814 F. Supp. 414 (D.N.J. 1993)
Currently before the court is the motion of Budd Larner Gross Rosenbaum Greenberg & Sade, P.C. (“Budd Larner”) to withdraw as counsel for M. Susan Haines (“Haines”), plaintiff in the above-captioned matter.
For the following reasons, the motion is denied.
In the Spring of 1983, three New Jersey law firms — Budd Larner; Porzio, Bromberg & Newman (“Porzio”); and Wilentz Goldman and Spitzer (“Wilentz”) — entered into an agreement (the “Litigation Agreement”) whereby they agreed jointly to litigate cigarette-related health claims on behalf of smokers who developed lung cancer, allegedly from smoking. Edell Aff., ¶ 3; Moving Brief at 2. Ultimately, as a result of the Litigation Agreement, eight cases (the “Cigarette Cases”) were filed against various cigarette companies, including:
Cipollone v. Liggett Group, Inc., et al., No. 83-2864 (D.N.J.);
Dewey v. R.J. Reynolds Tobacco Co., et al., 216 N.J. Super. 347, 623 A.2d 712 (Law Div.);
Berko v. R.J. Reynolds Tobacco Co., et al., (N.J. Super. Ct. Law Div.), see 246 N.J. Super. 348, 587 A.2d 667 (App. Div. 1991);
Barnes v. R.J. Reynolds Tobacco Co., et al. (N.J. Super. Ct. Law Div.), see 246 N.J. Super. 348, 587 A.2d 667 (App. Div. 1991);
Smith v. R.J. Reynolds Tobacco Co., et al., No. L-059921-84 (N.J. Super. Ct. Law Div.); and the instant case, Haines v. Liggett Group, Inc., et al., No. 84-678 (AJL) (D.N.J.).
Edell Aff., ¶ 2; Moving Brief at 2.
The Litigation Agreement continued until March 1986, when Marc Z. Edell (“Edell”) left Porzio to join Budd Larner. Edell Aff., ¶ 3; Moving Brief at 2. Thereafter, only Budd Larner and Wilentz litigated the Cigarette Cases, with the exception of Haines, the instant case. Edell Aff., ¶ 3. On 29 September 1988, Wilentz was disqualified in Haines by Magistrate Judge Ronald Hedges, as a result of a decision by the New Jersey Supreme Court in Dewey v. R.J. Reynolds Tobacco Co., 109 N.J. 201, 536 A.2d 243 (1988). Edell Aff., ¶ 3. Since 29 September 1988, Budd Larner has assumed sole legal and financial responsibility for this case. Moving Brief at 2.
In each of the Cigarette Cases, including the present case, Budd Larner, Porzio and Wilentz entered into contingency fee agreements with the various plaintiffs. Moving Brief at 15. Pursuant to these contingency fee agreements, the expenses of litigation have been borne exclusively by Budd Larner and the other law firms. According to Budd Larner, “[n]o client has expended even a single dollar toward satisfaction of those costs; the expenses are recoverable only if plaintiffs prevail at trial — in which case those sums will be deducted from plaintiffs’ share of the judgments.”
At the present time, of the original eight cases filed under the Litigation Agreement, Budd Larner remains as counsel only in the present case and possibly one other.
On 22 February 1984, this case was filed by Haines as administrator of the estate of Peter F. Rossi (“Rossi”). Edell Aff., Ex. F (letter to Magistrate Judge Joel A. Pisano, dated 2 October 1992) (the “2 Oct. 1992 Letter”) at 1. The defendants (the “Defendants”) in this case are Liggett Group, Inc. (the “Liggett Group”), Loew’s Theatres, Inc. (“Lorillard”), Phillip Morris, Inc. (“Phillip Morris”), R.J. Reynolds Tobacco Co. (“RJR”) and the Tobacco Institute. Haines alleges, inter alia, that Rossi developed lung cancer and died on 28 May 1982 as a result of smoking cigarettes manufactured by Defendants.
Haines alleges numerous grounds for recovery. First, Haines asserts a claim for “risk-utility” as to all Defendants. The essence of this claim is that the cigarettes manufactured by Defendants “were not reasonably fit, suitable or safe for their intended or reasonably foreseeable use because the dangers of smoking so outweigh their usefulness that a reasonably prudent manufacturer would not have sold them.”
