(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
ERNEST ALLEN COHEN V. RADIO-ELECTRONICS OFFICERS UNION, DISTRICT 3, NMEBA
(A-7/8-95)
Argued September 12, 1995 -- Decided August 14, 1996
POLLOCK, J., writing for a majority of the Court.
On April 28, 1987 Ernest Allen Cohen entered into an annual retainer agreement (the Agreement)
with the Radio-Electronics Officers Union, District 3 (the ROU), to provide up to 1,000 hours of legal work
in 1988 for the set fee of $100,000 to be paid in monthly installments of $8,333.33. The Agreement provided
that it would automatically renew unless either party gave "written notice of termination on a date in any
year not less than six (6) months nor more than seven (7) months after the commencement anniversary date
of this agreement."
The Agreement was negotiated in 1987 between Cohen and Thomas C. Harper, the Secretary-Treasurer of ROU, with whom Cohen had dealings for many years as general counsel. Cohen claims to have
negotiated this Agreement because of his plan to move to Arizona and remain of counsel with his prior law
firm, continue as general counsel to ROU, practice as a solo practitioner, and to teach as an adjunct
professor at the University of Arizona College of Law. Cohen characterized Harper as an extremely
successful negotiator who bargained hard about specific provisions of the contract. In particular, they
negotiated a reduction in Cohen's hourly rate and his full time availability in exchange for the six month
notification-of-termination provision.
Cohen's work pursuant to the Agreement began on January 1, 1988. In that year, Cohen performed
550 hours of service for the ROU. The Agreement was renewed effective January 1989 without objection
from the ROU and in that year Cohen performed 1,003 hours of service for the ROU. On December 28,
1989, the ROU terminated Cohen, effective three days later, January 1, 1991. As of the date of termination,
Cohen had received full compensation for 1988 and 1989, except for three hours' work over the 1,000 hour
limit. In addition, Cohen held $8,079 of the ROU's money in an attorney's special account that Harper and
Cohen had agreed would be used as credit to the ROU against future additional fees.
After receiving the ROU termination letter, Cohen demanded payment of $100,000, claiming that
the Agreement had been automatically renewed for 1990 because the notice of termination was not timely.
When the ROU refused payment, Cohen filed suit seeking monetary damages. In its answer to Cohen's
complaint, the ROU contended that the Agreement was unenforceable. The ROU also counterclaimed for
breach of contract, misrepresentation, and malpractice.
After an eight-day trial, the court found that, given the unique circumstances of this case, the
Agreement, including the notice-of-termination provision, was fair, reasonable and, therefore, enforceable.
According to the court, the Agreement was the product of negotiations by two capable negotiators, each
aware of their objectives and each exercising some leverage and making some concessions in order to achieve
those objectives. Ruling that Cohen had a duty to mitigate damages, the court awarded him $50,000 for
1990. It further found that Cohen's failure to place the $8,079 in an escrow account was inappropriate but
did not constitute misappropriation of funds. The court, after calculating certain credits, entered judgment
against the ROU in the amount of $4,885.
The ROU appealed. A divided panel of the Appellate Division reversed, finding that the agreement between the ROU and Cohen was unenforceable because the lengthy notice-of-termination provision
unreasonably burdened the client's right to choose its lawyer. The court remanded the matter to the Law
Division for entry of a judgment for the ROU for $8,079 less the additional three hours service that Cohen
had provided in 1989. In a concurring opinion, Judge Baime agreed that the agreement was unenforceable
as against public policy. Judge Baime was unwilling, however, to limit an attorney's recovery to the
reasonable value of his services, finding that in certain circumstances out-of-pocket losses and other special
damages are also recoverable.
Judge Villanueva, dissenting in part, agreed with the trial court that the Agreement, including the
notice provision, was fair and reasonable. According to the dissent, lawyers and clients should not be
precluded from freely entering into fair and reasonable general retainer agreements that are based on mutual
consideration. Here, Cohen had reduced his fee to less than half the reasonable value of his services and
had restricted severely his other legal activities in exchange for the ROU agreeing to a fixed term of
employment for Cohen and a lengthy notice-of-termination provision.
Cohen appeals as of right on the issue of the validity of the Agreement and the amount of damages.
The ROU cross-appeals on the issue of setoff.
HELD: Consistent with considerations of fairness and reasonableness, clients may limit their right to
discharge a lawyer by agreeing to give the lawyer reasonable notice of termination of their
relationship. To withstand judicial scrutiny, the limitation should be fair, reasonable, and not unduly
burden the client's right to choose its attorney.
1. Agreements between attorneys and clients concerning the client-lawyer relationship generally are
enforceable, provided the agreements satisfy both contractual and ethical requirements. An otherwise
enforceable agreement between an attorney and a client would be invalid if it violates the RPCs governing
that relationship. A retainer agreement may not prevent a client from discharging a lawyer. With the
sophisticated client, however, a retainer agreement may provide that the client agrees to compensate the
lawyer if the client terminates the relationship, so long as the provision does not chill the client's right of
termination. (pp. 17-20)
2. Because it would be counterproductive to preclude clients from bargaining for a reduction in fees in
exchange for a reasonable limitation on the right to discharge the lawyers, a retainer agreement setting a
reasonable fee may take into account the cost of a lawyer's availability and the opportunities that the lawyer
forgoes. Under the circumstances of this case, however, a provision for six months notice of termination
excessively burdens the ROU's right to discharge Cohen. (pp. 20-25)
3. When interpreting agreements between lawyers and their clients, courts may consider the circumstances in
which the agreement was made, the parties' past practices and agreements, the extent to which they actually
negotiated the agreement, and the client's level of sophistication or experience in retaining and compensating
lawyers. Here, the ROU and Cohen intended to provide for a reasonable notice-of-termination provision.
The ROU agreed to the notice provision in exchange for reduced fees and Cohen's availability on demand.
In effect, the ROU agreed to pay Cohen reasonable compensation for the right to terminate their
relationship. However, the three-days' notice of termination given to Cohen was both unfair and
unreasonable. (pp. 25-26)
4. Under the modern rule, when a client discharges an attorney, the attorney may recover the reasonable
value of his or her services, not damages, under the retainer agreement. Because the modern rule strikes the
appropriate balance in this case, Cohen is entitled to recover for the reasonable value of the services he
provided prior to discharge. The fair value of those services includes both Cohen's annual retainer and the
cost of reasonable notice of termination of his representation of the ROU. Cohen should be compensated
by the ROU for one month's notice. In ascertaining the value of that notice, the Court looks to the agreed
on monthly payment of $8,333.33. Furthermore, the ROU is entitled to a setoff of $8,079. (pp. 26-32)
Judgment of the Appellate Division is MODIFIED and AFFIRMED, and the
matter is REMANDED to the Law Division for entry of a judgment consistent with this opinion.
