As we not too long ago observed, "[t]he unique relationship between an attorney and client founded in principle upon the elements of trust and confidence on the part of the client and of undivided loyalty and devotion on the part of the attorney, remains one of the most sensitive and confidential relationships in our society" (Demov, Morris, Levine & Shein v Glantz, 53 NY2d 553, 556). Because of the role attorneys play in the vindication of individual rights in our society, they are held to the highest standard of ethical behavior (Code of Professional Responsibility, Preamble, EC 6-5). Yet without this relationship of trust and confidence an attorney is unable to fulfill this obligation to effectively represent clients by acting with competence and exercising proper care in the representation (Demov, Morris, Levine & Shein v Glantz, 53 NY2d at 556, supra).

Because of the uniqueness of the attorney-client relationship, traditional contract principles are not always applied to govern disputes between attorneys and clients. Thus it is well-established that notwithstanding the terms of the agreement between them, a client has an absolute right, at any time, with or without cause, to terminate the attorney-client relationship by discharging the attorney (Shaw v Manufacturers Hanover, 68 NY2d l72, l77; Teichner v W & J Holsteins, 64 NY2d 977, 979; Demov, Morris, Levine & Shein v Glantz, supra; Crowley v Wolf, 281 NY 59, 64-65; Martin v Camp, 219 NY 170, 176). Where that discharge is without cause, the attorney is limited to recovering in quantum meruit the reasonable value of the services rendered (Teichner v W & J Holsteins, supra; Demov, Morris, Levine & Shein v Glantz, 53 NY2d at 557, supra). Where the discharge is for cause, the attorney has no right to compensation or a retaining lien, notwithstanding a specific retainer agreement (Teicher v W & J Holsteins 64 NY2d at 979, supra; Crowley v Wolf, 281 NY at 65, supra). "Th[is] rule is well calculated to promote public confidence in the members of an honorable profession whose relation to their client is personal and confidential" (Martin v Camp, 219 NY 170, 176).

We view the public policy considerations that underpin this rule as both relevant and sufficiently compelling to warrant denying unearned attorney's fees, or credit for the monetary equivalent, to an attorney who is guilty of legal malpractice that results in the client's loss of recovery upon a valid claim. The attorney's malpractice constitutes a failure to honor faithfully the fidelity owed to the client and to discharge competently the responsibilities flowing from the engagement. It is especially appropriate to deny credit for a fee where, as here, the defendant-attorneys performed absolutely no services in connection with the disputed claim, and thus, even if discharged by plaintiff without cause, would not have been entitled to any quantum meruit compensation (cf. Moores v Greenberg, 834 F2d 1105, 1112-1113).[n 2] Of course, if plaintiff had learned of defendants' malpractice and discharged them for cause, they could not claim credit for their fee. We see no reason to allow the defendants to benefit by the fact that plaintiff belatedly learned of their misconduct and sued for recovery in legal malpractice. We conclude, therefore, that in these circumstances, the negligent attorney is precluded from claiming credit for an unearned fee. Thus, plaintiff's recoverable damages are the value of her GEICO claim, without any deduction for the fee she would have paid defendants had they performed the contract.[n 3]