Second, Haines asserts a claim for failure to warn against all Defendants. Specifically, Haines alleges that, through their advertising and promotion of cigarettes prior to 1969, Liggett Group and Lorillard failed to adequately warn of the health consequences of smoking. Haines also alleges under this claim that all Defendants “failed to adequately test, research and warn of the health consequences of smoking through means other than advertising.” Haines seeks both compensatory and punitive damages on the failure to warn claim.
Third, Haines brings a claim for breach of express warranty as to all Defendants. Haines alleges that Defendants made express promises or affirmations of fact that the cigarettes they sold to Rossi would not cause injury or harm, that these alleged statements were part of the bargain between Defendants and consumers like Rossi, and that Defendants’ cigarettes used by Rossi failed to conform to the alleged affirmations of fact or promises made to Rossi and proximately caused his death.
Fourth, Haines asserts claims in intentional tort — for fraud and conspiracy — alleging that Defendants “individually and in concert, concealed and intentionally failed to disclose significant and material information and data regarding the health consequences of smoking.” Moreover, Haines alleges that Defendants, “through their advertising, promotion, and other practices, distorted and otherwise misrepresented the health effects of smoking to the public.” Haines contends that Rossi, individually and/or as a member of the general public, relied on these alleged misrepresentations and omissions. Haines seeks compensatory and punitive damages on these intentional tort claims.
On 14 September 1992, by order of the Third Circuit, 975 F.2d 81, this case was reassigned from United States District Judge H. Lee Sarokin to this court. On 16 November 1992, Budd Larner filed this motion to withdraw.
Budd Larner argues it should be granted permission to withdraw from this case because litigation against the cigarette industry “has become an unreasonable financial burden.” Moving Brief at 1. Budd Larner indicates that, although it has entered into “thousands of contingency arrangements over the years, ... it has rarely, if ever, sought to be relieved as counsel because of litigation costs.”
Budd Larner insists “this is not a typical case.” Budd Larner argues:
[This] is a case that must be viewed in the context of the past ten years of litigation, which have demonstrated that the costs of litigating against the tobacco industry are far greater than anyone could have reasonably expected at the time the contingency contract was signed.
According to Budd Larner, the three firms have expended significant amounts of money and time in litigating these eight cases against the cigarette industry. Specifically, Budd Larner states:
[T]he firms have incurred approximately $1.2 million in out-of-pocket expenses (not including the costs of more than one million Xerox copies made in house), of which Budd Larner has paid more than $500,000. The firms have also spent well over $5 million in lawyer and paralegal time, of which Budd Larner was responsible for the largest share — approximately 75%.
Budd Larner does not specify how much money or time it has spent to date in litigating Haines. Nevertheless, Budd Larner suggests that “[t]o approximate the costs of litigating the present case through trial, one need look no further than Budd Larner’s experience in Cipollone.” According to Budd Larner:
From approximately the procedural point where Haines is today through trial, the Cipollone case cost more than $500,000 in out-of-pocket expenses and approximately $2 million in lawyer and paralegal time. There is no reason to believe that Haines could be tried any more quickly than Cipollone, which took four months to try.
In fact, Budd Larner predicts that trying Haines “might very well take longer” than litigating Cipollone because Haines is not restricted to defendants’ pre-1966 tortious conduct ... and it includes a risk/utility claim by plaintiff.”
Budd Larner also suggests that Cipollone should serve as a model for the type of post-trial activity that can be expected in this case. According to Budd Larner:
In Cipollone, almost half of the ten years since the case was filed was spent on post-trial matters. During that period, Budd Larner incurred approximately $150,000 in out-of-pocket costs and expended over $900,000 in attorney and paralegal time.
As a final cost consideration, Budd Larner argues that “much remains to be done to prepare Haines for trial.” Budd Larner anticipates five motions will be filed on behalf of Haines and eight motions will be filed by Defendants. Apparently, both Budd Larner and Defendants also plan to take additional discovery.
In light of these anticipated expenses, Budd Larner concludes: “[I]t has become apparent that the amount of recovery against the tobacco industry is not likely to exceed these costs.” To support this claim, Budd Larner points to the fact that, even when it received a verdict favorable to a plaintiff in Cipollone, that verdict was only for $400,000.
