This case, Sanford v. Maid-Rite Corporation, 15-2424, is significant because it allowed lawyers to appeal a decision to deny their motion to withdraw. Even better it reversed the decision of the district court.
The case was a class action filed by current and former franchisees against Maid-Rite. The plaintiff alleged that Maid-Rite made false representations regarding the company’s profitability that induced them into purchasing franchises. In September 2014, Maid-Rite and the other defendants retained Larkin, Hoffman, Daly & Lindgren (“Larkin”) as counsel. The parties signed an engagement letter under which Larkin would bill the defendants on an hourly basis. Larkin “reserved the right to withdraw from this representation for good cause.” Good cause included the failure to make timely payment and the failure to follow Larkin’s advice on a “material matter.”
The defendants paid one invoice and did not pay any remaining invoices. On January 28, 2015, Larkin moved to withdraw. The magistrate denied the motion and the district court affirmed that decision. Larkin then filed an interlocutory appeal to the 8th Circuit, which reversed the decision on the grounds that it was an abuse of discretion.
The 8th Circuit looked to the Minnesota Rules of Professional Conduct, which permit a lawyer to withdraw if:
(5) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer’s services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled;
(6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client; or
(7) other good cause for withdrawal exists.
Minn. R. Prof’l Conduct 1.16(b)(5)-(7). The Rule also requires the lawyer to show good cause and notify the client of the motion to withdraw.
The 8th Circuit held that Larkin met all the requirements to file a motion to withdraw and thus a presumption arose that the firm would be permitted to withdraw. Further, the 8th Circuit held that there was no reason to rebut the presumption that withdrawal was appropriate. There was no suggestion that the law firm waited too long to withdraw and the discovery period was still open. Finally, there was no prejudice to any third parties. The judgment was reversed and the law firm was allowed to withdraw.
It is noteworthy that the 8th Circuit opinion closely follows an opinion of the 7th Circuit in Fid. Nat’l Title Ins. Co. v. Intercounty Nat’l Title Ins. Co., 310 F.3d 537 (7th Cir. 2002) (holding that a law firm could file an interlocutory appeal to challenge the denial of a motion to withdraw).
Edward X. Clinton, Jr.