Ethical issues involved in leaving law firms
The days when the average employee would get a retirement party and a gold watch after working at the same company for 40 years are gone. Most people don’t stay in the same job their entire careers any more. At some point, most lawyers will find themselves looking for another job, and many may be in that position more than once. Not surprisingly, the Bar’s Ethics Hotline often gets calls from lawyers seeking advice on what they are allowed to do while transitioning to a new job. From the interview process, to identifying conflicts, to letting clients know of a move, to moving cases to a new firm, there are some potential ethical pitfalls.
During the interview process, if a lawyer is moving from one firm to another, the hiring firm may ask for a list of clients from the interviewee to determine what kind of business the lawyer can bring to the firm as well as whether there are potential conflicts. However, lawyers are often unsure what information they are allowed to share with the interviewing firms. Subsection (c)(6) of Rule 4-1.6 of the Rules Regulating The Florida Bar addresses this issue. Normally, a lawyer may not voluntarily reveal any information related to the representation of a client, including the name of a client or the fact of representation, without the client’s informed consent unless an exception to the rule applies. Some lawyers believe they are safe to give just a list of names or cases if that information is not privileged, but Rule 4-1.6 is very broad and prohibits a lawyer’s voluntary disclosure of any information, regardless of its source, and even if the information is in the public record. Fortunately, subsection (c)(6) provides an exception that allows a lawyer to reveal information to detect and resolve conflicts of interest when a lawyer is contemplating changing firms if revealing the information does not adversely affect the client. The comment to the rule provides an example of prejudicial disclosure, in which a person has consulted the lawyer about a divorce but has not told their spouse. Further, subsection (f) requires that when a lawyer chooses to reveal information under this or any other exception to Rule 4-1.6, that the lawyer limits the disclosure to only what is necessary to accomplish the purposes of the rule. The comment to the rule elaborates that the disclosure should only be made once substantive discussions regarding a new relationship have commenced. Therefore, this exception would not allow a lawyer to include a sample list of clients with a resume, or name drop during an initial interview, without first getting the clients’ informed consent.
The lawyer and the hiring firm will want to consider whether the firm would have conflicts of interest if the firm decides to hire the lawyer. Subsection (b) of Rule 4-1.10 addresses conflicts when a lawyer moves from one firm to another. The rule states that a firm would not be able to represent a client if a newly hired lawyer or that lawyer’s former firm represented another client in the same or substantially related matter and the newly hired lawyer has actual knowledge of information material to the matter that the lawyer only has because of that prior representation. A conflict does not arise merely because the new hire’s former firm represents an opposing party on a matter; it must be the same or substantially related matter for a possible conflict to arise. However, even if the new hire was not assigned to work the particular matter at the prior firm, a conflict could still exist if the lawyer has actual knowledge of facts material to the matter that the lawyer only has because of the prior representation. Such knowledge could be obtained through interactions at firm meetings or even water cooler talk. If the firm determines that a conflict exists under that rule, the firm would not be allowed to continue representation of its client unless informed consent is obtained from the new hire’s former client. Screening or walling the new hire from the matter is not sufficient to avoid the conflict under the rule.
If the lawyer is going into private practice from government employment, Rule 4-1.11 applies instead. The rule informs that a conflict exists when the new hire has information that can be used or revealed to the detriment of a former government client in the representation of a private client when the lawyer only has that information because of the prior government employment. The rule also prohibits a lawyer from representing a client in a matter in which the lawyer participated personally and substantially while a government lawyer without getting the government agency’s informed consent in writing. Unlike conflicts under Rule 4-1.10 when a lawyer moves from one private firm to another, Rule 4-1.11 allows for screening to avoid a conflict. Therefore, other lawyers in the firm may continue to represent clients against their new colleague’s former government client even when the colleague has a conflict under this rule as long as the lawyer does not participate in the mater, receives no direct fee from the matter, and written notice is provided to the government agency. Similarly, the former government lawyer cannot use information obtained about a person while employed as a government lawyer against that person. While that creates a conflict of interest for the former government lawyer, other lawyers in the firm may represent the affected client if the former government lawyer is screened from and receives no fee from the matter. While the lawyer may not receive a fee directly from the matter, it does not prohibit the lawyer from receiving a salary or sharing in firm profits as a partner.
Instead of moving to a new firm, many lawyers choose instead to go out on their own, carefully planning the new venture until the time is right to cut ties with the old firm. While lawyers are not prohibited from working for more than one firm at the same time, lawyers wishing to set up a new firm before telling their current employers should be aware that lawyers have been disciplined for moonlighting without first obtaining permission from their regular employers. In The Florida Bar v. Kossow, 912 So. 2d 544 (Fla. 2005), a lawyer was suspended for 30 days for continuing to accept outside employment after the firm advised associates not to provide legal services outside of the firm. In The Florida Bar v. Cox, 655 So. 2d 1122 (Fla. 1995), a lawyer was suspended for 30 days for engaging in outside employment against firm policy. The courts have viewed the conduct to be in violation of subsections (c) and (d) of Rule 4-8.4. The provisions prohibit conduct involving dishonesty, fraud, deceit, or misrepresentation, and conduct that is prejudicial to the administration of justice.
After the lawyers have sorted out where they are going, the last and sometimes most difficult part is dealing with the old firm and communicating the move to current clients. Fortunately, Rule 4-5.8 provides guidance on this issue. The rule sets out a procedure for the departing lawyer and the firm to attempt to negotiate a joint communication to the clients. If they can reach an agreement, they can follow whatever agreement they reach as long as they still communicate the new arrangement to the clients. If, after bona fide negotiations, they are not able to reach an agreement, the rule allows both the firm and departing lawyer to unilaterally communicate with the clients. A unilateral communication must inform the client of the departure, give the client the choice of staying with the firm, going with the departing lawyer, or choosing a different lawyer and inform the clients of any responsibilities they may still have to the firm regarding fees and costs. This communication should be made to any current clients to which the departing lawyer provided substantial legal services. It is not necessary when the lawyer had no direct contact with the clients. While the rule does not specifically require that the communication be in writing, disputes often arise during a lawyer’s departure from a firm, and it is advisable to have a written record of what was communicated to the clients. Once that communication has been made, the firm and lawyer must wait for a response from the client. The rule presumes that the client remains with the firm unless the client advises otherwise.
Leaving a firm may sometimes be awkward, bittersweet, or less than amicable, but it does not have to lead to an ethics complaint. Lawyers should take care to consider issues regarding confidentiality, conflicts of interest, and duties to the firm and clients to obtain a smoother transition. Lawyers may also contact the Bar’s Ethics Department at 800-235-8619 with any additional questions.