Apart from cost considerations, Budd Larner argues that considerations of public policy have already been achieved by its work in this case and that such considerations do not require Budd Larner to remain as Haines’ counsel in this case. Budd Larner states:
Even though the present case has not yet been tried, many believe that these cases have substantially achieved one of the main goals of product liability law — to provide the public, courts and legislators with the truth regarding a manufacturer’s or an industry’s practices. Budd Larner’s efforts have been widely credited with obtaining in discovery what no other attorneys had been able to obtain.... These revelations regarding the tobacco industry’s practices, and the ability of Congress and the public in general to benefit from Budd Larner’s efforts, will be unaffected by whether Budd Larner remains as counsel in Haines or any other case. Nor does the public have any overriding interest in whether Haines or any other particular case proceeds to trial.
In fact, Budd Larner argues that “there is a strong public interest in discontinuing lawsuits when the aggregate costs of the litigation far exceed the potential benefit to an individual plaintiff.... [T]here is a public interest in refraining from — or discontinuing — suits that have no economic viability.”
Budd Larner falls back upon its record of representation in the Cigarette Cases. For instance, Budd Larner quotes the Affidavit of Thomas Campion (“Campion”):
The formidable work the Budd, Larner firm has done in the vigorous representations of its clients’ interest in cigarette litigation is widely known among members of the trial bar in this state.... [Budd Larner] has acted with manifest devotion to the interests of its client and at an extraordinary financial sacrifice to its own interest.... I do not know of any firm in this state which has labored as vigorously or expended such sums of money to support the maintenance and continuation of litigation of this type. I do not know of many who could even afford to do so.
Budd Larner describes its own performance as follows:
For many years Budd Larner sought to vindicate its clients’ position: it acted tenaciously and aggressively in an effort to prove that the cigarette companies should not have induced people to smoke and that they have failed to provide adequate warnings of smoking risks. Regrettably, the impending financial burden is now far too great for Budd Larner to bear.
Budd Larner suggests that “[i]f there is any substantial public interest in the continuation of this litigation, a public spirited organization or law firm is free to underwrite it or take it on.” Thus, “[u]pon withdrawal of Budd Larner, plaintiff can be given a reasonable time to find new counsel and new counsel can be given a reasonable time to prepare.”
Haines begins by re-formulating the issue presented by this motion. She states:
Presently before the Court is Budd Larner’s motion for leave to withdraw as counsel for plaintiff in the above matter. The central theme of Budd Larner’s pleading, as well as every one of the affidavits submitted in support of its motion, is money; nothing more, nothing less. The issue which should be addressed by the Court is not whether a comparison of projected legal expenses against potential recovery makes it ethical or permissible for Budd Larner to withdraw. Rather, the issue is whether this Court should permit the [D]efendants in this case to engage in pre-trial and trial conduct which generates such an imbalance. As long as any Court is willing to sit back and merely watch as the parties in tobacco litigation engage in a battle of attrition, the plaintiff will always run out of ammunition before the [Defendants even begin to notice a diminution of their resources.
Haines discusses what she describes as “the Tobacco Industry Strategy” to defend against cigarette liability suits. According to Haines, the “tobacco industry has taken the position that its members will never settle a lawsuit which involves claims that tobacco has caused injuries to an individual.” Moreover, she states, “the ability to outspend and over-litigate is ... used to persuade those attorneys and their clients who were ‘foolish’ enough to file suit to voluntarily dismiss their claims.”
To support her argument, Haines cites, inter alia, the following statement by J. Michael Jordan (“Jordan”), counsel for RJR, in which Jordan discusses the voluntary dismissal of nine cigarette cases in California:
[T]he aggressive posture we have taken regarding depositions and discovery in general continues to make these cases extremely burdensome and expensive for plaintiffs’ lawyers, particularly sole practitioners. To paraphrase General Patton, the way we won these cases was not by spending all of [RJR]’s money, but by making that other son of a bitch spend all of his.