JUSTICE STEIN, concurring in part, dissenting in part in which JUSTICE COLEMAN joins, is of
the view that Cohen is entitled to no damages because the unreasonableness of the notice provision renders
the contract unenforceable as a matter of law. Justice Stein implies no disapproval of agreements that
reasonably take into account the unfair consequences of a client's premature discharge of a lawyer. In many
circumstances, provisions for a non-refundable retainer or for compensation to cover expenses or losses
necessarily incurred because of a lawyer-client relationship may be fair and reasonable.
JUSTICES HANDLER, O'HERN and GARIBALDI join in JUSTICE POLLOCK's opinion,
JUSTICE STEIN filed a separate dissenting opinion in which JUSTICE COLEMAN joins.
SUPREME COURT OF NEW JERSEY
A-7/
8 September Term 1995
ERNEST ALLEN COHEN,
Plaintiff-Appellant
and Cross-Respondent,
v.
RADIO-ELECTRONICS OFFICERS UNION,
DISTRICT 3, NMEBA,
Defendant-Respondent
and Cross-Appellant.
Argued September 12, 1995 -- Decided August 14, 1996
On appeal from the Superior Court, Appellate
Division, whose opinion is reported at
275 N.J. Super. 241 (1994).
Samuel N. Reiken argued the cause for
appellant and cross-respondent (Lillick &
Charles, attorneys; Mr. Reiken and Linda P.
Torres, on the briefs).
Ira R. Mitzner, a member of the District of
Columbia bar, argued the cause for respondent
and cross-appellant (Zazzali, Zazzali,
Fagella & Nowak, attorneys; Mr. Mitzner,
Kenneth I. Nowak and James R. Zazzali on the
briefs).
Harold A. Sherman, President, submitted a
letter brief on behalf of amicus curiae New
Jersey State Bar Association.
Richard K. Jeydel, President-Elect, submitted
a letter brief of behalf of amicus curiae New
Jersey Corporate Counsel Association.
The opinion of the court was delivered by
POLLOCK, J.
At issue is the enforceability of a one-year automatically-renewable retainer agreement providing for six months notice to
the lawyer before the client could terminate the agreement. The
issue arises in the context of a negotiated agreement in which
the lawyer and the client's representative, each a skilled
negotiator, bargained for the notice of termination in exchange
for a reduced fee and the attorney's availability on demand.
On April 28, 1987, plaintiff, Ernest Allen Cohen, entered
into an annual retainer agreement (the Agreement) with defendant,
the Radio-Electronics Officers Union District 3 (NMEBA AFL-CIO)
(the ROU), to provide up to 1,000 hours of legal work in 1988 for
the set fee of $100,000, to be paid in monthly installments of
$8,333.33. The Agreement would automatically renew unless either
party gave "written notice of termination on a date in any year
not less than six (6) months nor more than seven (7) months after
the commencement anniversary date of this agreement."
The ROU discharged Cohen on December 28, 1989, three days
before the renewal date. Cohen claims that the ROU violated the
notice-of-termination provision of the Agreement and that it owes
him the full $100,000 fee for 1990. The ROU contends that the
Agreement unreasonably burdens its right to discharge Cohen at
will and that it does not owe him anything.
The Law Division found that the Agreement was reasonable and
enforceable. In three separate opinions, a divided Appellate
Division panel reversed and remanded, holding that the lengthy
notice-of-termination provision unreasonably burdened the
client's right to choose its lawyer.
275 N.J. Super. 241, 261-62
(1994). Cohen appeals as of right on the issue of the validity
of the contract and the allowed damages. R. 2:2-1(a). The ROU
cross-appeals on the issue of setoff. We modify and affirm the
judgment of the Appellate Division.
Cohen is an attorney admitted to practice law in Arizona,
New York, and New Jersey. He specializes in labor and employment
law. From 1964 until December 1987, Cohen was a partner at a New
York law firm, Marchi, Jaffe, Cohen, Crystal, Rosner & Katz (the
Marchi firm). In December 1987, Cohen became of counsel to the
firm.
The ROU is a labor organization of approximately 200 members
that represents radio officers responsible for communications on
seagoing ocean vessels. It moved from Jersey City, New Jersey,
to Panama City Beach, Florida, in 1987.
From 1975 to 1980, the Marchi firm served as general counsel
for the ROU. Cohen was the partner in charge of the work. His
hourly rate for the ROU was $150.
Underlying the current dispute between Cohen and the ROU is
a rift between competing factions in the union, each of which
sought to appoint the ROU's counsel. In 1980, the ROU sustained
a change in leadership. The new leaders discharged the Marchi
firm and retained the law firm of Dickstein, Shapiro & Morin (the
Dickstein firm), which represents the ROU in this action.
After his election as secretary-treasurer of the ROU, Thomas
C. Harper asked Cohen in December 1985 to return as general
counsel. On January 4, 1986, the ROU and the Marchi firm agreed
on an hourly rate that would not exceed $150. According to
Cohen, however, he and Harper agreed that the rate would increase
gradually until it reached Cohen's standard rate of $225 per
hour. In June 1986, after Harper became President of the ROU,
the Marchi firm continued as general counsel with Cohen as the
partner in charge.
In March 1987, Cohen decided to move to Arizona in January
1988. He planned to remain of-counsel with the Marchi firm, to
practice as a solo practitioner in Arizona, and to teach as an
adjunct professor at the University of Arizona College of Law.
On April 27, 1987, Cohen met with Harper to discuss his
plans. At trial, Cohen and Harper gave different accounts of the
meeting. According to Cohen, Harper suggested that Cohen after
moving to Arizona continue as general counsel. Cohen
characterized Harper as "an extremely accomplished and successful
negotiator," who bargained hard about specific provisions of the
contract. In particular, Harper and Cohen negotiated a reduction
in Cohen's hourly rate from $150 to $100 in exchange for six
months' notification of termination of the Agreement.
