Virginia Adopts Notification Protocol For Lawyers Leaving Firms, Dissolving Firms

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By Joan C. Rogers

May 26 — Following a step Florida took a decade ago, Virginia has enacted an ethics rule that tells lawyers and law firms how they should give notice to clients when lawyers leave a firm or a firm dissolves.

New Rule 5.8 of the Virginia Rules of Professional Conduct went into effect May 1 after the Virginia Supreme Court adopted it Feb. 27.

The rule forbids a lawyer who is leaving a firm—and other lawyers in the firm—from unilaterally contacting clients to notify them about the upcoming departure or to solicit representation, unless the lawyer and the law firm have tried and failed to agree on a joint communications to clients.

Similarly, the rule bars lawyers in a dissolving firm from unilaterally contacting clients unless authorized members of the firm have tried and failed to agree on a method of notifying clients. The rule also specifies:

• When no procedure for notifying clients has been agreed on, the lawyer or law firm's unilateral notice to clients must spell out their choices for representation.

• Timely notice must be given to clients either unilaterally or by agreement.

• A client of a departing lawyer who doesn't express a choice remains a client of the firm until the client advises otherwise or the law firm terminates the engagement in writing.

• A client of a dissolving firm who doesn't express a choice remains a client of “the lawyer who is primarily responsible for the legal services to the client” until the client advises otherwise.

Following the rule is a comment that provides additional guidance. It states, for example, that for purposes of the notification required by the rule, “ client” refers to “clients for whose active matters the departing lawyer has primary responsibility.”

In addition, the comment notes that lawyers may also have fiduciary, contract or other obligations to their firms that are outside the scope of the professional conduct rules.

Two States So Far

Virginia's new rule is similar in some ways to Rule 4-5.8 of the Florida Rules of Professional Conduct, which specifies procedures for lawyers leaving law firms and dissolution of law firms. See 21 Law. Man. Prof. Conduct 530.

Florida and Virginia are the only two states that have a dedicated rule on this subject, according to Robert M. Hillman, a University of California-Davis law professor, and Allison M. Rhodes, a partner in Holland & Knight's Portland, Ore., and Los Angeles offices. Hillman is the author of Hillman on Lawyer Mobility, and Rhodes is a contributing author to that book.

In an e-mail to Bloomberg BNA, Hillman said “Florida is to be commended for having the first rule providing guidance in responsibilities to clients when lawyers depart and when firm dissolve. It is a shame that it took a decade for another state (Virginia) to follow suit.”

Hillman said the main difference between the two states' rules is that Florida restricts unilateral client communications only by the departing lawyer, whereas Virginia restricts unilateral client communications by both the departing lawyer and the firm. “Virginia got this one right,” he said.

Both states' rules have a default provision saying a client who fails to respond to a departure notice by making a choice remains a client of the firm, at least until further notice, Hillman noted. In addition, both provide that if the firm is dissolving, the nonresponsive client remains a client of the lawyer who was the primary service provider for the client.

The Virginia rule “basically expresses standards commonly understood to apply to departures and dissolutions,” Hillman said. “But it is nice to have the standards reduced to writing and with the force effect of an ethics rule,” he added.

Firms Have Obligations Too

Rhodes said in an e-mail to Bloomberg BNA that while Florida and Virginia are the only two states so far to adopt specific ethics rules on departures, “I would not be surprised to see other jurisdictions follow suit as I think we are seeing a trend of increased regulatory interest in how lawyer mobility is handled.”

Rhodes emphasized, as Hillman did, that the Virginia rule restricts unilateral communications by law firms—not just departing lawyers—before engaging in a joint effort to agree on a method of notifying clients. Virginia is different in this respect from Florida, which places that restriction only on the departing lawyer, Rhodes said.

“I think Virginia was very wise to recognize that, if we are going to require this type of collaboration, clients are best served by having the requirement apply to everyone involved,” she said.

If a rule binds the departing lawyer to hold tight but allows the former firm to put the full-court press on clients, “this is awkward for clients and does not advance their interests in having full and thoughtful discussions with the lawyer and the firm over how their legal work will be handled going forward,” she said.

Rhodes said many bar associations have issued ethics opinions regarding client notification or the ethical obligations of lawyers and law firms associated with lawyer mobility and firm dissolutions.

As examples, she pointed to California Formal Ethics Op. 2014-190, 30 Law. Man. Prof. Conduct 293, and Pennsylvania and Philadelphia Joint Ethics Op. 2007-300, 23 Law. Man. Prof. Conduct 384 (2007). Oregon has an ethics opinion on the subject under consideration now, she said.

ABA Formal Ethics Op. 99-414, 16 Law. Man. Prof. Conduct 122 (1999), addressed ethical obligations that apply when lawyers change firms. The Model Rules of Professional Conduct do not have a dedicated rule on the subject; the closest is Model Rule 5.6(a), which regulates restrictions on the right to practice law after leaving a firm.

