Committee on Professional Ethics

QUESTION NO. 668 (89-1)



DIGEST: A lawyer may advance the fees imposed by the Patent Office to postpone a filing deadline. However, unless the need for the postponement is occasioned by the lawyer, the client must remain liable for the expense. Where the lawyer cannot elicit instructions from the client, the lawyer may withdraw from the representation, after taking reasonable steps to avoid foreseeable prejudice to the client’s rights. Where the client’s matter is pending before the Patent Office, the permission of the Commissioner of Patents should be obtained.


CODE: EC 2-19; DR 2-110(A)(2), DR 2-110(C)(1)(d), DR 2-110(C)(1)(f), DR 5-103(B), DR 6-101(A)(2), DR 6- 101(A)(3).


QUESTION: (1) May or must a lawyer pay an extension fee authorized by the Patent and Trademark Office (the “Patent Office”) to postpone a deadline for response, when the lawyer has no instructions from the client and the client is delinquent in paying legal fees?


  1. If no further extensions are possible, must the lawyer pursue the application for the client, even if the client has not given necessary instructions?


  1. May such a lawyer withdraw from the representation, where the rules of the Patent Office allow an attorney to withdraw from representation for non-payment of fees (whether the fees are for that matter or for other pending matters), with the approval of the Patent Office, as long as there are at least 30 days between the approval of withdrawal and the next date on which a Patent Office requirement must be met in order to preserve the client’s rights? 




Applicability of the code


Authority for attorneys to practice before the Patent Office in patent cases is conferred by federal statute. 35 U.S.C. § 31. The Commissioner of Patents and Trademarks has promulgated regulations governing practice before the Patent Office, including the Patent Office’s Code of Professional Responsibility. 37 C.F.R. §§ 10.20 through 10.112. However, the Patent Office does not construe anything in its Code as preempting the authority of each State to regulate the practice of law, except to the extent necessary for the Patent Office to accomplish its federal objectives. 37 C.F.R. § 10.1. Accordingly, the New York Code of Professional Responsibility may still apply to the conduct of patent lawyers practicing in this state.


Payment of Extension Fee on Behalf of Client


The U.S. Patent Act requires that applicants for patents prosecute their applications within six months after any action by the Commissioner of Patents. Otherwise, the application is considered abandoned. 35 U.S.C. § 133. However, shortened time periods are used in almost all cases. Where a shortened time period is being used, the rules of the Patent Office allow a party to postpone a deadline for response for up to four months (but not longer than the statutory 6-month period) if a petition for an extension of time and a prescribed fee are filed prior to or with the response. 37 C.F.R. § 1.136. The length of the extension depends upon the amount of the fee paid.


Whether a lawyer must pay an extension fee on behalf of a client, and whether the client must remain ultimately liable for reimbursing the lawyer, depends upon the circumstances involved. A lawyer must diligently seek instructions from his or her client on how to proceed with a matter. DR 6-101 (A) (2) and (3) provide that a lawyer should not handle a legal matter without preparation adequate in the circumstances or neglect a matter. Accordingly, a lawyer may not wait until the deadline for filing before seeking instructions from the client on how to proceed. However, we are aware that in some circumstances, after the commencement of the lawyer-client relationship, the client ceases communicating with the lawyer and cannot be reached for guidance.


The timing of the payment of attorney fees and expenses is generally a matter of contract between the lawyer and the client. EC 2-19 states: “As soon as feasible after a lawyer has been employed, it is desirable that a clear agreement be reached with the client as to the basis of the fee charges to be made. . . . It is usually beneficial to reduce to writing the understanding of the parties regarding the fee.”


Although a lawyer generally may not advance financial assistance to the client, it is permissible for the lawyer to advance expenses, including court costs, provided that the client remains ultimately liable for those expenses. DR 5-103(B). The reason for this prohibition is to prevent lawyers from stirring up litigation by agreeing to finance the client’s claim, However, we believe the prohibition is directed at court and other costs that are necessary to the maintenance of a litigation or other proceeding. The Patent Office’s extension fee usually constitutes such a cost. However, where the delay that necessitates payment of the fee is caused by the lawyer’s inability to devote sufficient attention to the matter before the deadline for answering, we believe that it is not inappropriate or unethical for the lawyer to pay the fee and not seek reimbursement.