Cohen explained to Harper why he needed a lengthy notice-of-termination provision in the Agreement. As a solo practitioner,
he would need time to obtain new clients, if the ROU discharged
him. The University of Arizona, moreover, needed to know in
June, if Cohen was to become a full-time faculty member the
following year. As the trial court found, "teaching or
representing the ROU were the two options being considered by
Cohen, and they were mutually exclusive." Thus, an independent
economic reason underlay Cohen's request for a provision
requiring either party to give notice of termination in June.
Harper's response, according to Cohen, was "If you want a long
notice provision from me, you're going to have to pay for it."
By the end of the meeting, Cohen and Harper agreed on the basics of a contract designating Cohen as General Counsel. At Harper's insistence, Cohen drafted a proposed contract for Harper
to present the next day to the ROU's District Executive Committee
(DEC), the governing body of the ROU. Finally, Cohen testified
that he advised Harper to consult independent counsel on the
proposed contract.
Harper's version differed considerably. According to
Harper, Cohen "almost begg[ed]" to continue as general counsel
after his move to Arizona. Cohen presented Harper with several
ideas "how it could be made to ROU's advantage to have it work,
including the reduced rate." Harper denied that the parties
discussed any specific contract provisions and that Cohen advised
him to seek independent legal advice. He claimed that Cohen,
without any instruction from Harper, drafted the proposed
contract and insisted that Harper sign it the following day.
On April 28, 1987, Harper, acting on behalf of the ROU,
signed the Agreement naming Cohen as general counsel. Later, in
April or May, 1987, the DEC signed the Agreement after Harper
made minor handwritten changes.
The Agreement, which was renewable, retained Cohen as the
ROU's general counsel for one year, effective January 1, 1988.
According to its terms, the Agreement was "negotiated and
executed in New Jersey with reference to New Jersey law." The
parties agree that New Jersey law governs this dispute.
The Agreement provided for "annual compensation of $100,000
for 1,000 hours of service," to be paid at a monthly rate of
$8,333.33. It also provided for a rate of $150 for each hour in
excess of 1,000 hours. According to Cohen, he was to receive the
$100,000 even if he worked less than 1,000 hours.
In addition, the ROU would "seek to have Cohen designated
Co-counsel to all applicable ROU related Plans and Trusts" (the
ROU Plans and Trusts) and that "[w]hatever compensation Cohen
receives from such Plans or Trusts will entitle ROU to additional
hours of services at the rate of (1) hour per $100 of
compensation."
The ROU Plans and Trusts, which are entities separate from
the ROU, provide various benefits to ROU members and company
employees. The ROU and employers of the ROU's members jointly
fund the ROU Plans and Trusts. Each plan or trust has two
attorneys acting as counsel. The ROU recommends one attorney and
the employer, the other. Although the trustees of the individual
plans formally select counsel, they usually follow
recommendations of the ROU and the employers.
Under the Agreement, Cohen was to be "available during ROU's regular business hours for consultation by phone within 24 hours of any call from ROU to Cohen." If the ROU considered the call to be an emergency, Cohen had to be "available during regular
business hours within three hours." If Cohen was "unavailable
due to illness, vacation or other legitimate cause," he was
obligated to provide at his own cost "appropriate substitute
coverage for ROU." Furthermore, the Agreement required Cohen to
be available to travel as required.
The Agreement also contained an automatic-renewal provision,
which stated that the Agreement would be renewed automatically
unless the party seeking to terminate gave written notice of
termination between six and seven months after the commencement
of the anniversary date, or January 1. The termination would
become effective the following January 1.
Nine months later, in December 1987, Cohen moved to Tucson,
Arizona. He began work under the Agreement on January 1, 1988.
In 1988, he performed 550 hours of service for the ROU. The
Agreement was renewed effective January 1989 without objection
from the ROU. Cohen continued to represent the ROU throughout
1989, performing 1,003 hours of service that year. According to
Cohen, legal services rendered for the ROU and related matters
"represented well over 50" of my professional time" in 1988 and
1989.
Antagonism existed between Cohen and C. E. DeFries, president of the ROU's parent union, the National Marine Engineers Beneficial Association (NMEBA). Because of this
antagonism, Cohen apparently became a liability to Harper in his
efforts to become executive secretary of NMEBA. The Dickstein
firm, which the Marchi firm had replaced in 1980, represented the
NMEBA. On November 16, 1989, Harper, still president of the ROU,
sent ballots to the DEC for authorization to renegotiate or
terminate Cohen's contract. Those ballots were the first
indication that the ROU was not satisfied with Cohen's services.
Sometime after November 16, 1989, Harper asked David Tipton,
the auditor for the ROU plans, to analyze Cohen's contract and
bills. Tipton claimed that Cohen had double-billed the ROU for
hours billed to the plans. Further, he noted that the contract
was unclear about credit to the ROU if Cohen did not perform
1,000 hours of work. According to Harper, Tipton's report was
the most significant factor in his decision to terminate Cohen's
relationship with the ROU. Both the Law Division and the
Appellate Division, however, found the claim that Cohen had
double-billed the ROU to be a pretext.
By letter dated December 10, 1989, Harper informed Cohen
that the trustees of the plans had decided to replace him as co-counsel. On December 28, 1989, Harper sent Cohen a written
notification of his termination as general counsel for the ROU,
effective three days later, January 1, 1990.
As of the date of termination, Cohen had received full
compensation for 1988 and 1989, except for three hours' work over
the 1,000-hour limit. In addition, Cohen held $8,079 of the
ROU's money in an attorney's special account, not an escrow
account. Cohen had received $8,079 on behalf of the ROU as an
award of attorney's fees in an arbitration in which the Marchi
firm had represented the ROU. Because the ROU already had paid
the Marchi firm, Cohen owed the ROU the entire $8,079. Harper
and Cohen agreed, however, that Cohen could retain the $8,079
until the end of 1989, and that Cohen would give the ROU credit
for that sum against any future additional fees.
After receiving the ROU termination letter, Cohen demanded
payment of $100,000, claiming that the Agreement had been
automatically renewed for 1990. When the ROU refused, Cohen
filed the present action seeking damages of $100,000 for 1990 and
$75,000 for reasonably anticipated fees from the ROU Plans and
Trusts.
In its answer, the ROU contended that the Agreement was unenforceable for various reasons including Cohen's failure to advise the ROU to seek independent counsel, that certain provisions of the Agreement were unlawful and unreasonably advantageous to Cohen, that the Rules of Professional Conduct barred a suit arising out of the discharge of an attorney, and that the ROU had terminated the Agreement for cause. The ROU
also filed a counterclaim for breach of contract,
misrepresentation, and malpractice.
