|Oregon State Bar Bulletin AUGUST 2012|
Ethical Duties When Changing Law Firms
By Amber Hollister
Once upon a time, it was common for a lawyer to begin practice, be promoted to partner and retire at the same firm. Today, such a career trajectory is becoming exceedingly rare. Instead, lawyers are constantly seeking new horizons.
High lawyer mobility is a reality of modern legal practice.1 In 2000, the American Bar Foundation began following a nationally representative cohort of newly-admitted lawyers. The resulting study, titled “After the JD,” found that within three years of starting practice, more than one-third of the cohort had changed jobs at least once (not counting judicial clerkships), and 18 percent had moved twice.2 Between the cohort’s third and seventh years of practice, well over half of the lawyers changed jobs at least once again.3
So, you might ask, what does any of this have to do with lawyer ethics? The answer is simple: every time a lawyer leaves a firm or employer, that move triggers numerous ethical duties. Complying with those obligations in the midst of transition can be a challenge for the unwary. The best approach is for lawyers to educate themselves at the outset to avoid common traps and mistakes.
How Should You Break the News?
Congratulations. You have a job offer from a new firm. In the initial throws of elation, you want to share the good news with your current clients, and ask them to take their work to your new firm. Can you do so?
Beware. Depending on the nature and status of the lawyer’s work, the lawyer’s fiduciary duty to a client may require the lawyer to provide advance notification of a job change, so that the client can decide whether to stay with the prior firm, move with the lawyer or explore other alternatives. See OSB Formal Ethics Op No 2005-26 (discussing a lawyer’s fiduciary duty generally).
Even so, lawyers often owe duties to their current firm, which may arise out of the contractual, fiduciary or agency relationships between the lawyer and the current firm. Violating these duties can spell trouble. When a lawyer attempts to take clients away from the lawyer’s current firm while still being compensated by that firm, he or she may violate duties owed to the current firm. OSB Formal Op No 2005-70; see also ABA Formal Ethics Op No 99-414 (1999). Violation of those duties may result in the departing lawyer being subject not only to financial liability to the former firm, but also discipline. OSB Formal Op No 2005-70.
It is also important to be honest with colleagues during the transition. Departing lawyers might be tempted to deny rumors of a pending move. Exercise restraint. Even though it might spur an awkward conversation, lawyers cannot lie to others at their firm about their employment status or intentions. RPC 8.4(a)(3); see In re Smith, 315 Or 260, 264 (1992) and In re Murdock, 328 Or 18, 25 (1998).
Once a lawyer has informed his or her current firm of the move, both the lawyer and the current firm have a duty to inform the lawyer’s current clients of the anticipated departure. The fact that a lawyer who is performing significant work for a client is about to leave is information that must be shared to “keep a client reasonably informed about the status of a matter” and “permit the client to make informed decisions regarding the representation.” RPC 1.4.
Who Gets the Client File?
You have been managing several cases at your law firm. Now that you have plans to leave to go to a new firm, you feel certain you are the only lawyer who can represent the client going forward. Can you take those files with you to your new firm?
Before a departing lawyer packs up any boxes, or downloads client files to an external hard drive, the lawyer should seek direction from the client. As explained in OSB Formal Op No 2005-70, only the client can decide which lawyer or firm will continue representing the client.
Often the smoothest approach to determine who will continue the representation is for a departing lawyer and the former firm to send a joint letter to departing lawyer’s current clients outlining the anticipated move, and asking the client for direction. See ABA Formal Ethics Op No 99-141 (1999). Until the client makes a choice, the former firm has a duty to preserve client files and other client property. RPC 1.15-1(a) and (d). Both the former firm and the departing lawyer share a fiduciary duty to the client. See ABA Formal Ethics Op No 99-141 (1999).
If the client elects to transition to the new firm, subject to any valid lien rights it may have, the former firm must promptly send all client files and property to the new firm. RPC 1.16(d); OSB Formal Op No 2005-60; see also OSB Formal Op No 2005-90 (addressing attorney fee liens); and 2005-125 (discussing who pays photocopy expenses). Although the former firm may request written authorization from a client before sending out client materials to the new firm, it cannot require the client to physically come to the former firm’s office to retrieve the materials if the client directs that materials be sent elsewhere. OSB Formal Op No 2005-60.
If a client elects either to remain with the former firm or to hire a completely new lawyer, the departing lawyer must comply with RPC 1.16 by giving the client advance notice that he or she will be ceasing the representation, moving the court to withdraw from the representation if required by RPC 1.16(c), and taking reasonable steps to protect the client’s interests as required by RPC 1.16(d). For a departing lawyer, reasonable steps to protect the client’s interests may include informing the client or new lawyer of the status of the case and any pending issues or deadlines.