Haines recognizes that she “does not want this Court to force Budd Larner to spend hundreds of thousands of dollars in a vain effort to match [Defendants’ ability to spend.” Instead, Haines argues that “this Court should take firm control of the litigation to ensure ... that ‘magnitude of the impact of the disparity in resources between these parties, plus the sophisticated and calculated exploitation of the situation by the [Defendants, do not approach a denial of due process.” According to Haines:
If this Court is willing to take the necessary steps to ensure that the disparity of resources is not the ultimate arbiter of truth, this case can be prepared, tried and disposed of in an orderly, expeditious and fair manner without the necessity of bankrupting Budd, Larner and without prejudice to [Defendants. Rule 1 of the Federal Rules of Civil Procedure calls for nothing less.
Haines then suggests numerous ways for the court to decrease the expense and timeliness of the litigation— most notably, by limiting Defendants’ discovery and use of expert witnesses pursuant to Fed. R. Civ. P. 1, 26 and 83.
Rule 6 of the General Rules of District Court for the District of New Jersey (the “Local Rules”) provides that members of the bar permitted to practice in this court are governed by the Rules of Professional Conduct of the American Bar Association (the “ABA”), as those rules have been revised by the Supreme Court of New Jersey, and subject to “such modifications as may be required or permitted by [F]ederal statute, regulation, court rule or decision at law.” In other words, “the ethical rules and constraints imposed on [F]ederal practitioners in New Jersey are the same as those imposed on New Jersey attorneys generally by the state Supreme Court under New Jersey Court Rule 1:14.”
New Jersey Rule of Professional Conduct 1.16 (“RPC 1.16”), entitled “Declining or Terminating Representation,” is the state ethical rule which governs this motion. RPC 1.16 states in pertinent part:
A lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the interests of the client, or if ... (5) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client.
RPC 1.16(b) (emphasis added). Based on this language, RPC 1.16 has been interpreted by some commentators as providing for withdrawal under two circumstances: (1) for any reason, so long as no material adverse effect on the client occurs and (2) for good cause, such as financial hardship, even if withdrawal has a material adverse effect on the client. S. Gillers & N. Dorsen, Regulation of Lawyers: Problems of Law and Ethics 432 (1989).
Even with these provisions, RPC 1.16 provides that withdrawal is entirely within the discretion of the court and a court may refuse to allow withdrawal despite a showing of good cause. RPC 1.16(c); see also United States v. Cannistraro, 799 F. Supp. 410, 419 (D.N.J. 1992), appeal filed 10 August 1992; Streetman v. Lynaugh, 674 F. Supp. 229, 234 (E.D. Tex. 1987); Jacobs v. Pendel, 98 N.J. Super. 252, 255, 236 A.2d 888 (App. Div. 1967). Specifically, the Rule states: “[A] lawyer shall continue representation notwithstanding good cause for terminating the representation” when so ordered by the court. RPC 1.16(c). The theory behind this provision is that, even if withdrawal is otherwise appropriate, other considerations must sometimes take precedence, such as maintaining fairness to litigants and preserving a court’s resources and efficiency. G. Hazard & W. Hodes, 1 The Law of Lawyering, § 1.16:401 at 483 (1990); see also Jacobs, 98 N.J. Super. at 255, 236 A.2d 888 (withdrawal “depends upon such considerations as proximity of the trial and possibility for the client to obtain other representation”).
Federal law does not expressly permit withdrawal by an attorney on the ground of financial hardship. Instead, Local Rule 18 provides that court permission is required before an attorney may withdraw from representation. Local Rule 18 states: “Unless counsel is substituted, no attorney may withdraw an appearance except by leave of Court. After a case has been first set for trial, substitution and withdrawal shall not be permitted except by leave of Court.” The comment to Local Rule 18 indicates that consideration of four criteria is appropriate for motions to withdraw: (1) the reasons why withdrawal is sought, (2) the prejudice withdrawal may cause to litigants, (3) the harm withdrawal might cause to the administration of justice and (4) the degree to which withdrawal will delay resolution of the case. Comment, Local Rule 18 (citing Avant-Garde Computing Inc. Secur. Litigation, No. 85-4149, slip op., 1989 WL 103625 (D.N.J. 31 Aug. 1989)). These criteria are consistent with the provisions of RPC 1.16.
