Tal Dagan MD PC v. Resolutions Billing & Consulting, Inc.

Background

Tal Dagan, MD, PC brought a breach-of-contract action against Resolutions Billing & Consulting, Inc., described in the opinion as a healthcare claims, billing, and collection services provider. The plaintiff alleged that Resolutions Billing had failed to follow up on unpaid insurance and individual claims.

The plaintiff’s attorney, Martin E. Karlinsky, moved to withdraw. The parties had largely completed document discovery, but depositions had not been taken. The court scheduled a hearing on the motion and adjourned it several times. The hearing ultimately went forward on May 7, 2025, without a representative of the plaintiff appearing.

Legal standard

Under Southern District of New York Local Rule 1.4, an attorney who has appeared for a party may be relieved only by court order after showing satisfactory reasons for withdrawal. Courts consider the reasons for withdrawal and whether withdrawal would disrupt the timing of the case. New York’s professional-conduct rules also guide whether an attorney has shown good cause.

Reasons for withdrawal

Karlinsky primarily relied on a provision in the retainer agreement stating that, because the representation was contingent on the defendant having sufficient errors-and-omissions insurance, counsel could elect to withdraw if the defendant lacked adequate coverage. The court rejected that basis. It held that a retainer agreement cannot override an attorney’s ethical duty to continue representing a client absent good cause. The court stated that attorneys who accept contingency-fee matters assume the risk that they may not recover fees and may not abandon the representation simply because the risk of nonpayment increases.

Karlinsky also argued that the plaintiff’s refusal to retain an expert witness created a fundamental disagreement and showed a failure to cooperate. The court found that the plaintiff’s decision was based on financial considerations. It explained that clients generally make decisions about expenses, and that keeping costs low did not amount to the type of disagreement or failure to cooperate that permits withdrawal.

The court further rejected the argument that the plaintiff violated an agreement about expenses. The retainer agreement stated that the client would directly pay the costs of an expert if an expert were required, but no expert had been retained, no costs had been incurred, and the agreement did not require that an expert be retained.

Finally, Karlinsky argued that withdrawal would not materially harm the plaintiff because the plaintiff had received notice and could seek substitute counsel. The court found that the plaintiff had not obtained another attorney. Withdrawal therefore could cause substantial delay, and the plaintiff might be unable to continue the case because it is a corporate entity that cannot proceed without an attorney.

Disposition

The court held that counsel had not shown good cause for withdrawal and denied the motion to withdraw as counsel. Because the fact-discovery deadline passed while the motion was pending, the court directed the parties to file a joint letter by July 16, 2025, stating their respective positions on amending the deadlines in the case-management plan.