There are some common ethical issues every partner should know, or at least be able to identify what they don’t know, when planning for a lateral transition.
Most partners do not give ethical considerations enough attention in the process. Without proper planning, partners may breach fiduciary duties to their prior firms and create unnecessary conflicts between their former and new firms.
I asked Trisha Rich, a professional responsibility attorney who practices with Holland & Knight’s Lawyer Ethics, Risk Management and Regulation team, to respond to some of the most common ethical questions I have come across while moving partners and groups between law firms…
Mike: Partners generally want to reach out to their clients as soon as they know they are going to move, especially clients that have moved with them before. This is a sensitive matter especially because partners want to run their lateral destination by the clients they deem portable. Generally, what do you do when it comes to informing a client of an impending lateral move?
Trisha: Well, a general answer should not be considered legal advice for any particular lawyer in a specific situation. Every lawyer’s situation will be different, and should be evaluated in light of those specific facts involved. Keeping that in mind, most questions in this area involve balancing the duties that lawyers owe to their clients with the duties that lawyers owe to their present firm and its other lawyers.
For clients, the ethics rules tell us that clients have a right to know important information about their matters, and this will generally include issues of staffing and firm choice.
With respect to the firm (and other lawyers), things are more complicated since relationships between lawyers and firms vary — as does state law. Nonetheless, questions pertaining to a lawyer’s duties to the lawyer’s present firm cannot simply be ignored.
It is true that lawyers may want to notify their clients as soon as possible about impending departures and may be tempted to seek client assurances, directly or with a nod and a wink, that the clients will transfer matters to the new firm. In light of what may well be the fiduciary obligations that the lawyer owes to the firm, however, the general practice and rule of thumb is not to confer with any firm clients until — at the very least — the lawyer has notified the firm of the intent to depart. This is true even though the lawyer may have been the one who brought the client into the firm and may in fact be the only one at the firm working for the client.
Once the firm has been notified, the clients are generally entitled to be informed in a manner and with enough time to make an informed decision about the staffing of their legal matters going forward. At that point, the client has a right to make a choice, and neither the lawyer nor the firm can unilaterally prohibit the client from doing so. Exactly how this all plays out will vary depending on particular circumstances and the particular jurisdiction involved. Florida, for example, has gone further to create a set of procedures in its Rules of Professional Conduct than most if not all other states.
The authorities generally provide, however, that a lawyer may prepare to compete while still at the old firm, but may not actually compete. After departure, a lawyer who has left a firm generally has the same rights and faces the same limitations with regard to the solicitation of work from that firm’s present or former clients that any other lawyer would have.
Mike: I have worked with countless partners each with different comfort levels in discussing sensitive matters. Though my counsel is not of legal nature and therefore not privy to attorney client privilege, it is understood that any communication between a partner and myself is confidential unless otherwise noted by the partner. That being said, what is your perspective on how much information attorneys can divulge to recruiters and prospective firms?
Trisha: This is an extraordinarily difficult issue. A lawyer changing firms should expect that the potential acquiring firms may ask for things that are sensitive. Recruiters can be a useful intermediary to protect confidentiality and uphold ethics.
ABA Model Rule 1.6 broadly prohibits disclosure of information related to the representation of clients, but Model Rule 1.6(b)(7), which has been adopted in some (but not all) states, generally allows for sufficient disclosures to allow the potential new firm to run conflicts checks. Even in those states that have not adopted Model Rule 1.6(b)(7), it seems generally to be recognized that conflicts checks must be run at some point. It is also worth bearing in mind that ABA Model Rule 1.6(b)(7) and Official Comment  not only limit what information can be shared, but also impose duties on the prospective or recipient firm about what can be done with the information.
We know of no state in which a lawyer cannot share information about the amount of the lawyer’s past or present compensation. We tend to handle questions relating to information about gross client billings and the like on an individual basis.
Mike: Some partners I work with have been with their firm for their entire life and are entering into uncharted waters. It seems fundamentally easy, but if you are a partner you have responsibilities to your firm to notify them in an appropriate way. So since it’s not as easy as emailing your boss with a quick two weeks’ notice, what is your advice on giving notice?
Trisha: First and foremost, a lawyer considering departure should begin by reading the applicable firm documents – partnership agreement, employment contracts, or policies. Many, if not most, include some notice period. We understand that some firms may want a lawyer to leave immediately following the notice of intent to do so. Some firms also have notice periods that may be impermissibly long in light of the ethics rules of the jurisdiction or jurisdictions in question.
If a lawyer who is considering leaving a firm can find out how the firm has treated other departing lawyers in the past that may be helpful. Because some firms do advise lawyers to leave immediately when notice is given, we generally advise lawyers to go into their resignation meetings fully prepared either to do so or to prepare for a reasonable transition period.
Depending upon the specific circumstances, we generally recommend that the lawyer give notice in person and that the lawyer enters that meeting with draft documents in hand, such as a draft withdrawal notice, proposed joint notification letter, and client election document. We generally suggest as well that the lawyer have already prepared a list of clients that the lawyer believes should remain with the firm and a list of clients that the lawyer is interested in pursuing and should therefore receive joint notification. We also generally recommend that the lawyer have a list of any critical upcoming dates on client matters and a plan for how all such dates can be met.
Mike: In my experience, client transfer is a difficult task to execute, but an important one to properly consider. What do you recommend to help ease this transition?
Trisha: The most important consideration must be preventing prejudice to clients. This is reflected in part in ABA Model Rule 1.16 regarding the termination of representations. When the client goes with the lawyer, RPC 1.16 informs the former firms handling of the transition in the same manner it would be obligated to transition a client matter when there is an everyday substitution of counsel. This means that the lawyer will have to work with the old and new firms to assure a smooth transition. As a general proposition, the former firm is entitled to written authorization on behalf of the client prior to file transfer. One other issue that may come up is the costs of transferring those files, and which firm should bear those costs. The rules on this issue are not uniform throughout the country.
Clients that move with a lawyer may also have closed or inactive files at the soon-to-be-former firm. That should be a consideration in the transition process as well. Another issue is to make sure that what is transferred includes not only the physical file, but also any electronic files, emails, docket information, and trust account information.
Mike: A lot of partners I have worked with generally are not aware of the guidelines dictating partner-client relationships with clients that stay with the firm they left. How should lawyers handle the transition of the clients that stay behind?
Trisha: Both the rules regarding termination of an attorney-client relationship and the need for professionalism should inform this process. An attorney is obligated to withdraw in a manner that does not prejudice the client.
For those clients or matters that stay at the former firm, the lawyer will therefore want to make clear that the lawyer will do what is reasonably necessary to assist in any transition. That assistance could include anything from writing a file transfer memorandum to meeting with the subsequent attorneys who will be handling a file. Changes of address and court filings are required and completing those steps remains the obligation of the attorney of record.
Mike: A concern that some partners that I work with have is that the firm will withhold communications addressed to their past firm. What do you think these partners should do to prevent any lag in communication?
Trisha: This is certainly an issue that the lawyer and the firm that the lawyer is leaving should discuss. If nothing else, mismanagement and failures of communication are invitations to see both the lawyer’s and the firm’s name on the wrong side of the “v” in a legal malpractice or breach of fiduciary duty claim. We therefore prefer to see a written agreement about how this process will be handled, although an exchange of emails will suffice. We generally recommend as well that the lawyer test the system to make sure it is working as agreed. Even if a lawyer’s actual departure is unpleasant, both the lawyer and the firm have an interest in making sure that nothing subsequently falls through the cracks due to a failure to forwarding mail, email, or telephone calls.