis is provided by the rules of professional conduct that are issued by the bodies that regulate the legal profession. These include the Law Society of Hong Kong and, in mainland China, the All China Lawyers Association and local bar associations.
In common law jurisdictions, a fourth basis exists; namely, the principles of equity that govern the fiduciary duty that a lawyer owes to a client (for a discussion about fiduciary duties, see China Business Law Journalvolume 3 issue 1, page 90: Duty or obligation?; for a discussion about equity, see China Business Law Journal volume 3 issue 5, page 74: Law or equity?). This column considers the circumstances in which a lawyer can terminate the relationship (or retainer) with a client.
This issue is usually straightforward where the client terminates the retainer, as most jurisdictions recognise that a client may terminate a retainer and withdraw the lawyer’s instructions at any time and for any reason (although the client will continue to be liable for all reasonable legal fees for work that was properly undertaken by the lawyer prior to termination).
Interestingly, PRC law and the law in common law jurisdictions adopt a very similar approach to this issue, which is broadly representative of international practice.
The position in common law jurisdictions
The traditional position under the common law – i.e. judge-made law as distinct from legislation – is that a lawyer may terminate an “entire contract” retainer before the end of the retainer on reasonable notice, and if the lawyer has a “reasonable ground for refusing to act further for the client”: Lord Esher in Underwood Son & Piper v Lewis, 1894.
In addition, if the lawyer has a “reasonable ground” or “good reason” to terminate, the lawyer is entitled to recover legal fees for the work undertaken prior to termination.
A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at www.vantageasia.com.