Budd Larner argues that it should be permitted to withdraw because it can no longer afford to maintain this action against Defendants and, therefore, by demonstrating financial hardship, it has demonstrated good cause for withdrawal. Moving Brief at 1-2, 15-18. The issue, however, is not so simple.
Although there is no debating that the Cigarette Cases have cost Budd Larner a significant amount of money, this expense represents the aggregate expense to Budd Larner of all eight Cigarette Cases. As mentioned, Budd Larner has not stated how much money it has spent on this particular litigation. Haines should not lose her representation because Budd Larner has incurred significant expenses in other — similar but separate — matters.
Equally difficult to accept is Budd Larner’s suggestion that Cipollone should be used as a yardstick for the determination of potential costs in this case. This case is not Cipollone. Whatever may have occurred in Cipollone, that case was not before this court. To the extent Jordan’s paraphrase of General Patton correctly reflects the attitude of Defendants, it is at odds with the purposes of the Federal Rules of Civil Procedure and is intolerable. The design of the Federal Rules, to ensure the “just, speedy, and inexpensive determination” of this action or any matter, Fed. R. Civ. P. 1 (emphasis added), cannot be ignored. It must be recognized:
Delay and excessive expense now characterize a large percentage of all civil litigation. The problems arise in significant part, as every judge and litigator knows, from abuse of the discovery procedures available under the Rules.... We may assume that discovery usually is conducted in good faith. Yet all too often, discovery practices enable the party with greater financial resources to prevail by exhausting the resources of the weaker opponent. The mere threat of delay or unbearable expense denies justice to many actual or prospective litigants.... Litigation costs have become intolerable, and they cast a threatening shadow over the basic fairness of our legal system.
Order Amending Federal Rules of Civil Procedure, 446 U.S. 997, 1000 (1980) (Stewart, J., dissenting); see also Fed. R. Civ. P. 26(b) Advisory Committee Note (noting that Rule 26(b) should be used to “prevent use of discovery to wage a war of attrition or as a device to coerce a party, whether financially weak or affluent”).
As Budd Larner recognizes, its noteworthy accomplishments in the Cigarette Cases generally, as well as the decisions rendered by the Third Circuit and the Supreme Court in Cipollone, see 893 F.2d 541 (3d Cir. 1990); — U.S. —, 112 S. Ct. 2608, 120 L. Ed. 2d 407 (1992), set this case in a different procedural posture than Cipollone. Because of Cipollone and the other Cigarette Cases, much of the groundwork for trial of this case has already been set in place. Prior discovery, in the form of both documents and deposition testimony, can provide the parties with ready data which will decrease the amount of discovery necessary in this case. In addition, as a result of the holdings in Cipollone, the legal issues in this case have been narrowed and clarified; the parties are better able to focus their discovery requests.
In sum, while Budd Larner has demonstrated that it has expended a significant amount of resources in litigating the Cigarette Cases generally, it has not demonstrated a sufficient basis to permit withdrawal absent the consent of Haines.
Contrary to the assertions of Budd Larner and their expert, Fred S. McChesney (“McChesney”), this motion for withdrawal implicates concerns other than money. See McChesney Aff., 3-8. At stake is the ability of citizens to bring and maintain suits for the purpose of vindicating rights and receiving compensation for injuries, as well the ability of clients to rely upon the representation of and the agreements with their attorneys.
When an attorney agrees to undertake the representation of a client, he or she is under an obligation to see the work through to completion. Streetman, 674 F. Supp. at 234; United States v. Ramey, 559 F. Supp. 60, 62 (E.D. Tenn. 1981); see also Smith v. Anderson-Tulley Co., 608 F. Supp. 1143, 1146 (S.D. Miss. 1985) (obligation of attorney to client “is one of the paramount obligations undertaken in the attorney-client relationship”), aff’d, 846 F.2d 751 (5th Cir. 1988). This obligation is not disposed of easily. As the court stated in Kriegsman v. Kriegsman, 150 N.J. Super. 474, 376 A.2d 1253 (App. Div. 1977):
An attorney has certain obligations and duties to a client once representation is undertaken. These obligations do not evaporate because the case becomes more complicated or the work more arduous or the retainer not as profitable as first contemplated or imagined. Attorneys must never lose sight of the fact that the profession is a branch of the administration of justice and not a mere money-getting trade.... The lawyer should not throw up the unfinished task to the detriment of his client....
