6 Aspects of Attorney Departure Every Firm Must Know
A number of books have been written on the topic of attorney departure, many of which provide a plethora of valuable information on everything from partnership law and the fiduciary duty of loyalty to whether or not a firm’s client list is a trade secret. While good stuff, I suspect many attorney departures occur without anyone ever taking the time to pick up one of these books, if for no other reason than the lack of time. Given my suspicion, I offer the following in an attempt to succinctly cover the basics.
What’s the most important thing everyone needs to know?
At all times, keep the interests of all impacted clients first and foremost in mind when making any departure-related decisions. A failure to do so is just asking for trouble.
Can a firm prevent an attorney from leaving, or at least prevent the departing attorney from competing with the firm for business?
The short answer is nope. Clients are not property and efforts to try and restrict a departing attorney’s right to practice are often found to be unethical and/or unenforceable agreements. Clients get to decide who they want to work with, period.
Who should be notified and when?
Here, timing is everything. The firm should be notified as soon as possible after a decision to leave has been made and before any clients have been notified. While there are no bright lines, there is a difference between thinking about leaving a firm and committing to actually leaving. Note, however, that committing to actually leaving does not mean waiting until after an agreement spelling out the terms of a lateral move has been formalized. It means when the departing attorney has made the mental decision to begin investigating options. The reason is one should not allow a firm to make an untimely and potentially poor business decision unaware of an upcoming departure. Of course, if a partnership agreement exists and the document spells out the notice requirements for an attorney departure, abide by the terms of that agreement.
Clients for whom the departing attorney is primarily responsible are to be promptly notified once a decision to depart has been made. The reason is you want to allow time for all impacted clients to be notified and to give these clients sufficient time with which to decide who they want representing them post-departure.
If a court or tribunal is involved, timely notice of necessary attorney withdrawals must be given for any attorney of record who will no longer be involved. Motions to withdraw should be filed (and be certain to follow-up by verifying that a Substitution of Counsel has been filed).
From whom should the client notice come?
In a perfect world, a joint letter from the firm and the departing attorney would be sent to all impacted clients. This letter should inform these clients of the upcoming change as well as set forth the options they will have to choose from. If the departing attorney will remain in practice, the options would normally be the matter/s stay with the firm, go with the departing attorney, or the client may select to have their matter/s transferred to a different firm. Keep in mind that there is no rule prohibiting differing default options should any particular client not respond to the notification letter.
If a joint letter isn’t possible, don’t try to grab as many clients as possible and never disparage the departing attorney or the firm one is departing from in the separate notices that will be sent to all impacted clients. Publicly airing your dirty laundry risks alienating clients, damaging relationships, and damaging your reputation. Remember, everyone at your firm is in the employ of your clients. You work for them and are to always put their interests first. This means the decision as to who gets the file post-departure will always remain solely with the client.
What about client files?
When a client file leaves with the departing attorney or is going to go to a different firm keep the following in mind. First, the file must be delivered in a reasonable time and in a useful format. Unless you can do so without causing harm to the client, you cannot hold a client file until the firm is paid its share or the account is brought current.
Next comes the decision regarding what must be turned over, which can be a difficult one. A practical guideline is this. Beyond the obvious, such as client originals, if you billed for producing a document, it belongs to the client. Include it in the file.
Last, but certainly not least, if you have any concerns about potential liability on any given file, make a copy of the file at your expense. Always do this before the file physically leaves the premises because trying to obtain a copy later on is going to be problematic. Of course, keep a record of what files went where, when they left, and document with all departing clients that the firm’s responsibility for these files has come to an end.
Finally, are there any cautions to be aware of?
Yes, there are. Addressing the firm first, lockout tactics directed at the departing attorney are never going to pass ethical muster, so don’t go there. For example, don’t try to prevent the departing attorney from continuing to work on client files that he has primary responsibility for or refuse to provide the new contact information to clients.
That said, a departing attorney can’t ignore their fiduciary duties to the firm. While they may make necessary logistical arrangements prior to departure such as renting office space, opening bank accounts, or purchasing office equipment, they cannot engage in secret discussions to lure away staff, other firm attorneys, and or firm clients. They also can’t unilaterally decide to move client monies to a new trust account or take firm forms. Most importantly, they should never try to remove client files, computer equipment, and the like off-site in the middle of the night. In other words, no clandestine self-help. Unfortunately, this advice does need to be shared.
Authored by: Mark Bassingthwaighte Risk Manager
Since 1998, Mark Bassingthwaighte, Esq. has been a Risk Manager with ALPS, an attorney’s professional liability insurance carrier. In his tenure with the company, Mr. Bassingthwaighte has conducted over 1200 law firm risk management assessment visits, presented over 550 continuing legal education seminars throughout the United States, and written extensively on risk management, ethics, and technology. Mr. Bassingthwaighte is a member of the State Bar of Montana as well as the American Bar Association where he currently sits on the ABA Center for Professional Responsibility’s Conference Planning Committee. He received his J.D. from Drake University Law School.