After an eight-day trial, the Law Division found that the
Agreement was fair and reasonable. Significantly, the court
found Cohen to be more credible than Harper. According to the
court, the Agreement "was the product of negotiations by both
Cohen and Harper, [that] each side was a capable negotiator, each
was aware of their objectives and each exercised some leverage
and made some concessions in order to achieve their objectives."
The trial court further found "that Harper dumped Cohen in order
to appease De Fries and receive De Fries's support for his
candidacy to NMEBA."
The court agreed with Cohen's expert on legal ethics, Professor Michael P. Ambrosio of Seton Hall University School of Law, that "the nature of a retainer agreement is primarily to be available, and being available, not being able to take on a full-time position is compensable even if you're never actually called upon to fulfill work." It also found that the notice-of-termination provision was reasonable and fair given the unique facts of this case. In particular, the court noted the need of the University of Arizona to know in June whether Cohen would teach in September. It also found that "[t]he six-month advance notice is not unreasonable when one considers that . . . the representation of the ROU required Cohen to travel all over the
country to different forums, sometimes on short notice. Thus,
having a lawyer at its beck and call, the union cannot argue that
it was oppressive or unreasonable that the attorney have a six-month advance notice of the discontinuation of that
relationship."
The trial court rejected the ROU's argument based on Rule
1.16(d) of the Rules of Professional Conduct (R.P.C.), which
requires a discharged attorney to refund all fees that are
unearned at the time of discharge. The ROU had argued that
according to R.P.C. 1.16(d) "the right to terminate includes non-liability for contractual fee obligations." The court stated
that "Cohen was not a lawyer with an ongoing practice who was
discharged by a client . . . . [who] presumably has other clients
and is able to easily adapt to the laws of the unearned but
anticipated income." Rather, Cohen had relocated to another
state, and, "as a result of his engagement by the ROU, he did not
pursue a full-time teaching position." Furthermore, the court
found that "[t]he necessities of representing ROU prevented him
from developing a significant practice in Arizona" and from
pursuing a full-time teaching position.
Notwithstanding its finding that the Agreement was enforceable, the court held that the credit of one hour for every $100 billed to the trust or plans was illegal and unenforceable.
That provision, however, was severable and did not affect the
enforceability of the entire agreement.
Ruling that Cohen had a duty to mitigate damages, the court
awarded him $50,000 for 1990. The court reasoned that by June
1990, Cohen either could have arranged for a full-time teaching
position or obtained other clients. It further found that
Cohen's failure to place the $8,079 in an escrow account was
"clearly inappropriate," but did not constitute misappropriation
of the funds. Ultimately, the court calculated that the ROU was
entitled to a credit of $37,486 as reimbursement for Cohen's work
for the plans. When added to the $8,079, the credit totaled
$45,545. Thus, after adding in Cohen's fee of $450 for the three
extra hours worked in 1989, the court entered judgment against
the ROU in the amount of $4,885. The ROU appealed.
A divided Appellate Division reversed, finding that the
Agreement between the ROU and Cohen was unenforceable. 275
N.J. Super. at 260-61. The court reasoned that non-refundable
retainer agreements are "not unethical per se but are subject
always to the overriding precept that any fee arrangement must be
reasonable and fair to the client."
According to the Appellate Division, "an attorney is not a businessman `entitled to charge what the traffic will bear[,]' but rather is entitled to quantum meruit, i.e., `as much as he
reasonably deserved to have for his labor.'" 275 N.J. Super. at
253 (quoting In re Poli's Estate,
134 N.J. Super. 222, 253
(County Ct. 1975) (internal citations omitted). Thus, Cohen was
entitled to recover for the reasonable value of his services, not
the $100,000 specified in the contract. Id. at 256.
The Appellate Division relied on In the Matter of Cooperman,
633 N.E.2d 1069, 1070 (N.Y. 1994), a disciplinary proceeding,
which held that fee agreements providing for non-refundable
retainers in criminal and probate matters were unenforceable as
against public policy. 275 N.J. Super at 253-54, 258. The court
concluded that the Agreement here, like the agreements in
Cooperman, impermissibly chilled the client's right to discharge
the lawyer. Id. at 258.
In reaching that result, the Appellate Division also relied
on the "modern rule" pertaining to contingent fee agreements.
Ibid. Under the "modern rule,"
"If the client has a right to terminate the
relationship of the attorney for any reason or without
cause, it follows as a corollary that the client cannot
be compelled to pay damages for exercising a right
which is an implied condition of the contract. . . .
The discharge of the attorney by his client does not
constitute a breach of the contract, because it is a
term of such contract, implied from the peculiar
relationship which the contract calls into existence,
that the client may terminate the contract at any time
with or without cause."
[275 N.J. Super. at 256 (quoting Martin v. Camp,
114 N.E. 46, 58 (1916).]
The court found the public policy and ethical considerations
underlying the modern rule to be equally applicable here. Id. at
259.
Focusing on the unique nature of the attorney-client
relationship, the majority declared that a "contract for legal
services is not like other contracts," and "ordinary contract
principles . . . must give way to the higher ethical and
professional standards enunciated by our Supreme Court." Id. at
259 (footnote omitted). "To allow Cohen entitlement to $100,000
for 1990 . . . after ROU terminated him prior to his rendering of
any legal services whatsoever, and knowing he would not be called
on by ROU for any such services, is unconscionable and
contravenes the essence of our Rules of Professional Conduct."
Id. at 259-60. Thus, the majority concluded that "payment to
Cohen would run afoul of his obligation to refund promptly any
part of a fee paid in advance that he had not earned. R.P.C.
1.16(c)." Ibid.
The court reasoned:
we premise our holding on ethical and professional
principles and limit it to invalidating this particular
agreement because the six-month notice provision
impermissibly infringed upon the client's inherent
right to discharge his attorney, and provided for the
payment of fees even though the attorney failed to
render any legal services whatsoever.
[Id. at 258 n.9.]
It stressed that "the restrictive termination clause here would
have in effect caused the ROU to continue to retain an attorney
it no longer wanted and create an impermissible chilling effect
upon its inherent right to discharge Cohen at will." Id. at 260.
The court continued:
The client's right to terminate at will is not a breach
of contract but a contract term implied by law based
upon the special relationship of trust and confidence
between an attorney and client. The right to discharge
without cause is of little value if the client must pay
the entire contract price for services not rendered.
[Id. at 261 (footnote omitted).]
