I think I see why their old lawyer does not want to finish their case, now it has been tainted and complicated by the new status.
With all the years of delays and backlogs that occur in the immigration system, The problem of LPR petitioners becoming citizens during the long drawn out process must not be uncommon. Sure, maybe more than a few were just unfamiliar with the immigration laws and thought that becoming a citizen was to be expected, or maybe they just accidently 'checked the wrong box' on a form. It may seem like an unfair 'gotcha" kind of technicality to some. However common it is, no one should assume that they will be shown mercy or have case by case discretion used.
Be forewarned- Immigration has targeted immigration fraud like this. Penalties are stiff for those who commit this type of fraud and also the fraudster friends or family that 'help' them.
Also, DO NOT cavalierly become a citizen just because you can! Your ignorance of the rules could ruin your family's dream of life in america together.
Some facts about making 'mistakes' on immigration forms-
Any time someone submits a U.S. visa or green card application that contains false information, it is considered a fraud against the U.S. government. The result is that the person could face a substantial delay or denial of the visa and quite possibly the denial of subsequent immigration applications.
What's more, anyone in the U.S. who helps an applicant falsify an application to gain entry to the country can be indicted and prosecuted by a federal grand jury if the matter is formally investigated by Immigration and Customs Enforcement (ICE).
Some examples of types of false information that can result in visa denial include:
personal information
failing to reveal past visa refusals, and
lying about past criminal activity or convictions