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February 6th, 2020
ABA Opinion Limits Restrictions on Departing Partners
There’s important news for law firm leaders who have recently revised partnership and shareholder agreements to restrict partner departures. In ABA Formal Opinion 489, the ABA Standing Committee on Ethics and Professional Responsibility spells out new limits on notice periods, on rules governing communications with clients, and on so-called “ownership” of clients. Here’s what firm managers need to know to stay on the right side of the ethics rules.
Notice Periods: Opinion 489 goes where no ethics opinion had gone before, prohibiting the 30-, 60- or 90-day notice periods found in most law firm partnership agreements. According to the Committee, while firm partnership agreements “may request a reasonable notification period, necessary to assure that the files are organized and updated and staffing is adjusted to meet client needs, . . . lawyers cannot be held to a fixed notice period.” (Emphasis added.) Just as strikingly, the Committee directs that notice periods “cannot be . . . 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.” The Committee could not be clearer on this point: “The lawyer cannot be required to work from home or remotely, or deprived of appropriate and necessary support staff or other lawyers necessary to represent the clients competently,” or cut-off from the internet or online research tools. In short, firms may no longer treat a notice period like a gardening leave, preventing departing lawyers from servicing or contacting clients while the firm attempts to keep the lawyer’s business for itself.
Notifying Clients of an Impending Departure: The Committee made clear that lawyers have an obligation to promptly notify their clients of an impending move to another firm. Moreover, their law firms may not prevent them from doing so. Repeating advice from an earlier opinion, ABA Formal Op. 99-414 (1999), the Committee said “the departing lawyer and the firm each may unilaterally inform clients of the lawyer’s impending departure” at or around the same time the departing lawyer gives notice to the firm. While the Committee recommends that the departing lawyer and the firm negotiate a joint letter to the clients, that is not required, and if “the firm and the lawyer cannot promptly agree on the terms of a joint letter, [the firm] cannot prohibit the departing lawyer from soliciting clients.”
“Ownership” of Firm Clients: Partnership agreements often state that clients belong to the firm, not any individual lawyer. Opinion 489 emphasizes that this is just not so: “Clients are not property. . . . Clients decide who will represent them when a lawyer changes firm affiliation.” This has two important corollaries. First, departing lawyers and their firms must both explicitly give clients being solicited a choice of staying at the current firm, following the departing partner to the new firm, or going to another firm entirely. Second, law firms may not, after the departing lawyer gives notice, unilaterally staff a case the departing lawyer was handling with new lawyers in an effort to keep the client, at least not without the client’s express permission.
Protecting Clients Who Remain Behind: The firm must have procedures to protect the confidential information of clients who remain, by requiring “departing attorneys [to] return and/or delete all client confidential information in their possession, unless the client is transferring with the departing attorney.” Opinion 489. This includes having the ability to wipe a lawyer’s devices, including phones, iPads and laptops.
Opinion 489 reiterates that the underlying policy behind the Model Rules is to allow lawyers and clients to move from firm to firm. Law firms must now take care to enable that process to happen smoothly, without overreaching or coercion – or risk the consequences.
If you have any questions about ABA Formal Opinion 489, or other law firm ethics and professional responsibility matters, please contact Ronald C. Minkoff at (212) 705-4837 or firstname.lastname@example.org, or any other member of the Frankfurt Kurnit Professional Responsibility Group.
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On November 13, 2020, Frankfurt Kurnit held its Third Annual Litigation Ethics Summit, consisting of three hour-long panels, earning the attendees three ethics CLE credits in New York and California. Read more.
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This past week, New York has taken a number of steps to restrict movement in and around the State in an effort to contain the COVID-19 crisis. Governor Andrew Cuomo has issued executive orders and the chief judges of the state and federal courts have issued administrative orders that have had a sweeping impact on the legal industry as well as the business community at large. Read more.
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To cap off the Second Annual Litigation Ethics Summit our panel challenged some brave audience members to participate in a contest of ethical wits. Read more.
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