Under the Microscope: Experts offer thoughts on the wide range of
issues arising from lawyers' lateral moves.
Bottom Line: Real-life practices of lawyers and firms sometimes cross
ethical and legal lines.
By Joan C. Rogers
BOSTON--What sometimes happens behind the scenes when lawyers are in the
process of changing firms can be at odds with partners' fiduciary duties, ethics
rules, tort law, and clients' interests, according to a panel discussion at the
38th ABA National Conference on Professional Responsibility.
At a program June 2 on “Lawyers in the Night--Conflicts, Stealing Clients,
Accessing Files,” lawyers who advise other lawyers and law firms about lateral
moves shared their knowledge and experience via several hypotheticals drawn from
the annals of real life.
From the discussion of current practices, an ugly picture emerged that
resembled the Wild West, with lots of fighting, not much law, and only rough
justice. Careful analysis is needed for lawyers and firms to traverse this
increasingly uncertain frontier without violating ethics rules or becoming
embroiled in lawsuits, the speakers made clear.
The program couldn't have been more timely, coming just a few days after
Dewey & LeBoeuf LLP filed for bankruptcy (see 28 Law. Man. Prof. Conduct
341) and after a key ruling on who gets to keep profits from completing
unfinished business of the defunct Coudert Brothers firm (see 28 Law. Man. Prof.
As background for a discussion of hypotheticals at a panel on “Lawyers in the
Night--Conflicts, Stealing Clients, Accessing Files,” speaker Robert A. Creamer,
Cambridge, Mass., provided a quick overview of basic rules about partners'
transitions between firms:
Essential Concepts. Running through the rules and cases are
three fundamental concepts: a client's right to counsel; a lawyer's and firm's
duty to their client; and a lawyer's duty to the firm and/or other partners in
Two ABA opinions are sources of guidance, ABA Formal Ethics Op. 99-414, 16
Law. Man. Prof. Conduct 122 (1999) (discussing ethics obligations that apply
when lawyers change firms), and ABA Formal Ethics Op. 09-455, 25 Law. Man. Prof.
Conduct 621 (2009) (approving limited disclosure to spot conflicts in lateral
Notice to Clients. ABA Formal Opinion 99-414 says that clients
should be notified when a lawyer who is responsible or plays a principal role in
a client's representation leaves the firm. On the question of who gives notice,
the opinion indicates it is the responsibility of the lawyer, and sometimes the
firm has that obligation as well. The opinion recommends joint notice, but that
may not always be feasible. Florida Rule of Professional Conduct 4-5.8, for
example, prohibits a departing lawyer from sending notice until after a good
faith effort to negotiate a joint notice. (See 21 Law. Man. Prof. Conduct
Opinion 99-414 advises that timely notice is important so that the client can
make a decision about who will continue the representation. Some cases say the
lawyer must notify the firm before notifying clients.
Solicitation. Notice to clients can cross over into
solicitation, but there's not much guidance for detecting the difference.
The Restatement (Third) of the Law Governing Lawyers) (2000) states in
Section 9 that a lawyer may solicit clients after giving notice of leaving a
firm; however, several states, including Massachusetts, consider it a breach of
fiduciary duty to solicit clients before leaving the firm, even after the lawyer
notifies her colleagues.
Once a lawyer leaves a firm, it's generally believed that she can solicit
clients at that point. The lawyer is permitted to solicit those with whom she
has a prior professional relationship, or, under the Model Rules, if they are
lawyers--such as general counsel of a company.
The firm's clients with whom the lawyer has not had a personal professional
relationship are treated like the general public for purposes of
According to the leading treatise Hillman on Lawyer Mobility: The Law and
Ethics of Partner Withdrawals and Law Firm Breakups, soliciting firm
employees before a partner leaves the firm is probably a breach of fiduciary
duty to other partners.
Taking Files. As for taking files--what used to be called
“papers”--they generally follow the client, with some nuances about what belongs
to the client and what belongs to the firm. ABA Formal Opinion 99-414 advises
that a departing lawyer may take materials the lawyer created and personally
worked on. Many firms now have special software to detect suspicious
See also Hillman & Rhodes, Client Files and Digital Law Practices:
Rethinking Old Concepts in an Era of Lawyer Mobility, 43 Suffolk L. Rev. 897
The first hypothetical teased out the issue of who gets to keep fees when a
firm goes under and partners take unfinished matters to other firms.
