Risk Update

Lateral Departure Rules, Risks and Requirements (Conflicts, Confidentiality & Client Files)

Excellent and comprehensive article from the co-chair of the firm’s legal ethics and malpractice group, and two associates from Harris Wiltshire & Grannis LLP: “6 Ethics Tips For Attorneys Making Lateral Transfers” —

  • “Every year, approximately 3,000 partners at AmLaw 200 law firms will lateral to a new firm. That number is rising: Law360 reported that in the first half of 2019, there was an 18% overall increase in the number of attorney hires across all tiers, with partner lateral moves rising by 8%.Given these trends, it is more important than ever for partners to understand the steps they must take to adhere to the ethics rules when making a transition. This article outlines those steps and provides a practical overview of the pertinent rules.”
  • “First, review your firm’s partnership agreement…Notice: How much advance notice of a departure is required? Typical provisions call for 30-60 days. What are the consequences of a departure before the end of the notice period? Can the notice period be waived?”
  • “Notification of clients: While the ethics rules provide guidance on how to notify clients, you should also be cognizant of what, if anything, your partnership agreement says about notification… Do not solicit associates or staff members while you are still a partner at your current firm.”
  • “Once you have decided to move, you should begin the process of getting your client files in order. To do this, save all documents and emails in designated client folders. Do not download any files or email any documents to yourself. Any manipulation of a client’s file — downloading documents onto a USB, emailing correspondence to a personal email account, etc. — will leave a record. Your current firm could be alerted to the manipulation, and could misconstrue it as an effort to remove client files without firm or client authorization.”
  • “Remember that the client file is the client’s property — it does not belong to you or your firm. The firm acts as the custodian of the client file if and until the client requests her file. Accordingly, your current firm is obligated to maintain the client’s file until instructed in writing to provide the file elsewhere… If your client intends to follow you to your new firm, have her request her file upon your departure… As a general matter, a lawyer cannot contact clients in advance of informing her current firm of the departure… Some jurisdictions offer guidance or impose requirements regarding the content of your departure notice to clients. “
  • “Pursuant to ABA Model Rule 1.7, among others, a lawyer has an ethical duty to check if conflicts exist at the new firm before making the move. To do that, you’ll need to provide the new firm with a list of all your clients, and all clients about whom you learned information even if you did not perform work for them.
    But note that pursuant to ABA Model Rule 1.6,[11] you cannot provide that information until “substantive discussions regarding the new relationship” have begun. ABA Model Rule 1.6(b)(7) allows for a lawyer to disclose nonprivileged information about her clients and the nature of her representation, provided disclosure does not prejudice the client.”

And more from Ethical Grounds: The Unofficial Blog of Vermont’s Bar Counsel: “Leaving a Law Firm” —

  • “As for a ‘to do’ list, I’ve included several helpful resources at the end of this post. Many draw from ABA Formal Opinion No. 99-414: Ethical Obligations When a Lawyer Changes Firms.”
  • “The key takeaway from ABA Opinion: both the firm and the departing lawyer must ensure that the lawyer’s departure does not have a ‘material adverse effect on the interests of the clients with active matters upon which the lawyer is currently working.'”
  • “Here’s an outline of the rest of the ABA Opinion:
    • Notice to clients. The firm and lawyer should provide notice of the lawyer’s “pending departure in a timely fashion to clients for whose active matters (s)he currently is responsible or plays a principal role in the current delivery of legal services.”
    • Who sends it? When possible, joint notification from the firm & departing lawyer is preferred.
    • Include:
      • when the lawyer is leaving & where the lawyer is going;
      • whether the firm & lawyer are able & willing to continue representing the client;
      • that the client has the absolute right to choose to remain with the firm, to go with the lawyer, or to secure new representation altogether.
    • Do not include: The departing lawyer “should not urge the client to sever its relationship with the firm . . . [or] disparage the firm.”
    • Other considerations. The departing lawyer should be mindful not to:
      • engage in any conduct that is deceitful or dishonest (secreting files is big no-no);
      • do anything that would put client property, data, information, or confidences at risk; or,
      • improperly solicit business from clients with whom the lawyer has no prior working relationship.”
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