Close
Updated:

Does Your Law Firm Have an Attorney Separation Agreement? It Should.

  • Attorney separation agreements may require that a lawyer give reasonable notice to his firm before resignation, reducing conflict with departing lawyers.

  • Lawyers may agree in advance how they will handle such issues as billing, transfer of file responsibilities and return of equipment.

  • Joint notice to clients by the law firm and the departing lawyer is the preferred method of advising clients of an attorney’s departure from the firm.


Attorney separation agreements that contain provisions for a minimum notice period before an attorney’s resignation and other terms for notice, transfer of files and billing should be common.  They are not, and it is likely bad for the clients and the firm.

The free-for-all that may follow a resignation is something that can be avoided, and a recent opinion of the ABA’s standing committee holds that the minimum notice requirement is ethical as long as it does not restrict competition by the departing lawyer or limit the client’s ability to choose counsel.

Separation Agreements to Manage Lawyer Resignations

What would such an agreement look like?  We suggest that the following issues should be addressed whether dealing with withdrawing principals or resigning attorneys.

Minimum Notice to Law Firm of Intended Departure

In many circumstances the withdrawal of a senior lawyer from a law firm for another practice is a process that is implemented over weeks or months.  The orderly transition of files by a process that is mutually acceptable to everyone involved serves a number of interests held by all involved, particularly the clients.

That is not the universal standard of conduct among lawyers, however.  Competition for clients will manifest itself in one of two ways.  The first is the grab and go.  The resigning lawyers leave without significant notice and engage in a coordinated and aggressive solicitation of the firm’s clients.  It is a blitzkrieg approach and is likely to leave clients bewildered in the process.

A second approach is the lockout.  The departing attorney advises the law firm of his intention to leave and is terminated before he has an opportunity to solicit the clients.  This approach typically involves cutting the attorney who intends to resign from access to files, staff and the telephone and voice mail systems.

An agreement that requires the attorney, principal or not, to give a minimum notice before leaving a firm helps to avoid the free-for-all competition for clients.  It must be reasonable and necessary to provide for the orderly transfer of client matters and cannot be an attempt to restrict competition by the departing attorney with his former firm.  (See ABA Says Minimum Notice Requirements Are Ethical)

What is a reasonable notice will depend on the nature of the practice.  And then extent to which it can be enforced is less than clear.  The ABA Standing Committee on Professional Responsibility in a recent opinion held that a minimum not notice requirement may not be enforceable if it is not necessary.  Nonetheless it is plainly better to have an agreement in place beforehand.

Joint Notification of Clients of Attorney Resignation

Lawyers have an ethical obligation to keep clients informed about the status of their matters, which includes significant changes in staffing.  What that means in practical terms is that if the lawyer with principal responsibility for a matter changes, the client must be notified.  This ethical requirement is also justification for a free-for-all in the scramble for clients.

A departing lawyer may speak to his or her clients about a plan to resign before informing the law firm or other principals, or may time the resignation so as to provide as big a head start as possible in contacting clients about the transfer.  Likewise, a practice might cut off access to client contact information in an attempt to block the departing lawyer from reaching clients.  Neither approach is ethical.

The ABA Standing Committee on Ethics and Professional Responsibility issued an opinion in 2009 in which it advised that the departing lawyer did not violate ethical rules by contacting clients but that the “far … better court to protect clients’ interest is for the departing lawyer and her law firm to give join notice of the lawyer’s impending departure to all clients for whom the lawyer has performed significant professional services while at the firm, or at least notice to the current clients.”  (ABA Opinion 99-14)

The ABA opinion stops short, however, of requiring joint notice.  The ABA Committee gives a hat tip in Formal Opinion 19-489 to the two states (Florida and Virginia) that prohibit unilateral notice by the departing lawyer unless the lawyer has notified the firm and was unable to negotiate a joint notice.

A law firm can remove the uncertainty and negotiation by covering the notice procedure beforehand in a separation agreement.