Nine months before the hypothetical firm dissolved and sought bankruptcy
protection, the partners had agreed that in the event of dissolution each
partner could keep fees for firm matters to the extent the work was done at a
successor firm. A partner took several former firm clients with ongoing matters
to a new firm, promising $2 million in revenues to the new firm.
Panelist Allison D. Rhodes said that for those in the firm that brings in
this partner, “the unfinished business doctrine will completely pull the rug out
from under your feet.” Rhodes practices with Hinshaw & Culbertson in
She explained that under this doctrine, which was applied to law firms in
Jewel v. Boxer, 203 Cal. Rptr. 13 (Cal. Ct. App. 1984), the unfinished
business of a dissolved partnership is an asset of that firm, and the legal fees
from completing those matters belong to that firm--with no extra compensation
for the partner who wraps up the matters other than his proportional share of
profits. The recent ruling in the Coudert firm's bankruptcy proceeding applied
the unfinished doctrine to hourly fees, she noted.
Rhodes emphasized that firms can contract around this result by including in
their partnership agreement a “Jewel waiver” so that if the firm
dissolves, partners may keep fees from unfinished matters completed at another
But in the hypothetical case, panel leader Ronald C. Minkoff said, the
Jewel waiver was added too late to escape the unfinished business
doctrine. Bankruptcy law, he explained, sets a one-year “preferential transfer
period” for insiders. Minkoff is a shareholder in Frankfurt Kurnit Klein &
Selz, New York.
As a matter of public policy, Minkoff argued, the unfinished business
doctrine should not apply to law firms because it discourages them from taking
on partners of a dissolved firm. The doctrine protects creditors rather than
clients, he asserted.
Fellow panelist Robert A. Creamer of Cambridge, Mass., agreed with Minkoff.
Jewel misconstrued partnership law and treats clients as if they were
widgets, he said, and professional responsibility lawyers shouldn't create or
encourage such a system.
Rhodes disagreed. Including a Jewel waiver in a partnership agreement
isn't hard, she said, and shows that the firm is interested in attracting strong
laterals. “It's a client service issue,” she added.
She suggested an estate-planning analogy: “If you've got stepchildren and a
house in the mountains, write a will.”
A second hypothetical framed the issue of disclosing and collecting
information when a partner in a dissolving firm looks to make a lateral move to
a new firm.
In the hypothetical, the new firm asks the departing partner, even before the
first interview, to provide a list of all his current clients and former clients
for the past three years, the revenues those clients brought into the old firm,
and expected future revenues for the new firm.
Panelist Tracy L. Kepler, who is senior litigation counsel for the Illinois
Attorney Registration and Disciplinary Commission, made clear that she had
concerns in this scenario about potential breach of confidentiality. Although
lawyers are allowed to reveal information reasonably necessary to check for
conflicts, some clients may not even want their names disclosed, she pointed
Minkoff commented that at some point lawyers have to give clients' names to
the new firm “so there's not a train wreck when you get to the new firm.” The
two questions to consider are when and how, he said.
With regard to timing, Minkoff noted that as in the hypothetical some large
law firms won't even talk to a lawyer without full disclosure of client names
and revenue “That's unacceptable; you can't do that,” he declared. A lawyer
should not disclose information before the first interview, he stated.
As the process gets further along and becomes more serious, Minkoff said,
information must be exchanged, “but you do it in a way that's protective to
clients.” Minkoff said he insists that the laterally moving partner must give
the information to one partner at the new firm, who is required to keep the
information in a bubble.
The moving partner should not provide numbers, because a conflicts check does
not require that information, he added. ABA and New York City ethics opinions
support this compromise approach, he said, referring to ABA Formal Ethics Op.
09-455, 25 Law. Man. Prof. Conduct 621 (2009) and New York City Ethics Op.
2003-3, 19 Law. Man. Prof. Conduct 636 (2003).
Rhodes said she does not advise lawyers changing firms to ask for client
consent, and that lawyers certainly may give the new firm billing revenue
without clients' names. It's sometimes possible to use pseudonyms for clients
such as a “Fortune 500 company in the electronics field,” she added.
Minkoff commented that lawyers changing firms should not reveal how much
paralegals or associates in their current firm are paid. The moving lawyer can't
even talk to employees in his current firm about leaving until he's out of the
firm, because those contractual relationships are assets of the firm, he said,
citing Gibbs v. Breed, Abbott & Morgan, 710 N.Y.S.2d 578, 16 Law.