Concerning the set-off, the Appellate Division concluded
that Cohen owed the ROU for the $8,079 previously paid to the
Marchi firm. Id. at 262-63. The court rejected any other set-offs. Consequently, it remanded the matter to the Law Division
with the direction to enter judgment for the ROU for $8,079, less
the three hours of extra service that Cohen had provided in 1989.
In a concurring opinion, Judge Baime agreed that the
Agreement was unenforceable as against public policy, but was
unwilling to limit an attorney's recovery to quantum meruit in
appropriate circumstances. He explained that "a lawyer has a
legitimate interest in being compensated for breach of a retainer
agreement and . . . quantum meruit may not be enough," and "[i]n
appropriate circumstances, out-of-pocket losses and other special
damages may be recovered." Id. at 264.
Judge Villanueva, dissenting in part, agreed with the trial
court that the Agreement, including the notice provision, was
fair and reasonable. Id. at 265. According to Judge Villanueva,
lawyers and clients should not be precluded from freely entering
into fair and reasonable general retainer agreements that are
based on mutual considerations. Id. at 269.
He concluded that Cohen had reduced his fee to less than
half the reasonable value of his services. In exchange, the ROU
had agreed to a fixed term of employment for Cohen and a
provision for advance notice of the ROU's intention not to renew
the Agreement. Cohen, moreover, had restricted severely his
other legal activities. Consequently, Judge Villanueva believed
it was unfair to deny Cohen recovery. Id. at 276-77.
This Court's exclusive responsibility to regulate the conduct of attorneys, N.J. Const. art. VI, § II, ¶ 3, State v. Rush, 46 N.J. 399, 419 (1966), extends to every aspect of the attorney-client relationship, including agreements for fees, In re LiVolsi, 85 N.J. 576, 585 (1981). In discharging that responsibility, we are committed to preserving the fiduciary responsibility that lawyers owe their clients. See In the Matter of Brown, 88 N.J. 443, 448-49 (1982). We remain especially vigilant when attorneys and clients contract with each other.
R.P.C. 1.5, 1.8; In the Matter of Nichols,
95 N.J. 126, 131
(1984); In the Matter of Gallop,
85 N.J. 317, 322 (1981). To
this extent, an attorney's freedom to contract with a client is
subject to the constraints of ethical considerations and our
supervision. Consequently, courts scrutinize contracts between
attorneys and clients to ensure that they are fair. Nichols,
supra, 95 N.J. at 131; Gallop, supra, 85 N.J. at 322.
Agreements between attorneys and clients concerning the client-lawyer relationship generally are enforceable, provided the agreements satisfy both the general requirements for contracts and the special requirements of professional ethics. Restatement of the Law Governing Lawyers, § 29A, cmt. c (Proposed Final Draft No. 1 1996) (Restatement). An otherwise enforceable agreement between an attorney and client would be invalid if it runs afoul of ethical rules governing that relationship. Consistent with the special considerations inherent in the attorney-client relationship, In re Education Law Center, 86 N.J. 124, 133 (1981); In re Loring, 73 N.J. 282, 289 (1977), the attorney bears the burden of establishing the fairness and reasonableness of the transaction, Nichols, supra, 95 N.J. at 131; Gallop, supra, 85 N.J. at 322. A court should construe an agreement between a lawyer and a client "as a reasonable person in the circumstances of the client would have construed it." Restatement § 29A cmt. d. Those principles apply as readily to
retainer agreements as to other agreements between lawyers and
clients.
The Restatement explains the reasons for construing
agreements between lawyers and clients against the lawyer:
Three reasons support this rule. First, lawyers almost
always write such agreements . . . and an agreement
traditionally is interpreted against its author.
Second, lawyers are more able than most clients to
detect and repair omissions in client-lawyer
agreements. Third, lawyers have a fiduciary obligation
to inform clients about the risks of the
representation, including those unresolved by the
client-lawyer agreement.
[Restatement § 29A, cmt. h.]
When contracting for a fee, therefore, lawyers must satisfy
their fiduciary obligations to the client. The lawyer must
explain at the outset the basis and rate of the fee. In
addition, the lawyer should advise the client of potential
conflicts, the scope of representation, and the implications of
the agreement. Restatement § 29A, cmt. d. A retainer agreement
may not provide for unreasonable fees or for the unreasonable
waiver of the clients' rights. Ibid.
At issue here are two fundamental considerations: the
client's right to discharge a lawyer and the lawyer's right to
charge reasonable fees. See R.P.C. 1.5 (reasonable fees), 1.16
(terminating the relationship); Restatement §§ 29A (Client-Lawyer
Agreements), 43 (Termination of Lawyer's Authority), 44
(Discharge by Client and Withdrawal by Lawyer); 46 (Reasonable
and Lawful Fees); 50 (Client-Lawyer Fee Agreements); 52 (Fees on
Termination). The client's right to hire and fire an attorney is
integral to the client-lawyer relationship. In re Poli's Estate,
supra, 134 N.J. Super. at 226-27. "A client may always discharge
a lawyer, regardless of cause and regardless of any agreement
between them. A client is not forced to entrust matters to an
unwanted lawyer." Restatement § 44, cmt. b; see also In re
Poli's Estate, supra, 134 N.J. Super. at 226.
A retainer agreement may not prevent a client from
discharging a lawyer. Neither directly nor indirectly may the
agreement restrict a client's right to representation by a lawyer
of the client's choice. With a sophisticated client, however, a
retainer agreement may provide that the client agrees to
compensate the lawyer if the client terminates the relationship,
so long as provision does not chill the client's right of
termination. See Restatement § 52(2)(c).
ROU does not dispute the enforceability of the Agreement
under general principles of contract law. It nonetheless asserts
that the notice-of-termination provision unlawfully infringes on
its right to discharge Cohen as its general counsel. Cohen,
however, claims the provision merely assures him of reasonable
compensation. He contends further that the ROU agreed to the
notice provision in exchange for a reduction in his hourly rate.
