Today’s clients are more loyal to their lawyer than their law firm and rainmaker partners are returning that loyalty by seeking out better opportunities for their clients and themselves at other law firms. Partners are now moving from firm to firm in the same percentages as associates are moving. This new mobility by rainmaker partners does not come without legal and ethical consequences of lateral moves. When done improperly, rainmaker partners who leave with their business could find themselves in the cross hairs of angry former partners and may need their own legal counsel.
A recent panel discussion at the 38th American Bar Association’s National Conference on Professional Responsibility specifically discussed the host of legal issues, including fiduciary duties, ABA ethics rules, tort law, and client obligations, that can arise during lateral moves. A Bloomberg article reporting on the conference painted an alarming portrait of lateral moves. “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,” the article states.
Despite a plethora of lawsuits between law firms and attorneys, there are still no bright line rules for lateral moves. Therefore, it is difficult for attorneys to know what conduct will run afoul of legal and ethical rules.
Since it would be impossible to highlight every legal risk implicated by lateral moves, below are five important items that all departing attorneys should consider:
1. Notify Your Firm First. Departing lawyers have a duty to notify their firms that they are leaving, and they should do so before notifying their clients. Notifying clients first can lead to allegations of breach of fiduciary duty or tortious interference with contracts.
2. Keep Clients in the Loop. While the “when” and the “how” are up for debate, it is clear that attorneys must notify current clients of their impending departure. As detailed by the ABA, the lawyer should not urge the client to sever its relationship with the firm but may indicate his or her willingness and ability to continue representing the client. The departing lawyer must, however, make clear that the client has the ultimate right to decide who will represent them in the future. Before the attorney officially leaves the firm, there is a fine line between notice and solicitation.
3. Understand Your Ethical Obligations. Lateral moves also invoke a host of ethical concerns, particularly when it comes to client confidentiality. While a lawyer has an ethical obligation to protect a client’s confidential information, new firms generally want to know as much as possible about the attorney’s clients and cases. This is one situation where there is no clear rule, and, therefore, lawyers should tread carefully by only revealing what is absolutely necessary during the interview process.
4. Take Only What Belongs to You. Client files and proprietary firm documents play a part in many of the legal disputes arising from lateral moves. Absent case files which generally follow the client, it is important for departing attorneys to understand what they are legally entitled to take with them to a new firm. In most cases, departing lawyers may take documents that they personally created. Meanwhile, proprietary firm documents and client lists may not be taken without the firm’s permission. In fact, many firms require attorneys to sign employment agreements specifically stating that they may not take such documents with them upon departure.
5. Don’t Work With One Foot Out the Door. Lawyers’ duties to their current firms do not end simply because they have announced their departure. Therefore, until departing attorneys have officially left the firm, it is important that they continue to fulfill their obligations to their clients as well as the firm. This includes working, billing, and collecting.
Given the potential ethical and legal risks involved in a lateral move, the message is clear—look before you leap.