Risk Update

Client Conflicts — Prospective Client Interview Risk, Departing Lawyer Client Poaching Fines Not Fine

When to Hang Up the Phone—Hazards of Talking to Prospective Clients” —

  • “Casual phone inquiries from people seeking an attorney to represent them can sometimes lead to troublesome claims of conflicts of interest. Arthur D. Burger, chair of Jackson & Campbell’s professional responsibility practice group, discusses steps lawyers can take to minimize the likelihood of such claims.”
  • “The casual nature of such inquiries can leave lawyers and their firms vulnerable to being blind-sided by subsequent claims of conflicts of interest that fall outside the firm’s usual mechanisms for screening.”
  • “Should I Listen to the Whole Voicemail Message?… So, for example, if a lawyer is in a firm that defends hospitals and doctors in medical malpractice cases the lawyer should be wary of messages from callers seeking representation in bringing such claims. If the lawyer receives a voicemail of this nature, they should stop listening to the message, delete it and need not return the call. Under these circumstances, the caller cannot credibly assert a conflict of interest if that lawyer’s firm ends up defending the caller’s suit.”
  • “One measure used by some firms is to require lawyers to conduct a preliminary review of potential conflicts before initiating a substantive conversation with a prospective client. This could be done by checking the firm’s data base of current and former clients to rule out the likelihood that the new matter will create a conflict of interest.”
  • “Another measure firms may consider is having the names of former prospective clients entered into the firm’s data base so they will be accessed in the firm’s routine screening of conflicts.”
  • “Notwithstanding the limits on the protections for prospective clients with respect to conflicts of interest, lawyers should remain mindful that their duty of confidentiality and the protection of the attorney-client privilege are the same as those for their former clients. The application of the attorney-client privilege is an inherent feature of the status of prospective clients.”

Appeals court voids firm fee imposed on departing lawyers who take clients with them” —

  • “The Colorado Court of Appeals has addressed two issues of first impression that relate to law firm agreements that aim to prevent departing attorneys from taking clients with them.”
  • “In its April 28 opinion, the appeals court held that an agreement imposing a fee on a departing attorney for each client who leaves with them may violate Colorado Rule of Professional Conduct 5.6(a), which prohibits agreements that restrict ‘the right of a lawyer to practice,’ if it is unreasonable under the circumstances. The appeals court also said contractual provisions that violate this rule are necessarily void as against public policy.”
  • “The case arose after associate attorney Grant Bursek resigned from the Denver office of Modern Family Law in September 2019. The firm requested that Bursek pay $1,052 for each of the 18 clients who left with him per the terms of a reimbursement agreement that he signed earlier that year.”
  • “When Bursek refused, Modern Family Law filed a complaint asserting a breach of contract claim and a claim that a separate confidentiality and nondisclosure agreement was enforceable against Bursek. A district court found that the $1,052-per-client fee violated Rule 5.6(a), and that the agreement was unenforceable. However, the district court agreed that the second agreement was enforceable and entered judgment in favor of the law firm on that claim.”
  • “The appeals court said while the firm’s agreement claimed that the purpose of the fee was to recoup marketing costs, it did not explain why the fee represented a fair estimate of costs for each client. The court noted that the fee was imposed even on clients Bursek brought to the firm without the assistance of marketing.”
  • “While the appeals court also held that a contractual provision that violates Rule 5.6(a) is necessarily void, it said a violation of the rule will not void a contract in its entirety. It reversed the portion of the district court’s order that declared Modern Family Law’s entire agreement unenforceable.”