The parties vigorously dispute the circumstances surrounding
the formation of the Agreement. According to the trial court,
which had the opportunity to observe the witnesses, Cohen was
more credible than Harper. We find no reason to depart from the
traditional deference that appellate courts accord to a trial
court's conclusions on credibility. Close v. Kordulak Bros.,
44 N.J. 589, 599 (1965). We also defer to the trial court's
findings of fact, which we find to be supported by credible
evidence. Rova Farms Resort, Inc. v. Investors Ins. Co. of
America,
65 N.J. 474, 484 (1974).
The trial court found that Harper and the ROU were experienced negotiators and that Harper ably negotiated the Agreement with Cohen. The court further found that both Harper and Cohen understood that the ROU would pay Cohen $100,000 for up to 1,000 hours of work, that the ROU would pay Cohen $150 per hour for each hour in excess of 1,000, and that Cohen was entitled to $100,000, even if he worked less than the anticipated 1,000 hours. Fairly implicit in the arrangement is the ROU's agreement to pay Cohen the retainer for his availability and for not assuming responsibilities that would prevent him from providing timely advice to the ROU. In fact, during 1988, ROU paid Cohen the full $100,000 for only 550 hours of work. The payment of the entire retainer for approximately half the anticipated hours reflects the ROU's understanding that it was paying the retainer for something more than hours worked. ROU
confirmed that understanding by renewing Cohen's contract the
following year. The trial court also found credible Cohen's
testimony that he recommended that the ROU seek independent
counsel to review the Agreement. Notwithstanding our acceptance
of those findings, the focus of our inquiry is whether the
notice-of-termination provision was valid.
The Appellate Division held that the six-month notice-of-termination provision renders the entire Agreement invalid, and
that Cohen is entitled to only the reasonable value of services.
275 N.J. Super. at 261-62. In addition to any such award, Judge
Baime would add out-of-pocket expenses and special damages.
According to the Appellate Division, the Agreement's
requirement of six months notice impermissibly chilled the ROU's
right to discharge Cohen. That requirement also improperly
saddled the ROU with the substantial penalty of paying Cohen's
$100,000 retainer for 1990. 275 N.J. Super. at 260-62.
In reaching that conclusion, the Appellate Division relied substantially on the opinion of the New York Court of Appeals in Cooperman, supra, 633 N.E. 2d at 1070, which involved "non-refundable special retainer agreements." 275 N.J. Super. at 253-54. Under the agreements, Cooperman received "payment of a nonrefundable fee for specific services, in advance and irrespective of whether any professional services are actually
rendered." 633 N.E.
2d at 1070. The local Grievance Committee
initiated a disciplinary proceeding charging Cooperman with
fifteen charges of misconduct in connection with the fee
arrangements. Ibid. Holding that the agreements constituted per
se violations of public policy, the New York Supreme Court,
Appellate Division, suspended Cooperman for two years.
591 N.Y.S.2d 855, 858 (App. Div. 1993).
The Court of Appeals affirmed. 633 N.E.
2d at 1074. The
court's primary concern was to protect the client's "unqualified
right to terminate the attorney-client relationship at any time."
Id. at 1072. According to the court, Cooperman's nonrefundable
retainer agreements "diminish the core of the fiduciary
relationship by substantially altering and economically chilling
the client's unbridled prerogative to walk away from the lawyer"
and relegating the client to "hostage status in an unwanted
fiduciary relationship--an utter anomaly." 633 N.E.
2d at 1072-73.
Cooperman involved unsophisticated, individual clients who signed an attorney's standard-form retainer agreement and paid a nonrefundable lump-sum retainer fee for representation in a particular matter. Id. at 1070. The ROU, by comparison, was an experienced client. It agreed to pay Cohen $8,333.33 every month to be its general counsel and provide up to 1,000 hours of legal services per year. In Cooperman, the nonrefundable fee
unreasonably chilled the clients' right to replace their
attorney. Here, in contrast, we cannot say that the fee by
itself is unreasonable. Rather, the burden on the ROU's right to
discharge Cohen arises because of the combined effect of the
provisions for notice and automatic renewal.
Although we do not find Cooperman as persuasive as did the
Appellate Division, we agree that, under the circumstances of
this case, a provision for six months notice of termination is
excessive. The provision excessively burdens the ROU's right to
hire and discharge Cohen.
As a matter of public policy, retainer agreements may not
limit unreasonably a client's right to discharge an attorney.
Some clients, particularly those who regularly retain lawyers,
bargain for innovative fee arrangements that limit the right of
discharge in exchange for lower fees. In an era of increasing
concern about the cost of legal services, it would be
counterproductive to preclude clients from bargaining for a
reduction in fees in exchange for a reasonable limitation on the
right to discharge an lawyer.
The Restatement contemplates an "engagement retainer," in
which a fee is paid,
in addition to other compensation, to ensure that a
lawyer will be available for the client if required. .
. . An engagement retainer fee satisfies the
requirements [that fees be reasonable] if it bears a
reasonable relationship to the income the lawyer
sacrifices or expense the lawyer incurs by accepting
it, including such costs as turning away other clients
(for reasons of time or due to conflicts of interest),
hiring new associates so as to be able to take the
client's matter, keeping up with the relevant field,
and the like.
[Restatement § 46, cmt. e.]
Section 52 of the Restatement, which pertains to Fees on
Termination, provides that a lawyer may receive a fee measured by
the lower of fair value or the contractual fee. It also
recognizes that "fair value" may include "expenses or loss of
income. . .reasonably incurred by accepting the engagement
retainer." Restatement § 52, illus. 2. Thus, a retainer
agreement setting a reasonable fee may take into account the
costs of the lawyer's availability and the opportunities that the
lawyer forgoes.
When interpreting agreements between lawyers and their clients, courts may consider the circumstances in which the agreement was made, the parties' past practices and agreements, the extent to which they actually negotiated the agreement, and the client's level of sophistication or experience in retaining and compensating lawyers. Restatement § 29A, cmt. h. With retainer agreements, for example, courts may consider whether in-house counsel represented the client in the negotiations or whether the client entertained competitive bids for its legal work. The extent to which courts will construe an agreement against the attorney is a product of the realities of the
attorney-client relationship and the circumstances that give rise
to it. Ibid. In maintaining the standards of the bar, we need
not lower the commercial morality of everyone else.
We are satisfied that the ROU and Cohen intended to provide
for a reasonable notice-of-termination provision. The trial
court found that the Agreement was the product of hard bargaining
between experienced negotiators. Essentially, the ROU agreed to
the notice provision in exchange for reduced fees and Cohen's
availability on demand. Cohen and Harper had worked together for
several years and had established a close professional
relationship. Harper's negotiating skills and the DEC's
subsequent review of the contract indicate that the ROU
appreciated the significance of the notice-of-termination
provision.