Bar Saw Need for Rule

Virginia's rule is designed to get law firms and departing lawyers to cooperate in notifying clients, according to James M. McCauley, ethics counsel for the Virginia State Bar.

In an interview with Bloomberg BNA, McCauley said that in recent years the bar's ethics hotline has frequently received calls about issues concerning lawyers leaving firms. For example, he said, lawyers would call and say, “I left my former firm and now I can't get my clients' files” or “One of our associates left over the weekend without letting us know and took client files.”

These problems were happening even though the bar had put out ethics opinions describing best practices for joint notification to clients, he said.

After two recent high-profile cases involving lawyer departures, McCauley said, the bar began to explore whether there should be a rule on the subject of joint notice regarding lawyer departures. Florida's rule was used as a starting point but Virginia went its own way in some respects, he said.

Overall the bar has gotten positive feedback on the rule, McCauley said.

Not Everyone Likes It

One critic of the new rule is attorney Brad Marrs, who vigorously objected to the rule while it was under consideration. Marrs practices with Marrs & Henry Law Firm in Richmond, Va. His departure from a previous firm he had founded was one of several law firm departures that were highly publicized in the Virginia Lawyers Weekly before the new rule came out.

In an interview with Bloomberg BNA, Marrs said that, in effect, the default position in the rule “treats clients like firm property, like a desk.”

Marrs said if one lawyer has been handling the client's matter all along, the default rule should be that the client stays with that lawyer—not the law firm. From the client's perspective, the attorney-client relationship is with that lawyer, Marrs said.

When a client has had a relationship only with the departing lawyer, an election letter asking the client to specify choice of counsel is “a lot of busy work that just sows confusion,” Marrs said. In a practice that involves representing consumer clients who are unsophisticated, the clients often don't respond to these letters, he said.

Marrs also criticized the idea of prohibiting communication until an effort has been made to craft a joint notice. Clients may have upcoming court dates or time-sensitive needs that should not be sacrificed to the more leisurely process contemplated in the rule, he stated.

“There should never be a time when a client does not know how or where to contact his chosen lawyer,” Marrs said in a July 2014 letter to the Virginia Supreme Court opposing the draft rule. At a minimum, he told the court, the departing lawyer should be able to provide immediate notice to any potentially affected clients that he has relocated.

To contact the reporter on this story: Joan C. Rogers in Washington at jrogers@bna.com

To contact the editor responsible for this story: Kirk Swanson at kswanson@bna.com

Full text at http://www.vsb.org/pro-guidelines/index.php/rules/law-firms-and-associations/rule5-8.

An article about the new Virginia rule by Rhodes and two other attorneys is posted at http://www.hklaw.com/Publications/New-Ethics-Rule-Governing-Lawyer-Mobility-Adopted-in-Virginia-04-08-2015/.

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

Copyright 2015, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.


 

New Virginia Rule Mandates Notification Procedures When Lawyers Leave Firms or Firms Dissolve

 “Rule 5.8 Procedures For Notification to Clients When a Lawyer Leaves a Law Firm or When a Law Firm Dissolves

“(a) Absent a specific agreement otherwise:

“(1) Neither a lawyer who is leaving a law firm nor other lawyers in the firm shall unilaterally contact clients of the law firm for purposes of notifying them about the anticipated departure or to solicit representation of the clients unless the lawyer and an authorized representative of the law firm have conferred or attempted to confer and have been unable to agree on a joint communication to the clients concerning the lawyer leaving the law firm; and

“(2) A lawyer in a dissolving law firm shall not unilaterally contact clients of the law firm unless authorized members of the law firm have conferred or attempted to confer and have been unable to agree on a method to provide notice to clients.

“(b) When no procedure for contacting clients has been agreed upon:

“(1) Unilateral contact by a lawyer who is leaving a law firm or the law firm shall not contain false or misleading statements, and shall give notice to the clients that the lawyer is leaving the law firm and provide options to the clients to choose to remain a client of the law firm, to choose representation by the departing lawyer, or to choose representation by other lawyers or law firms; and

“(2) Unilateral contact by members of a dissolving law firm shall not contain false or misleading statements, and shall give notice to clients that the firm is being dissolved and provide options to the clients to choose representation by any member of the dissolving law firm, or representation by other lawyers or law firms.

“(c) Timely notice to the clients shall be given promptly either by agreement or unilaterally in accordance with Rule 5.8(a) or (b).

“(d) In the event that a client of a departing lawyer fails to advise the lawyer and law firm of the client’s intention with regard to who is to provide future legal services, the client shall be deemed a client of the law firm until the client advises otherwise or until the law firm terminates the engagement in writing.

“(e) In the event that a client of a dissolving law firm fails to advise the lawyers of the client’s intention with regard to who is to provide future legal services, the client shall be deemed to remain a client of the lawyer who is primarily responsible for the legal services to the client on behalf of the firm until the client advises otherwise.”