|Oregon State Bar Bulletin MAY 2007|
Ethical duties when switching law firms
By Helen Hierschbiel
Once upon a time, I am told, lawyers would settle into a firm soon after graduation and spend their entire careers at that firm. These days, however, lawyer mobility seems to be the norm. Lawyers are apt to move among various firms, between private and government practice, or in and out of the practice of law multiple times during the course of their careers. Moving on invariably gives rise to ethical issues that should be considered before even contemplating a change. The duties vary somewhat depending on whether the move is between firms or between private and government practice. This column focuses on the former.1
Looking to Leave
A lawyer has an interview at a firm and is gearing up to showcase her talents and experience with stories of cases resolved and clients saved. Self-promotion during an interview may be acceptable, but revealing client confidences is not. While a lawyer may discuss the general nature of cases handled, a lawyer may not be able to disclose client names or the factual or legal details of a particular case. See, Oregon RPC 1.6; District of Columbia Formal Op No. 312 (2002). Even when the prospective employer wants to check for conflicts before extending an offer, client confidences must be preserved. One option is to provide the prospective employer with the names of opposing parties rather than clients.
In addition to satisfying ethical obligations, fiduciary obligations to partners or employers must be considered prior to leaving the firm. "Although there is no explicit rule requiring lawyers to be candid and fair with their partners or employers, such an obligation is implicit in the prohibition … against dishonesty, fraud, deceit, or misrepresentation. Moreover, such conduct is a violation of the duty of loyalty owed by a lawyer to his or her firm based on their contractual or agency relationship." In re Complaint as to the Conduct of Murdock, 328 Or 18, 25 (1998), citing, In re Smith, 315 Or 260, 266 (1992). See also OSB Formal Op No 2005-70; ABA Formal Op No 99-414; ABA/BNA Lawyers’ Manual on Professional Conduct Section 91:707 (2005). Thus, secretly attempting to lure firm clients to the new firm by having them sign retainer agreements with the lawyer rather than the firm, lying about the client’s right to choose counsel, and taking client files or money without the knowledge or consent of the employer have been considered breaches of the lawyer’s duty of loyalty to the employer that could result in discipline. In re Smith, id. The departing lawyer must also be careful about taking firm property, including document forms and similar materials, except with consent of the firm. See ABA Formal Op No 99-414.
After making the decision to leave and informing the employer, lawyers have three primary ethical obligations before moving on: 1) tell the clients; 2) let the clients decide whether they go with you or stay at the firm; and, 3) take appropriate steps to withdraw when asked to do so. See OSB Formal Op No 2005-70; ABA Formal Op No 99-414; Oregon RPC 1.4 and 1.16(d).
As a general proposition, the departing lawyer’s clients are clients of the firm, and the firm may have an interest in retaining the clients. On the other hand, particularly in smaller firms, the firm may not be able to continue the representation after the departure of the lawyer. Discussion of the departing lawyer’s plans should include a decision about which, if any, clients the firm is interested in retaining and which the firm is willing to have the departing lawyer take with her (assuming the clients consent).
The preferred method for providing notice to clients of a lawyer’s departure is by a joint letter from the managing partner and the departing lawyer to those clients with whom the departing lawyer has had principal responsibility or significant contacts. The letter should provide information about the departing lawyer’s plans and indicate whether the firm is capable of and interested in continuing the representation. The letter must inform the clients that they may choose to keep their work with the firm or engage the departing lawyer. The letter should also inform clients, if they choose the latter option, what they need to do to terminate their relationship with the firm, including paying any outstanding fees or costs and how to get a copy of the file. The letter should be sent well enough in advance of the departure to give clients time to make their choices and lawyers time to take steps to effect any transfers of cases.
Of course, an unfriendly separation may make these best practices impossible. In such cases, separate letters may be sent. ABA Formal Op No 99-414 recommends that a letter from the departing lawyer should: 1) not urge the client to sever its relationship with the firm, but may indicate the lawyer’s willingness and ability to continue responsibility for the matters upon which she currently is working; 2) make clear that the client has the ultimate right to decide who will finish the case and 3) not disparage the lawyer’s former firm. In addition, so long as the letter is sent only to those clients with whom the lawyer has a present professional relationship, the lawyer does not violate RPC 7.3(a). See OSB Formal Op No 2005-70.
Upon separation, client files and property must be handled in accordance with the client’s direction. ABA Formal Op No 99-414; Oregon RPC 1.15-1(e) and 1.16(d). Generally, this means that if the client decides to go with the departing lawyer, the firm should surrender the client file2 to the departing lawyer and transfer any unearned advance deposits to the departing lawyer’s new trust account. Where a case is being handled on a contingent fee basis, fees will have to be apportioned. The decision on how fees will be split does not need to comply with requirements of RPC 1.5(e).
When a lawyer becomes associated with a firm, former client conflict questions should be handled in accordance with 1.10(c). Where a former client conflict exists, representation may continue either with the affected parties’ informed consent, confirmed in writing as per RPC 1.9, or by complying with the screening process set forth in RPC 1.10(c). See also, OSB Formal Op No 2005-128. A thorough screen will include: 1) notification to all firm staff of the screen; 2) locking the disqualified lawyer out of the document database; 3) locking the disqualified lawyer out of communication loop regarding the case; 4) periodic reminders to staff of the screen; 5) written warning in the paper file stored in a secure location, not the general file room. See Lynda C. Shely, Law Firms Changes: The Ethical Obligations When Lawyers Switch Firms, ABA 32nd National Conference on Professional Responsibility Coursebook (June 2006).
Once the lawyer is established in her new practice she may solicit the clients that she represented at the former firm. See, e.g., Oregon RPC 7.2(a)(2) (allowing a lawyer to solicit personally former clients; and Oregon RPC 7.2(c) (requirement that written solicitation of a person known to be in need of legal service sin a particular matter be labeled as an "advertisement" does not apply to persons specified in 7.2(a)).
Changing firms gives rise to a several ethics issues that should be considered as soon as a lawyer contemplates leaving a firm. Duties of confidentiality, loyalty and avoiding prejudice to clients serve as the framework for answering questions of whom to tell about the move, when, what to say and how. The possibility of conflicts may ultimately determine whether the move is feasible. Finally, the departing lawyer’s contractual and fiduciary duties to the firm must be considered, together with property issues involving client files, documents, templates and forms.
1 For guidance on moving between government and private practice, see Oregon RPC 1.11 and OSB Formal Op No 2005-120.
2 For discussion of what constitutes the "client file," see OSB Formal Op No 2005-125.
ABOUT THE AUTHOR
Helen Hierschbiel is deputy general counsel for the Oregon State Bar. She can be reached at (503) 620-0222, or toll-free in Oregon at (800) 452-8260, ext. 361, or by e-mail at firstname.lastname@example.org.
© 2007 Helen Hierschbiel