Holley was allegedly fired when she was on her way to court to try and make a plea deal for lockdown rehab for the troubled star, the New York Post reported.
According to sources, the Santa Monica City attorney was willing to keep the troubled starlet out of the jail on the condition that the 26-year-old actress checked into an in-patient rehab for at least six months.
It is unclear why she fired Holley in the first place, but a source told Radar Online that the financially broke Lohan owes her 300,000 dollars.
The source also said that Lohan hadn’t paid anything for any of the work that Holley has done on her three new criminal charges of lying to cops, in connection with her car accident in Santa Monica last summer.
She is now represented by New York attorney Mark Heller.