In effect, the ROU agreed to pay Cohen reasonable
compensation for the right to terminate their relationship. So
viewed, the notice-of-termination provision furthered the ROU's
interest in reducing its legal fees. Furthermore, the ROU
realized in 1988 and 1989 that the bulk of Cohen's practice
consisted of work for the ROU and the associated plans. Before
November 1989, Cohen had no inkling that the ROU was dissatisfied
with his performance. Under the circumstances, the three-days'
notice of termination that the ROU gave to Cohen is both unfair
and unreasonable.
Consistent with considerations of fairness and
reasonableness, clients may limit their right to discharge an
lawyer by agreeing to give the lawyer reasonable notice of
termination of their relationship. Such a limitation may be
appropriate when the client is sophisticated or experienced in
retaining and compensating lawyers. See Restatement § 29A, cmt.
h. To withstand judicial scrutiny, the limitation should be
fair, reasonable, and not unduly burden the client's right to
choose its counsel. Restatement §§ 29A, cmt. d; 30(1).
Ordinarily, when lawyers and clients enter business
agreements, the lawyer should advise the client, preferably in
writing, to seek independent counsel to review the agreement. In
the Matter of Humen,
123 N.J. 289, 301 (1991); In the Matter of
Smyzer,
108 N.J. 47, 55 (1987). Before entering such agreements,
the client should have the opportunity to consult independent
counsel. R.P.C. 1.8(a). Often, that practice will not be
feasible when lawyers and clients sign retainer agreements. If
so, the lawyer at least should inform the client of the potential
effect of limiting the right to terminate their relationship.
Ibid.
Some clients are experienced bargainers who can negotiate favorable retainer agreements. Others, particularly individual clients, need the full protection of the fiduciary relationship with their lawyers. Sophisticated clients who bargain with their
lawyers from positions of substantial parity are less susceptible
to overreaching. For example, in-house counsel may negotiate
innovative fee arrangements that are favorable to a corporate
client. See, e.g., Dick Dahl, Share the Pain, Share the Gain,
82 A.B.A.J. 68, 69-70 (June 1996) (discussing incentive fee
arrangements).
Even with sophisticated clients, a contractual burden on the
right to discharge a lawyer must be reasonable under the
circumstances. For example, the client and attorney could agree
that the client may terminate the relationship by giving the
lawyer reasonable notice. In some circumstances, if a client
wishes to exercise its duty to discharge the lawyer immediately,
the client may agree to pay the lawyer reasonable compensation
for winding down the relationship. The lawyer, however, may not
coerce the client into continuing the relationship by a provision
that either prohibits the client from discharging the lawyer or
requires the client to pay excessive fees if it discharges the
lawyer. See Cooperman, supra, 633 N.E.
2d at 1070.
Under the modern rule, when a client discharges an attorney, the attorney may recover the fair value of his or her services, not damages under the retainer agreement. Olsen & Brown v. City of Englewood, 889 P.2d 673, 677 (Colo. 1995); AFLAC v. Williams, 444 S.E.2d 314, 353-54 (Ga. 1994); LaRocco v. Bakwin, 439 N.E.2d 537, 540-41 (Ill. App. 1982). The rule continues to apply
extensively to contingent fee agreements. Gaines, Gaines &
Gaines, P.C. v. Hare, Wynn, Newell & Newton,
554 So.2d 445, 447-49 (Ala. Civ. App. 1989); Fracasse v. Brent,
494 P.2d 9, 13-14
(Cal. 1972) (in bank); Rosenberg v. Levin,
409 So.2d 1016, 1019-20 (Fla. 1982); Plaza Shoe Store, Inc. v. Hermel, Inc.,
636 S.W.2d 53, 57-60 (Mo. 1982); Martin v. Camp,
114 N.E. 46, 48
(N.Y. 1916); Reid, Johnson, Downes, Andrachik & Webster v.
Lansberry,
629 N.E.2d 431, 434-35 (Ohio 1994); Heinzman v. Fine,
Fine, Legum & Fine,
234 S.E.2d 282, 285 (Va. 1977); see also
Simon v. Metoyer,
383 So.2d 1321, 1324 (La. App. 1980) (applying
modern rule in contingent fee case, but recognizing that under
certain circumstances, contract damages are available); Barr v.
Day,
879 P.2d 912, 916-18 (Wash. 1994) (applying modern rule in
contingent fee case, but noting substantial performance
exception, which prevents client from discharging attorney on eve
of settlement to avoid paying contingent fee). Thus, the modern
rule permits an attorney to recover the reasonable value of
services rendered before discharge. Olsen & Brown, supra, 889
P.
2d at 675; AFLAC, supra, 444 S.E.
2d at 316; Rosenberg, supra,
409 So.
2d at 1019; Fracasse, supra, 494 P.
2d at 14. A court may
consider the fee specified in the retainer agreement as the basis
for determining the reasonable value of the lawyers services.
See Restatement § 52 cmt. b ("If the contractual fee was an
hourly one and the fee is reasonable, the fair value of the
lawyer's services is usually the same as the hourly fee for the
number of hours worked." (citations omitted))
The modern rule "is premised upon the special confidence and
trust existing between an attorney and client which sets the
relationship apart from other employment relationships." Olsen &
Brown, supra, 889 P.
2d at 675. Under the rule, the client's
right to discharge an attorney is an implicit term of the
contract. Fracasse, supra, 494 P.
2d at 13. The client's
discharge of the attorney, with or without cause, does not
constitute a breach of the retainer agreement. Ibid.; Olsen &
Brown, supra, 889 P.
2d at 675-76; AFLAC, supra, 444 S.E.
2d at
316-17. By limiting the attorney's recovery for compensation
for services rendered, the modern rule balances the "important
interests of (1) protecting the special fiduciary nature of the
attorney-client relationship and the client's inherent right to
discharge and (2) assuring fair and adequate compensation to an
attorney." Olsen & Brown, supra, 889 P.
2d at 677.
A minority of courts still apply the traditional "contract
rule," in which a client's discharge of an attorney without cause
constitutes a breach of contract entitling the attorney to
contract damages. Bockman v. Rorex,
208 S.W.2d 991, 995 (Ark.
1948); Tonn v. Reuter,
95 N.W.2d 261, 265-66 (Wis. 1959).
Generally, the measure of damages is the full contract price of
the fee, although some jurisdictions reduce recovery for services
not provided. Other jurisdictions permit the attorney to choose
recovery under quantum meruit for the fair value of services
rendered. See at Rosenberg, supra, 409 So.
2d at 1019-20
(discussing traditional rule); V. Woerner, Annotation, Measure or
basis of attorney's recovery on express contract fixing
noncontingent fees, where he is discharged without cause or fault
on his part,
54 A.L.R.2d 604, 608-15 (1957) (collecting cases
and discussing the rule).