If neither the departing lawyer nor the former firm wants to continue representation of the client, both must consider whether withdrawal is allowed under RPC 1.16.
Can You Solicit Work From Your Former Clients?
Now that you are no longer at your prior firm, you want to make a few calls to your contacts, to let them know about your new practice, and to offer your assistance with legal matters. Whom can you call?
RPC 7.3(a) allows lawyers to make live or in-person contact to solicit work from anyone with whom they have a family, close personal or prior professional relationship, as well as any other lawyer. See OSB Formal Ethics Op No 2005-70. Accordingly, calling or having an in-person conversation with former clients, in-house counsel, other lawyers, social friends and family about a new practice is permitted. In addition, RPC 7.3(b) allows lawyers to solicit any person in writing, including former firm clients with whom the departing lawyer did not have a professional relationship.
Of course, lawyers may not solicit work from prospective clients the rules define as especially vulnerable or prospective clients who have asked not to be solicited. RPC 7.3(b)(1)-(2). Nor may any solicitations involve coercion, duress or harassment. RPC 7.3(b)(3).
To comply with the rules, lawyers should ensure that all written solicitations, including emails, are properly marked as advertisements, and include the lawyer’s name and firm address. RPC 7.3(c); RPC 7.1(b)-(c).
When Do Conflicts Stick With You?
You are excited about taking on a new case at your new firm, when you recognize the name of a party. The party was a client at your former firm. Do you have a conflict?
Maybe. A lawyer has a conflict of interest if the prospective client’s interests are materially adverse to those of the lawyer’s former firm’s client, the new case is the same or substantially related matter as the matter handled by the former firm, and the newly associated lawyer has confidential information about the former firm’s client or case. See OSB Formal Op No 2005-128.
Specifically, RPC 1.9(b) provides:
A lawyer shall not knowingly represent a person in the same or substantially related matter, in which the firm with which the lawyer formally was associated had previously represented a client:
(1) whose interests are materially adverse to that person; and
(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter, unless each affected client gives informed consent, confirmed in writing.
If there is no adversity, the matters are not the same or substantially related, or the lawyer has no confidential information about the former firm’s client, RPC 1.9(b) will not prevent the new representation. OSB Formal Op No 2005-120. It is important to note, however, that lawyers transitioning from private practice to work as a government employee or public official, or vice versa, are bound by a different set of conflict rules. RPC 1.11; OSB Formal Op No 2005-120.
Often lawyers transitioning from a larger firm have absolutely no recollection of or knowledge about certain former firm clients. Even so, it is best to do some due diligence before proceeding. For instance, the lawyer may want to double check old billing records to make sure the lawyer did not work on a small piece of the matter, or perhaps check with an old colleague to confirm the lawyer did not gain information about the prior case (without revealing the potential new representation). When it comes to determining the existence of a conflict, all facts that a lawyer knows or “by the exercise of reasonable care should have known will be attributed to the lawyer.” RPC 1.0(h).
Even if a lawyer has a conflict under RPC 1.9(b), it can often be resolved by obtaining the informed consent, confirmed in writing, of all affected prospective clients and former clients. RPC 1.9(b)(2); see also RPC 1.0(g) (defining informed consent). If the conflict cannot be resolved through informed consent, the new firm may be able to accept the representation if the new lawyer is properly screened pursuant to RPC 1.10(c). See OSB Formal Op No 2005-120.
Other Resources for Lawyers in Transition
If you are considering changing jobs, or are in the process of doing so, you likely have many concerns in addition to complying with the Rules of Professional Conduct.
The Professional Liability Fund, at (800) 452-1639, can advise lawyers regarding insurance coverage issues, and its practice management advisers have a plethora of useful checklists and handouts that can help lawyers navigate the practical aspects of a transition. In addition, the Oregon Attorney Assistance Program, at (800) 321-OAAP, provides free and confidential assistance to lawyers dealing with the challenges and stress of transition.
1. See John P. Heinz et al.,Urban Lawyers: The New Social Structure of the Bar, 141-47 (2005).
2. Robert L. Nelson et al., “Observations from the After the Bar Survey of the Bar Class of 2000,” 24 QLR 541 (2005-2006) at 544.
3. Ronit Dinovitzer et al.,After the JD II: Second Results from a National Study of Legal Careers, The American Bar Foundation and The NALP Foundation for Law Career Research and Education (2009) at 53-57.
ABOUT THE AUTHOR
Amber Hollister 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. 312, or by email at email@example.com.
© 2012 Amber Hollister