by Sheila Blackford ©2010 Lawyers leaving their firms are on my mind today. Seems like stressful conditions financially are big contributor. There is more movement of lawyers from firm to firm. This raises issues of ethics and professionalism.
1. The Client is not property. The client gets to decide whether to leave the firm following the lawyer who has been doing the work or to leave the firm for a different firm or to stay. The implications of this are sometimes bitter: you have to let the client know that the lawyer who has been doing the work and being in contact with the client is leaving. Here in Oregon, following the ABA Model Rules, see ORPC Rule 1.4 Communication. Click here for a PDF of them which you might want to print them out to keep in a folder or save it on your computer for future frequent reference. It certainly is reasonable to keep your client informed about the status of his or her matter: “your attorney is leaving our firm at the end of the month.” Is the lawyer leaving to move to another state? Is the lawyer leaving to take a position practicing in a different area of law and will be unable to do this type of law? Is the lawyer leaving anyone behind at the firm who could competently continue to work on the client’s behalf? This seems eminently important information to be shared with a client “to permit the client to make informed decisions regarding the representation.”
2. All fees are subject to refund if the work is not performed. Avoid calling fees earned upon receipt “nonrefundable.” This designation may be misleading, if not false, a violation of ORPC 8.4 (a)(3), prohibiting conduct that involves “dishonesty, fraud, deceit, or misrepresentation that reflects adversely on the lawyer’s fitness to practice law.” Wow. This flat fee earned upon receipt becomes a problem when the client chooses to leave with the attorney or to go to another firm. If the firm holds onto that fee, and has done little or no work, ORPC Rule 1.5 Fees prohibits doing so: “[a] lawyer shall not enter into an agreement for, charge or collect an illegal or clearly excessive fee or clearly excessive amount for expenses.” How do you know it’s excessive? “A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee.” ORPC 1.5(b) goes on to innumerate eight factors to be considered as guides to determining the reasonableness. I don’t think you really need to read those factors to realize that unreasonableness of a flat fee earned upon receipt held out as “nonrefundable” to a client who want to leave with the attorney or go to another firm. This isn’t the time to try to assess fees for setting up a manila folder with a label and calling it legal work rendered. Sorry. Don’t keep money you haven’t earned.
3. Parting is not sweet sorrow. Giving notice to clients that the lawyer is leaving seems to be a big source of angst in many situations for the departing attorney and the firm. This is especially so when the separation generates hard feelings on either or both sides of the relationship. Our deputy general counsel for the Oregon State Bar, Helen Hierschbiel wrote “On the Move: Ethical duties when switching law firms” in the May 2007 issue of the Oregon State Bar Bulletin.
In a perfect world, one would do as Ms. Hierschbiel advises: “[t]he preferred method for providing notice to clients of a lawyer’s departure is by a joint letter from the managing partner and the departing lawyer to those client with whom the departing lawyer has had principal responsibility or significant contacts. The letter should provide information about the departing lawyer’s plans and indicate whether the firm is capable of and interested in continuing the representation. The letter must inform the clients that they may choose to keep their work with the firm or engage the departing lawyer. The letter should also inform clients, if they choose the latter option, what they need to do to terminate their relationship with the firm, including paying any outstanding fees or costs and how to get a copy of the file. This letter should be sent well enough in advance of the depature to give clients time to make their choices and lawyers time to take steps to effect any transfers of cases.”
However, relationships being what they are – between complicated humans who here happen to both be lawyers, a situation can develop where tempers are stoked and emotions are heated. In that event, Ms. Hierschbiel points out that “an unfriendly separation may make these best practices impossible. In such cases, separate letters may be sent. ABA Formal Op No 99-414 recommends that a letter from the departing lawyer should: 1) not urge the client to sever its relationship with the firm, but may indicate the lawyer’s willingness and ability to continue responsibility for matters upon which she currently is working; 2) make clear that the client has the ultimate right to decide who will finish the case and 3) not disparage the lawyer’s former firm. In addition, so long as the letter is sent only to those clients with whom the lawyer has a present professional relationship, the lawyer does not violate RPC 7.3(a). See OSB Formal Op No 2005-70.
“Upon separation, client files and property must be handled in accordance with the client’s direction. ABA Formal Op No 99-414; Oregon RPC 1.15(e) and 1.16(d). Generally, this means that if the client decides to go with the departing lawyer, the firm should surrender the client file [See OSB FOrmal Op No 2005-125 for discussion of what constitutes the “client file.”] to the departing lawyer and transfer any unearned advance deposits to the departing lawyer’s new trust account. Where a case is being handled on a contingent fee basis, fees will have to be apportioned. The decision on how fees will be split does not need to comply with requirements of RPC 1.5(e).”
4. A lawyer may solicit his/her former clients. “Once the lawyer is established in her new practice she may solicit the clients that she represented at the former firm. See, e.g., Oregon RPC 7.2(a)(2) (allowing a lawyer to solicit personally former clients); and Oregon RPC 7.2(c) (requirement that written solicitation of a person known to be in need of legal services in a particular matter be labeled as an “advertisement” does not apply to persons specificied in 7.2(a)).” I glad that Ms. Hieschbiel included this point in her article. If both the departing lawyer and the firm can keep this in mind, contacting the clients will be viewed in the correct perspective and it will be easier to do what is right by the client.
Hopefully, if you have read this post, you can share it with either someone who is leaving their firm or someone who is being left. I hope you can take a few minutes to read–or re-read– the article from Helen Hierschbiel linked above. Most of all, I hope that both parties can get through this transition ethically and professionally so they can get back to the business of practicing law.