Like the Appellate Division, we believe that the modern rule
strikes the appropriate balance in the present case.
Accordingly, Cohen is entitled to recover in quantum meruit for
the reasonable value of the services provided. 275 N.J. Super.
at 261. We disagree with the Appellate Division, however, that
the reasonable value of Cohen's services is limited by the
contract fee of $100,000, plus $450 for the three hours worked in
excess of 1,000 hours. Like Judge Baime, supra at ___ (slip op.
at 16), we believe that we need not take so crabbed a view of
quantum meruit.
The parties intended to provide that the ROU would pay reasonable compensation to Cohen if it terminated their relationship contrary to the terms of their agreement. In effect, the fair value of Cohen's services includes both his annual retainer and the cost of reasonable notice of termination of his representation of the ROU. Numerous facts support the fairness of that conclusion. Harper and the ROU were sophisticated bargainers. They knew that Cohen, for independent economic reasons, needed reasonable notice of termination.
Harper, an experienced negotiator, bargained for a reduced hourly
rate in exchange for the six-months notice-of-termination. The
ROU, nonetheless, gave only three days notice. Under these
unusual circumstances, we believe that the fair value of Cohen's
legal services includes the cost of reasonable notice of
termination.
We conclude that the ROU should compensate Cohen for one
month's notice. In ascertaining the value of that notice, we
look to the agreed monthly payment of $8,333.33. Substantially
for the reasons stated by the Appellate Division, we affirm the
ROU's entitlement to a net setoff of $7,629. 275 N.J. Super. at
262. Because of the result we have reached, we need not decide
the issue of mitigation of damages.
The judgment of the Appellate Division is modified and
affirmed, and the matter is remanded to the Law Division for the
entry of a judgment consistent with this opinion.
JUSTICES HANDLER, O'HERN, and GARIBALDI join in JUSTICE
POLLOCK'S opinion. JUSTICE STEIN filed a seperate concurring in
part and dissenting in part opinion in which JUSTICE COLEMAN
joins.
SUPREME COURT OF NEW JERSEY
A-7/
8 September Term 1995
ERNEST ALLEN COHEN,
Plaintiff-Appellant
and Cross-Respondent
v.
RADIO-ELECTRONICS OFFICERS UNION
DISTRICT 3, NMEBA,
Defendant-Respondent
and Cross-Appellant.
STEIN, J., concurring in part and dissenting in part.
Reversing the Appellate Division, the Court remands this
matter to permit the Law Division to award plaintiff one month's
legal fees because of the termination of his contract without
adequate notice, although the Court acknowledges that the notice
provision in the contract is invalid as contrary to public
policy. I disagree. I would hold, as did the Appellate
Division, that plaintiff is entitled to no damages because the
unreasonableness of the notice provision renders the contract
unenforceable as a matter of law. In that circumstance, allowing
the plaintiff to recover compensation for his premature
termination is an inappropriate reward to a lawyer who drafted a
contract notice provision that unreasonably served to advance his
own interests by imposing an unjustifiable restriction on his
client's right to terminate his services.
Of course, there may be exceptional circumstances in which
an attorney's retention is so valuable to the client and imposes
such significant collateral burdens on the attorney that the
parties reasonably could agree that the attorney would receive
some compensation without providing services if the client
terminated the relationship prematurely. This agreement,
however, cannot be so characterized, and the trial court's
conclusion that the agreement was fair and reasonable is error as
a matter of law.
The underlying facts simply are insufficient to justify the
extraordinary notice of termination provision in the contract.
Cohen, whose New York law firm had represented the Radio-Electronics Officers Union (ROU) (Cohen being the lead partner on
the account), decided in 1987 to relocate to Arizona. Cohen and
the ROU president discussed the prospect of Cohen, rather than
his law firm, serving as counsel to ROU after his relocation.
Although the facts are contested, the discussions apparently took
into account the union's interest in an hourly rate below the
$150 hourly rate paid to Cohen's law firm and Cohen's interest in
advance notice of termination of his representation to permit
Cohen to apply for a full-time position at Arizona Law School.
According to Cohen, that Law School made hiring decisions in June
of each year.
Cohen prepared the contract retaining him as ROU's counsel,
testifying at trial that he advised Thomas Harper, ROU's
president, to consult with independent counsel. Harper testified
that Cohen presented him with the contract and demanded that he
sign it, without mentioning the need to consult another lawyer.
The agreement provided for annual compensation of $100,000
for 1,000 hours service payable in monthly installments of
$8333.33, and compensation of $150 hourly for all services
performed beyond 1000 hours in any year. The parties apparently
understood that Cohen would receive $100,000 even if he provided
less than 1,000 hours of service. Thus, Cohen was paid $100,000
for 550 hours of services in 1988 (an effective hourly rate of
about $200), and $100,000 for 1003 hours in 1989. In addition,
ROU agreed to attempt to have Cohen designated as co-counsel for
all "ROU related Plans and Trusts." Cohen apparently was hired
by some of the ROU Plans and Trusts, and was paid $107,000 in
1989 for that legal work, at the rate of $225 hourly.
The contract's renewal clause provided that the contract
automatically would renew each year unless either party provided
"written notice of termination on a date in any year not less
than six (6) months nor more than seven (7) months after the
commencement anniversary date of this agreement which notice
shall, unless withdrawn, become effective on the next anniversary
date." Stated simply, ROU could discharge Cohen only by notice
in the month of June, to take effect on the ensuing January 1st.
Other relevant provisions required Cohen to be available
during ROU's regular business hours for consultation by phone
within twenty-four hours of a call from ROU to Cohen, and
"emergency" calls required Cohen to be available within three
hours. If Cohen were justifiably unavailable at any time, he was
obligated to provide appropriate substitute coverage for ROU.
On December 28, 1989, ROU informed Cohen that his position
as general counsel would terminate on January 1, 1990. After ROU
refused Cohen's demand for payment of $100,000 representing his
anticipated fees for 1990, Cohen instituted this suit.
The fundamental principle that dictates the outcome of this appeal is that a client ordinarily possesses the right to discharge an attorney at any time with or without cause. See In re Estate of Poli, 134 N.J. Super. 222, 225-27 (Co. Ct. 1975); Restatement of the Law Governing Lawyers, § 44 cmt. b (Tentative Draft Nos. 5-6 1993); RPC 1.16 official ABA cmt. ("A cl