Lawyers departing from a law firm face many practical considerations when departing a firm for a new practice. This is especially true when some clients choose to leave the lawyer’s former firm and follow the lawyer to their new practice. A February 2024 opinion from the Texas Bar addresses two important considerations for a lawyer departing from their prior firm:
1. Must the lawyer enter into a new legal services agreement with clients who followed the departed lawyer to a new firm, or may the lawyer rely on the former law firm’s legal services agreement as continuing to serve as the contract with those clients?
2. What disclosure obligations does that lawyer have in advising clients who propose to follow the lawyer to the new practice regarding the clients’ financial obligations under the prior firm’s legal services agreement?
See Tex. Comm. On Professional Ethics, Op. 700 (2024).
First, the Texas opinion opines that “[w]hen a lawyer departs a firm for a new practice and a client chooses to terminate the prior firm and follow the lawyer to the new firm, the lawyer must enter into a new agreement with that client.” Id. The departing lawyer should make clear that the client is entering into a new agreement with a new firm. The departing lawyer should also confirm that the client understands that accepting the new agreement does not relieve the client from any obligations owed to the prior firm under the prior agreement. Finally, the opinion cautions that “if the departed lawyer proposes terms that differ from the terms of the client’s agreement with the lawyer’s prior firm, those differences may receive stricter scrutiny under common law.” Id.
Second, the Texas opinion concludes that the departing lawyer may have an obligation to disclosure information to the client when leaving the firm. As to the type of information that must be communicated, the opinion explains that:
Assuming that the departing lawyer is responsible for a client’s representation or currently plays a principal role in the law firm’s delivery of legal services to that client, the departing lawyer has a duty to ensure that a client is timely informed (a) that the lawyer is leaving the firm, (b) that the client has the ultimate right to decide who will continue the representation, and (c) whether there are any contractual or financial ramifications of the client’s decision.
This means that prior to contracting with clients who have proposed to follow the departed lawyer, the lawyer must inform the clients of any continuing financial or contractual obligations, known to the lawyer, that the client may have to the prior law firm. As to contingent fee matters, this disclosure should include the possibility that the client will owe the prior firm a portion of the legal fees to be determined on a quantum meruit basis.
This opinion provides good advice. Communication is one of the keys to managing client expectations and avoiding client complaints. Lawyers should efficiently and effectively communicate to the client in writing the ramifications of following the departing lawyer prior to the client electing to follow the lawyer to the new practice. Lawyers who are careful to communicate with the client regarding the ramifications and obligations associated with following the lawyer to their new practice face a decreased risk of an upset client when disbursing client funds after recovering compensation.