Id. at 480, 376 A.2d 1253 (citations omitted); accord In re Edsall, 89 B.R. 772, 775 (Bankr. N.D. Ind. 1988); In re Pair, 11 B.R. 976, 979 (Bankr. N.D. Ga. 1987).
In cases when withdrawal would significantly impair a client’s ability to find substitute counsel or to maintain the action, courts have refused to permit withdrawal despite the fact that representation has become unprofitable for the client’s lawyers. See, e.g., Kriegsman, 150 N.J. Super. at 479-80, 376 A.2d 1253; Edsall, 89 B.R. at 775-76; Pair, 11 B.R. at 979. Such is the case here. If Budd Larner is permitted to withdraw from this case, it is unlikely that Haines will be able to find counsel to take Budd Larner’s place. As Budd Larner concedes:
Budd Larner has already approached Richard Daynard, the Chairman of the Tobacco Products Liability Project in Boston — a clearinghouse for all lawyers prosecuting smoking and health litigation throughout the country. As of November 12, 1992, Mr. Daynard was unable to identify anyone who was willing to undertake the representation of plaintiff in this case — even though Budd Larner has indicated a willingness to forego reimbursement of its expenses.
As of the date of Budd Larner’s Reply Brief, 8 January 1993, it appears that substitute counsel is not available. As well, even if substitute counsel were available, the consent of Haines to such substitution is necessary.
Even if Haines could procure substitute counsel, serious questions are raised as to whether such a transition could be effected without causing severe prejudice to Haines’ interests. Put simply, Budd Larner is recognized as the leading law firm in the field of tobacco products liability litigation. Due to their experience acquired in ten years of litigation against these same Defendants, particularly in Cipollone and Dewey, Budd Larner is uniquely aware of the facts, documents, expert testimony, litigation strategy, legal issues and legal authority which are necessary for effective representation in this case, given the complex legal and factual issues which it presents.
To allow withdrawal under these circumstances would be inappropriate. When an attorney undertakes to represent a client, he or she has an obligation to fully protect his or her client’s interests. Indeed, RPC 1.16 stresses client protection by requiring that steps be taken to minimize the harm done to a client upon withdrawal. See RPC 1.16(d); see also G. Hazard & W. Hodes, Law of Lawyering, § 1.16:101 at 466. Given the inability of Haines to find any substitute counsel at all, let alone effective substitute counsel, it appears nothing can be done to protect her interests or minimize the harm of withdrawal. Without counsel, as Haines indicates, this action will not go forward.
Haines has relied upon the representation of Budd Larner and its concomitant duty to pursue her cause both diligently and to its completion. In re Yetman, 113 N.J. 556, 562, 552 A.2d 121 (1989); In re Smith, 101 N.J. 568, 571-72, 503 A.2d 846 (1986); In re Schwartz, 99 N.J. 510, 518, 493 A.2d 1248 (1985). If Budd Larner’s withdrawal were permitted, with the result that this action would not be litigated, the reliance and trust of Haines would be undermined. This result cannot be permitted.
Also significant to the question of withdrawal is the fact that Budd Larner’s representation is premised upon a contingency fee arrangement. At the core of such an arrangement is “a contract between an attorney and client setting the formula for calculating the attorney’s fee” in exchange for representation. Iskander v. Columbia Cement Co., 197 N.J. Super. 169, 174, 484 A.2d 353 (App. Div. 1984). This contract is binding. A “client may not disavow the formula after settlement on the thesis that the settlement was easier than average or quicker than anticipated.” Id. at 174, 484 A.2d 353. The opposite of this principle is applicable here; an attorney must abide by the terms of the contract as well, particularly in this case in which withdrawal is sought because of (1) expenses incurred in other matters and (2) anticipated expenses that have not yet been incurred.
Budd Larner also argues that, if this were a contract case not involving legal representation, the agreement between Haines and the firm would be void on the ground of unilateral or mutual mistake. Budd Larner states:
[T]he costs of litigating against the tobacco industry are far greater than anyone could have reasonably expected at the time the contingency contract was signed. Budd Larner has expended more money and effort in this case than any plaintiff could reasonably expect. If this situation had arisen outside the attorney-client context, the contract could be rescinded because of unilateral or mutual mistake.
