PHILADELPHIA – The U.S. District Court for the Eastern District of Pennsylvania recently denied a law firm's motion to withdraw as counsel for another law firm being sued in dispute over unpaid invoices for legal advertising services.
In the memorandum and order filed March 5, U.S. District Judge Gene E.K. Pratter denied a motion by Wilentz, Goldman & Spitzer, P.A. to withdraw as counsel for Udren Law Offices P.C. in a lawsuit filed Aug. 22 by William J. Mansfield Inc., which provides legal advertising services, against Udren alleging unpaid invoices and unjust enrichment.
The court said the motion is denied because corporations such as law firms generally can’t represent themselves in federal court and because Wilentz can’t satisfy the extremely narrow exception to this rule.
According to the opinion, the court appreciates Wilentz’s arguments attempting to justify withdrawal and agreed that, in many circumstances, “failure to make significant payments with no reasonable likelihood of being able to make payments in the near future constitutes good cause for counsel’s motion to withdraw.”
However, the court added that “withdrawal is inappropriate in this case at this time.”
“Defendant Udren, though a law firm, is still a corporation and corporations, as a general rule, can’t represent themselves in federal court,” the opinion said. “Simply put, corporations cannot be considered ‘licensed counsel.’”
According to the opinion, the U.S. Court of Appeals for the Third Circuit had embraced a limited exception to the rule against corporate counsel’s withdrawal in Ohntrup v. Makina Ve Kimya Endustrisi Kurumu.
The court said the court in that case affirmed the counsel’s motion to withdraw even though the defendant was a corporation because the withdrawing law firm ceased to serve a “meaningful purpose” and was instead “merely a captive, uncompensated process server.”
According to the opinion, the court in that case said “rules regarding attorney withdrawal are necessarily general because of the context-laden nature of such determinations. The interests to be considered will vary widely from case to case.”
In the case of Udren Law Offices, the district court determined that withdrawal by consent is premature.
The district court said Udren is “substantially behind” on paying Wilentz and Udren “has no funds available to compensate counsel for past or future work,” but the parties had a final pretrial conference on March 14 and the trial date is less than a month away.
The district court added that Wilentz continues to serve a meaningful purpose in this lawsuit.
“Indeed, Udren, through Wilentz, submitted a motion to strike a few days prior to Wilentz’s motion to withdraw,” the opinion said.
When Wilentz decided to represent Udren, Wilentz was, or should have been, aware of the risks incumbent in Udren’s insolvency, the district court added.
According to the opinion, Wilentz didn’t appear on behalf of Udren until Sept. 12, 2018, at which point Mansfield had already filed its complaint and an emergency motion to appoint a receiver.
“In the complaint, Mansfield alleges that Udren didn’t pay Mansfield for services spanning eight months and Udren was winding down and ‘thus cannot provide guidance as to when, or if, it will pay the invoices,'” the opinion said.