If the payment of the extension fee is not due to the lawyer’s inaction, the analysis is somewhat different. DR 5-103(B) does not require the lawyer to advance expenses on behalf of the client. Thus, whether the lawyer is obligated to make such advances depends upon whether, under the agreement between the lawyer and client (which may be oral or written), the client will remain ultimately liable for the expenses, whether the client has been led to believe that the lawyer will advance such funds, and whether the client, at the time an advance of costs must be made, is in breach of an agreement to pay other fees and expenses. In the latter case, the lawyer might be relieved as a matter of contract law from making any advances. However, this committee does not pass upon matters of law.


Performance of legal Services when Client is Not Reachable and Lawyer Lacks Necessary Instructions


If no further extensions are possible, and the lawyer has not received appropriate instructions and is unable to reach the client, the lawyer has two choices: to perform the necessary legal work or to withdraw from the representation. If the lawyer has all the necessary information to perform in accordance with the retainer agreement, it seems obvious that the lawyer must perform the agreed-upon work. However, if the client has not provided the necessary information, pursuing the application might constitute incompetent representation, and the Code does not condone, much less require, such representation. EC 6-1, DR 6-101(A). Accordingly, withdrawal from the representation may be the only available alternative. DR 2-110(C)(1)(d) authorizes the lawyer to withdraw where the client renders it unreasonably difficult to carry out the employment effectively.


Under both the rules of the Patent Office (noted above) and the Code of Professional Responsibility, DR 2-110(A)), the permission of the Patent Office must, of course, be obtained.


Withdrawal for Non-Payment of Legal Fees


If the deadline for response cannot be postponed further, then whether the lawyer may refuse to work on the matter before receiving payment from the client again depends upon the agreement between the two. If the lawyer has made clear that commencement of work on the matters is dependent upon payment of a retainer or continuing legal fees, then, as noted below, the lawyer may have grounds for withdrawal from the representation. In the absence of such an agreement, the lawyer may be obligated to complete the legal work and pursue his remedies for collection of the agreed upon fees later.


DR 2-110(C)(l)(f) permits an attorney to withdraw from employment if the client “deliberately disregards an agreement or obligation to the lawyer as to expenses or fees”. However, the withdrawing attorney is obligated under DR 2-110(A)(2) to take “reasonable steps to avoid foreseeable prejudice to the rights of the client, including giving due notice to the client, allowing time for employment of other counsel, delivering to the client all papers and property to which the client is entitled and complying with applicable laws and rules”.


The Patent Office has apparently determined that, in matters before it, 30 days’ notice is reasonable. However, in the event that no further extensions of time are available under the Patent Office Rules, we believe that 30 days’ notice may not constitute a reasonable amount of time within the meaning of DR 2-110(A). What is reasonable will depend upon the facts and circumstances of the case.


The courts in this state have held that counsel do not have an obligation to “finance litigation” or render gratuitous services where a client has declined payment. See generally Holmes v. Y.J.A. Realty Corp.,128 A.D.2d 482, 483, 513 H.Y.S.2d 415, 416 (1987); Cullen v. Olins Leasing, 91 A.D.2d 537, 457 N.Y.S.2d 9 (1982). However, DR 2-110(C)(1)(f) requires that the client’s failure to pay the lawyer’s fee must be deliberate. Mere failure by the client to pay an agreed upon fee, which is not deliberate, does not authorize the lawyer to withdraw. See N.Y. State 440 (1976), N.Y. State 212 (1971). If the client in good faith disputes whether payment is owed, then we could not conclude that the client had deliberately disregarded an agreement as to fees or expenses. Whether the client’s financial inability to pay would constitute deliberate disregard of a fee agreement would depend upon the circumstances of the individual case, and such factors as whether there had been a change in the client’s financial situation since the time the fee agreement was entered. See N.Y. State 598 (1989).


May 15, 1989