(citing Hamel v. Allstate Ins. Co., 233 N.J. Super. 502, 507, 559 A.2d 455 (App. Div. 1989); Lampley v. Davis Mach. Corp., 219 N.J. Super. 540, 549-50, 530 A.2d 1254 (App. Div. 1987)).
This argument is not compelling in the context of a contingency fee relationship which, by its nature, involves uncertainty and risk and requires the parties to make predictions as to (1) the likelihood of recovery, (2) the length of time until recovery and (3) the probable size of recovery. S. Gillers & N. Dorsen, Regulation of Lawyers at 114-15. Given their litigation experience, lawyers are in a better position than clients to make these predictions. The element of risk, moreover, is an element of contingency fee arrangements. For this reason, “it is generally accepted that a lawyer may receive a contingent fee that would be unconscionably high if it were a guaranteed fee.” Id. at 115; see also McKenzie Construction, Inc. v. Maynard, 823 F.2d 43 (3d Cir. 1987) (finding contingency fee that yields $790 per hour not unreasonable although thirteen times the lawyer’s usual hourly rate). The argument cannot work both ways; accepting high fees when the risk of litigation pays off and claiming unilateral mistake when the decision and investment go bad are unacceptable.
Having contracted with Haines on a contingency fee basis, Budd Larner cannot now walk away from the contract because the case may not generate the return it expected at the outset — either by judgment and/or additional clients. Contrary to Budd Larner’s suggestion, profitably is not a “basic assumption” of a contingency fee contract. Although Budd Larner entered this contract with Haines because it believed the contract would be profitable, it also knew that in litigation — particularly litigation in which a law firm advances costs and forgoes fees until an expected judgment— there are uncertainties.
As with all contingency fee arrangements, Budd Larner knowingly assumed the risk that its arrangement with Haines would not match its initial prediction of costs and returns. It is simply disingenuous to suggest that unilateral or bilateral mistake can be applied in such a context on the ground that cost has exceeded initial predictions.
Finally, important public policy considerations which underlie contingent fee arrangements would be ill-served by permitting withdrawal in this case. Contingency fees are “a necessary means of broadening access to justice, allowing those otherwise unable to afford counsel to obtain representation in the courts.” G. Hazard & S. Koniak, The Law and Ethics of Lawyering 503 (1990); see also Leonard C. Arnold Ltd v. Northern Trust Co., 116 Ill. 2d 157, 164, 107 Ill. Dec. 224, 226, 506 N.E.2d 1279, 1281 (1987) (describing contingency fee arrangements as “the poor man’s door to the courthouse”); In re Schwartz, 141 Ariz. 266, 686 P.2d 1236, 1242 (1984) (same). As the New Jersey Supreme Court has recognized: “Legal service to the poor is frequently available only through the contingent fee device.” American Trial Lawyers Ass’n v. New Jersey Supreme Court, 66 N.J. 258, 260 n. 4, 330 A.2d 350 (1974).
If lawyers — after assessing the likelihood of recovery, negotiating a contingency fee and raising the expectations of their client— are permitted to withdraw when contingency-fee representation becomes unprofitable or even costly, the purpose of contingency fee litigation will be defeated. Access to justice will not be broadened; it will be constricted. Moreover, as in this case, the contingency fee arrangement will actually have made matters worse.
When a lawyer is permitted to withdraw on the ground that maintaining the litigation has become too costly, finding substitute counsel may well prove to be difficult or even impossible. Individual claims, as well as entire classes of claims, may be stigmatized. As for plaintiffs, the disappointment at having been abandoned mid-stream is likely to undermine faith in the legal system and to reinforce the notion that access to the courthouse is a function of wealth. Simply put, the needs and obligations of the contingency fee system dictate that Budd Larner not be permitted to close the door to the courts which it has opened.
To permit withdrawal would be to permit the nullification of any contingency fee contract which later turns out to be less profitable than originally thought.
For the reasons set forth above, the motion of Budd Larner to withdraw is denied.