I want to quit my law firm and take clients with me. What ethical considerations are there in doing so?
There are few direct answers in the Louisiana Rules of Professional Conduct. Nevertheless, several rules, ethics opinions, and other persuasive sources provide some guidance. See, e.g., ABA Formal Op. 99-414 (Sep. 1999); Ohio Bd. of Prof’l Conduct, Ohio Ethics Guide to Switching Law Firms (Dec. 2017); Restatement (Third) of the Law Governing Lawyers § 9 (2000) (“Law-Practice Organizations—In General”). Most recently, on December 4, 2019, the ABA issued a new formal opinion providing additional advice. See ABA Formal Op. No. 489 (Dec. 4, 2019). Here is a summary of the guidance provided in these, and other, sources:
- “Clients are not property.” See id. at 3. You don’t own them or their files; neither does your soon-to-be “old” law firm. Your firm can’t impose restrictions on your ability to “take” clients with you on departure. Indeed, every client has an absolute right to choose a lawyer and to obtain their file. See La. Rules of Prof’l Conduct r. 1.16(d).
- The extent to which you can make surreptitious preparations prior to departing is uncertain. On the one hand, the Restatement of Law Governing Lawyers suggests that simply “planning” to depart a firm by making “predeparture arrangements” such as “leasing space, printing a new letterhead, and obtaining financing” is not objectionable. On the other hand, “[t]he departing lawyer generally may not employ firm resources to solicit the client, [and] may not employ nonpublic confidential information of the firm against the interests of the firm in seeking to be retained by a firm client.” See Restatement (Third) of the Law Governing Lawyers § 9, cmt. i (2000). Furthermore, the Restatement notes that a departing lawyer may not “misuse firm resources (such as copying files or client lists without permission or unlawfully removing firm property from its premises) or take other action detrimental to the interests of the firm or of clients, aside from whatever detriment may befall the firm due to their departure.” Id.
- If your firm’s operating or partnership agreement includes a 30-day (or similar) notice requirement prior to separation, it may not be enforceable. ABA Formal Opinion 489 provides as follows: “In practice, these notification periods cannot be fixed or rigidly applied without regard to client direction, or used to coerce or punish a lawyer for electing to leave the firm, nor may they serve to unreasonably delay the diligent representation of a client. If they would affect a client’s choice of counsel or serve as a financial disincentive to a competitive departure, the notification period may violate Rule 5.6.” See ABA Formal Op. 489 at 5.
- You should inform each client with whom you had “significant personal contacts”1 about your decision to leave, preferably in a joint letter with your “old” firm. However, Formal Opinion 489 makes it clear that “[i]n the event that a firm and departing lawyer cannot promptly agree on the terms of a joint letter, a law firm cannot prohibit the departing lawyer from soliciting firm clients.” See ABA Formal Op. 489 at 2-3.
- If you contact any client of your old firm with whom you did not have a significant prior professional relationship, your contact may be impermissible solicitation. See La. Rules of Prof’l Conduct r. 7.4 (“Direct Contact with Prospective Clients”).
- The letter informing each client of your departure must be sent promptly and must not contain any false or misleading statements about you or your old firm. See La. Rules of Prof’l Conduct r. 1.4 (requiring reasonable communication); id. r. 7.2(c) (“A lawyer shall not make or permit to be made a false, misleading or deceptive communication about the lawyer, the lawyer’s services or the law firm’s services.”); ABA Formal Op. 489 at 3 (“[n]either the departing lawyer nor the firm may engage in false or misleading statements to clients”). Indeed, both you and law firm management have an obligation “to assure the ethical transition of client matters” in connection with your separation. See ABA Formal Op. 489 at 4.
- The letter must make it clear to each client that the client has a choice and is neither “stuck” with you nor your former firm. It should inform each client about the status of the client’s matter. It should account to each client for any funds held in trust. It should give each client a deadline and a check-the-box selection form to return. It should provide contact information for you and a member of your old firm in case the client has questions. And finally, the letter should establish a default disposition if the client does not respond by the deadline (for example, the letter could inform the client that the file will “go” with you if the client does nothing).
- Before offering to continue to represent each client, however, the firm must “assess if it has the capacity and expertise to offer to continue to represent the clients. If a departing lawyer is the only lawyer at the firm with the expertise to represent a client on a specific matter, the firm should not offer to continue to represent the client unless the firm has the ability to retain other lawyers with similar expertise.” See ABA Formal Op. 489 at 4.
- While you are transitioning to your new firm, your former firm must not cut off your access to any firm resources that you need to “competently represent your clients during any interim period.” For example, you can’t be “required to work from home,” or be “deprived of appropriate and necessary assistance from support staff or other lawyers necessary to represent the clients competently.” See ABA Formal Op. 489 at 6.
- If you are joining a new law firm, you must evaluate whether any conflicts will exist between the clients that you will bring with you and any existing clients of the new firm. See La. Rules of Prof’l Conduct r. 1.7-1.10. If so, you must reevaluate your decision to associate with the firm or to bring a particular client with you. Note that under the Louisiana Rules of Professional Conduct, nonconsensual screening is not an option to avoid imputation of conflicts that may arise by joining a new firm. Compare La. Rules of Prof’l Conduct r. 1.10 with ABA Model Rules of Prof’l Conduct r. 1.10(a)(2).
- After your departure, your former firm “should set automatic email responses and voicemail messages” to provide notice of your departure and to “offer an alternative contact at the firm for inquiries.” Finally, your former firm should “promptly forward communications” to you relating to those clients that chose to stay with you. See ABA Formal Op. 489 at 7.
- Remember that your former firm will have an interest in being compensated for the work that you performed on each client’s file prior to your departure. On contingent-fee cases, that typically means that your old firm will have a quantum meruit claim for the value of services provided on the matter before you left. See Saucier v. Hayes Dairy Products, Inc., 373 So.2d 102 (La.1979) (a discharged lawyer is generally entitled to recover in quantum meruit for any services provided prior to termination); see generally Restatement of Law (Third) Governing Lawyers § 40 (2000). On hourly-fee cases, that typically means that your old firm will have a right to bill all of your unbilled time to the client.
- Finally, make absolutely sure that no clients or deadlines get lost in the shuffle. Both you and your old firm have a professional obligation to assure that every client is represented competently and diligently notwithstanding your departure. See La. Rules of Prof’l Conduct r. 1.1; id. r. 1.3.
- See ABA Formal Op. 99-414 (Sep. 1999). The significance of personal contacts should be judged from the perspective of the client. ABA Formal Opinion 489 notes that “a departing attorney would not have ‘significant client contact,’ for instance, if the lawyer prepared one research memo on a client matter for another attorney in the firm but never spoke with the client or discussed legal issues with the client.” See ABA Formal Op. 489 at 3. ↵