ABA Says Minimum Notice Requirements Are Ethical

  • Law firms may not limit the ability of lawyers to resign, solicit clients and compete with the firm, but they may contract for a reasonable notice period necessary for the orderly transfer of client matters.

  • Both the departing lawyer and the law firm share an ethical obligation to assure the client of continued competent representation during the transition period before the lawyer’s departure.

  • The notice requirement cannot act as a financial disincentive to competition and the departing lawyer’s willingness to cooperate in the transfer of matters and post-departure billing is a factor in determining whether the notice period is reasonably imposed.

There are some very good reasons for lawyer firm management to fear the “grab and go.”  A key lawyer resigns with little or no notice and immediately begins to solicit clients.  In some instances, the result can devastate the fortunes of a law firm, drawing out cash flow and personnel, but leaving the firm to continue to carry the same level of expenses.


The Law Firm Grab and Go

It’s sometimes known as the “grab and go.” It occurs when one or more lawyers resign without notice while simultaneously soliciting the firm’s clients to follow them.   In some cases, the grad and go will strip a small firm of a substantial portion of its revenue while leaving it with large liabilities such as leases, advanced expenses and personal financial exposure for the remaining principals.  Can a law firm contract with its principals and attorneys to prevent the grab and go?

It is a phenomenon that is generally unique to the private practice of law.  The right of clients to choose an attorney trumps many of the typical rules related to competition.  It is unethical for any law firm to try to impose a restriction on a lawyer’s future practice that would limit the client’s ability to follow the departing lawyer.  Departing lawyers can and do mount aggressive, coordinated solicitation campaigns to bring the clients with them on departure, often with great success.

A recent opinion from the American Bar Association’s Standing Committee on Professional Ethics, however, looks favorably on requiring lawyers to give reasonable notice of their plans to leave a firm when necessary to assure the orderly transition of client business.  What that means in practical terms is that law firm management may require reasonable notice and, to some degree, may level the playing field on the lawyer’s departure.

And more importantly from the ABA’s perspective, it assures that there is continuity and attention to client matters during any period of transition.  And, from the existing firm’s perspective, it provides the client with enough time to make an informed choice about the selection of counsel going forward.

Reasonable Notice Requirement is Ethical

The ABA’s Standing Committee on Ethics and Professional Responsibility in Formal Opinion 489 holds that a law firm may require “some period of advance notice of an intended departure.”  The amount of notice should be the minimum necessary to allow clients to make an informed choice, transition the files and wrap up the departing lawyer’s duty.  The notice period may not, however, interfere with the client’s choice of counsel or the lawyer’s right to change firms.  Moreover, the freedom to change firms without restrictions comes with some obligations that may be ignored by some lawyers, including duties that relate to the files left behind, billings and collections.

Let’s consider how that works in more practical terms. Consider this scenario.  Two senior associates in a personal injury firm with responsibility for handling a large book on ongoing cases decide to open their own firm.  Their current employer is fully invested in those matters and has advanced expenses funded through a revolving line of credit.  The firm has staffed these matters with paralegals and secretaries and maintains a central case management system.  In short, the firm has made a substantial investment in the matters.

The associates resign on a Friday evening with no notice and immediately begin soliciting clients by email and telephone.  (Obviously, this raises the issue of how the associates collected the telephone numbers and emails, but the rights and obligations of lawyers planning a departure are beyond the scope of this article.)  By the following week, the departing lawyers have secured transfer letters from 60 percent of the clients in matters they handled personally.

Now what?  Anyone who has been through this scenario, whether it involved contingent-fee cases or hourly work, recognizes the issues that are raised.  By noon on Monday, the departing lawyers are sending letters to their old firm authorizing transfer letters and demanding the files be turned over at their new offices.  There are hearings and statutes of limitation that must be considered.  What about the outstanding advances and credit lines?

Of equal significance, what is the firm’s obligation to communicate with the clients?  It is clear that the firm is liable for the clients that it – and not the individual lawyers – represent.  Does it have the ability to solicit the clients itself?  Should it?  How does it staff the matters left behind, and are the remaining lawyers competent to do so?  What about the accounts receivable and work in progress on hourly matters?  What is its relationship with the clients who appear to become ‘9former clients?

Without some advance notice and a plan, chaos ensues.  Moreover, the former firm is likely to bear a disproportionate financial burden in dealing with the cases involved.

