I'm not going to speculate upon whether Heather Mills 'sacked' her lawyers, Mishcon de Reya, or they 'sacked' her, but this article in The Times this week includes a summary of the circumstances in which solicitors can decline to act for a client any further. It does happen, although one sometimes wonders whether it happens as often as it should, with firms continuing to act (and take fees) in circumstances when they should not. The circumstances when a solicitor must cease to act are set out in Rule 2.01 of the Solicitors' Code of Conduct, but the rule does not set out circumstances when a solicitor may refuse to act, save that he/she "must not cease acting for a client except for good reason and on reasonable notice".
Perhaps the most common scenario in family law work is where the solicitor is trying to conduct the matter in a constructive, non-confrontational way (in accordance with Resolution's Code of Practice), but the client wants a far more aggressive approach, despite being informed at the outset of the approach the solicitor will take. This can lead to increasing tensions and, ultimately, a loss of confidence by the client. The client may of course choose to instruct other solicitors, but if they do not, the solicitor may have to cease acting.
As Rule 2.01 states, the solicitor must give reasonable notice of his/her decision, although the guidance notes to the Rule accept that there "may be circumstances where it is reasonable to give no notice". The amount of notice depends upon the circumstances, for example: "it would normally be unreasonable to stop acting for a client immediately before a court hearing where it is impossible for the client to find alternative representation" - where it is, the solicitor "should attend and explain the circumstances to the court".