Man. Prof. Conduct 388 (N.Y. App. Div. 2000), as a leading case on these
In another part of the hypothetical, the firm that is eyeing the departing
partner decides to conduct its own investigation via “pretexting” to learn more
about the lawyer's background.
Posing as a potential new client, the hiring partner contacts the lawyer's
current firm and his current and former clients for recommendations. She also
has another firm lawyer locate the potential new partner on Facebook and
“friend” him without disclosing her affiliation.
According to Rhodes, some firms actually have done these things when they
consider taking on a lawyer from another firm. Kepler concurred, saying she has
heard of firms sending people out to the other firm's lunchroom or on golf
outings to scavenge gossip.
Minkoff said he doesn't believe firms can call for recommendations, although
some lawyers have a different view. “I discourage law firms from doing this,” he
As for friend requests on Facebook, Minkoff noted that a number of ethics
opinions have been issued on this subject. A friend request may be permissible
if you just have to type the lawyer's name and the lawyer's page is public, but
“if you have to lie, you can't do it,” he said. (See New York State Ethics Op.
843 (2010), and New York City Ethics Op. 2010-2, 26 Law. Man. Prof. Conduct 607
Kepler noted, however, that others may view it as improper for attorneys to
make a friend request to obtain inside information without disclosing the real
purpose, even if there is no affirmative misrepresentation. (See Philadelphia
Bar Ethics Op. 2009-02, 25 Law. Man. Prof. Conduct 218 (2009); San Diego County
Ethics Op. 2011-2, 27 Law. Man. Prof. Conduct 438 (2011)).
From the audience, ethics expert Seth Rosner, Saratoga Springs, N.Y., said
that if a small firm engaged in the practices described in the hypothetical,
“they'd be before bar counsel.”
Minkoff noted that among big firms there's a sense of “what goes around comes
around.” A lawyer may reason, he said, that if a big firm has done something bad
to me now, I'll be doing it later, so if I complain it might come back to haunt
In yet another hypothetical, the partner in the dissolving firm has accepted
a new position, but hasn't resigned or made a public announcement. He's worried
that the remaining partners are going to compete for his clients before he
Creamer took the position that in light of the lawyer's fiduciary duty to the
firm he is leaving, the lawyer should notify his partners before talking to his
clients about the move, whether or not the firm is in dissolution.
Minkoff pointed out that the dissolution of the firm is a factor, because the
firm's problems are public knowledge and clients will be worried. But “I still
say tell the firm first,” he added.
Rhodes raised a different point. Don't you have a duty, she asked, to keep
your client informed?
Creamer said that if the lawyer hasn't resigned and a client asks the lawyer
directly whether he's jumping ship, the lawyer must be candid with the client
and not lie, but still must tell the firm first.
In this situation, Creamer suggested, the lawyer could say something along
these lines to the inquiring client: The situation is fluid and I haven't talked
to my partners; once I do, you'll be the first to know.
Minkoff commented that during the transition period the old firm sometimes
asserts a retaining lien and refuses to release the client file, or even takes
action unilaterally in the client's matter. Observing that such tactics can fuel
malpractice claims, he gave this advice: “Don't play games over small
Rhodes remarked that when mistakes are allegedly made in a client's
representation while the lawyer is straddling two firms, “both firms will be in
the caption of the malpractice action.”
The final hypothetical centered on an associate who decides to go out on his
own. His firm forces him to leave hastily, so that the associate does not have
access to client records or his list of contacts. Furthermore, the firm
discontinues its practice in the areas where the associate did most of his work,
tries to send his former clients to another firm, and refuses to give callers
his new contact information.
The panelists agreed that the firm's conduct is unwise and could backfire.
This type of behavior “can add a zero to the damages” in a tort suit against the
firm, Creamer said.
Rhodes commented that even though the lawyer was an associate, the firm
should provide joint notification to clients with whom the associate had an
Minkoff noted, however, that many of these issues are not expressly covered
by ethics rules or case law. No cases say that a firm must give out a departed
lawyer's contact information or take certain steps with the lawyer's email or
voicemail, such as forwarding messages to him, he remarked.
“This is an area bounded by very few rules and very little authority,”
Kepler suggested that Model Rule 8.4(c), which forbids conduct involving
dishonesty, fraud, deceit, or misrepresentation, could come into play. Rhodes
mentioned Model Rule 1.16, which requires lawyers to make sure that they
withdraw in a way that doesn't harm the client.
The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.
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