The ABA standing committee seems to recognize that clients are not served in the grab and go scenario, and ABA Formal Opinion 489 outlines the ethical requirements on both sides.  The ability to require advance notice and the obligation of the departing lawyer to cooperate with his or her formal firm helps to avoid some of those consequences.

What is Reasonable Notice to a Law Firm?

Reasonable notice of a planned departure from a law firm is defined as the notice necessary to permit an orderly transition. Understanding what is an orderly transition, in turn, requires consideration of the obligations of the firm and its individual lawyers under the ethical standards of the profession.

It is a violation of R.P.C. 5.6 for a lawyer to participate in an agreement containing an agreement not to compete or otherwise restricting an attorney’s ability to practice law.

A lawyer shall not participate in offering or making:

(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of
the relationship, except an agreement concerning benefits upon retirement . . .

What that means in practical terms is that restrictive covenant agreements are not permitted.  Lawyers may leave a firm and they may solicit the firm’s clients — in writing and, if they had personal contact with the client, by telephone or in person.  The lawyer may be able to take the contact information from the firm’s own records and while the ABA recommends that clients be jointly notified of a lawyer’s departure, it is not required.  The notice can be unilaterally given.

ABA Op. 489 provides that a firm may require advance notification of an intended departure, the length of which must be determined by the circumstances.

The period of time should be the minimum necessary, under the circumstances, for clients to make decisions about who will represent them, assemble files, adjust staffing at the firm if the firm is to continue as counsel on matters previously handled by the departing attorney, and secure firm property in the departing lawyer’s possession. Firm notification requirements, however, cannot be so rigid that they restrict or interfere with a client’s choice of counsel or the client’s choice of when to transition a matter. Firms also cannot restrict a lawyer’s ability to represent a client competently during such notification periods by restricting the lawyer’s access to firm resources necessary to represent the clients during the notification period. The departing lawyer may be required, pre or post-departure, to assist the firm in assembling files, transitioning matters that remain with the firm, or in the billings of pre-departure matters.

Notification provisions in agreements “cannot impose a notification period that would reasonably delay the diligent representation of the client or unnecessarily interfere with a lawyer’s departure beyond the time necessary to address transition issues, particularly where the departing lawyer has agreed to cooperate post-departure in such matters.”

A firm’s reliance on a fixed notice period set forth in an agreement either to attempt to require the lawyer to stay at the firm for that period or to impose a financial penalty for an early departure must be justified by particular circumstances related to the orderly transition of client matters and must account for the departing lawyer’s offer to cooperate post-departure in these and other matters. Otherwise, a firm’s imposition of a fixed notice period may be inconsistent with Rule 5.6(a).

Enforcement of an agreed-upon minimum notice period may be unethical when it is no longer necessary under the circumstances to assure the orderly transition of matters to a new firm or to different lawyers within the firm and billing matters have been resolved.

Firms may not limit or restrict access to email or voice mail during a transition period.  Once a lawyer has departed, the firm should set automatic responses on voices and emails providing notice of the lawyer’s departure and offering an alternative contact at the firm. A supervising lawyer should review all of the communications directed to the departed lawyer and forward those for clients that went with the lawyer to his or her new firm.

Shared Ethical Obligations

The ethical obligations surrounding a lawyer’s departure apply to both the firm and the departing lawyer.  Both the law firm and the departing lawyer have an ethical obligation to keep clients informed, which includes notifying clients of the departure of a lawyer.  Law firms may not restrict the lawyer’s notification of clients once the firm has been notified of the departure.

The departing lawyer has an ethical obligation to provide reasonable cooperation to assure that any clients that stay with the firm or decide to seek other counsel continue to have effective counsel. These joint ethical obligations include informing the client of the lawyer’s departure and advising the client of the client’s right to choose to stay with the firm, to go with the departing lawyer or to  retain new counsel.

Clients, the opinion cautions, “are not property” and decide who represents them when a lawyer changes firm affiliation.  A law firm should not reassign a matter for which a departing lawyer has principal responsibility after receiving notice of the resignation except in exigent circumstances or at a client’s instruction.  Likewise a firm should not punish the departing lawyer or the clients that go with him.  At the same time, the departing lawyer must cooperate in the reassignment of matters that elect to stay with the firm.

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