Solicitation of Employees

Telling other professionals in a law firm about plans to depart, or even soliciting their participation as part of a withdrawing group, is a tricky subject.  The rules governing the solicitation of employees and the general fiduciary duties owed to the firm or other principals are not suspended in the case of lawyers.

It is likely ethical for the departing attorney to inform other attorneys of tentative plans to leave, and quite likely for those withdrawing attorneys to develop joint plans to leave.  At the same time, the prohibition on restricts that limit a lawyer’s right to compete and the client’s’ rights to choose counsel should not give free reign to a departing lawyer to raid the employees of a law firm.

It makes far more sense to recognize that lawyers will resign, including partners, and to develop agreements in advance that describe what is and is not permitted in communicating a planned resignation to other members, associates or support staff of a law firm.

Status and Collection of Accounts Receivable

The departure of an attorney likely has significant financial implications, ranging from the simple collection of billable time records to ongoing assistance with problem accounts receivable.  A departing attorney should have an obligation to assist in winding up a client’s financial affairs with the firm, land that assistance is a factor in whether the minimum notice requirement is fully enforceable.

The assertion of a retaining lien that would allow a firm to retain the client’s property may be unwise and, at least in New Jersey where I practice, it is likely to be unethical.  Even in jurisdictions that still permit retaining liens, there are a number of caveats.

Contingent Fees and Charging Liens

When the departure will involve contingent fee matters, a separation agreement is likely to be critical if the parties are to avoid collateral litigation.  Contingent fee cases are subject to statutory charging liens and may be subject to equitable liens.  Many contingent fee agreements require the repayment of advanced expenses if the initial attorney is discharged without cause.

Although the Rules of Professional Conduct place limits on the sharing of fees between lawyer that are not affiliated in a practice, the majority rule appears to be that an agreement to divide fees in a matter that is part of a separation agreement is enforceable and not contrary to ethical rules.  The law firm that has been discharged is likely to, and probably should, protect its interest by suing on the liens or contractual provisions that are enforceable.

Return of Intellectual Property, Proprietary Information and Firm Equipment

Senior lawyers in a law firm often have access to intellectual property and proprietary information that goes beyond the information associated with matters that they actually handle.  These may range from mail lists to forms libraries and brief banks.  Unless that information is owned by a departing client, it may well be owned by the firm at a substantial investment of time or money.

Similarly, attorneys may be issued firm equipment, ranging from laptops and mobile phones to furnishings for a home office.  A separation agreement should address the return of firm property.

Transfer of Files to New Firm

It is inevitable that at least some clients will leave with a departing lawyer or choose another attorney, and that files will need to be transferred to a successor attorney.  Transferring large files, or large numbers of files, presents logistical difficulties and is fertile grounds for dispute.  Neither the departing lawyer nor the law firm left behind are excused from providing diligent representation during any transition period.  Moreover, holding files as a means of retaliation or to secure fees that are owed to the firm is very problematic.

The transfer of files is also fertile ground for disputes.  Among the issues that may be addressed in a separation agreement are the timing and manner of notice, the time within which the transfer should be made and the costs for the work involved.  What documents will the now discharged firm retain and who will pay the costs?  A well-drawn separation agreement will cover this ground.

Access to Digital Case Management Records

Most firms incorporate some digital document management and many have sophisticated practice management systems.  A firm that incorporates such products as Needles, Clio or Leap in its practice management likely will be faced with the task of extricating data, digital documents or other practice information.  A separation agreement may address the data transfer logistics that are likely to be required, as well as allocate the costs.

Access to Digital and Paper Files

It may be unethical to deny access to a departing attorney to files in matters that he or she was personally handling, but that should not imply that a lawyer that has given notice has a right to access the files of other matters or other clients.  Here again the firm may have information in its files that it can – and that perhaps it is ethically required to – protect from someone planning an exit from the firm.

Deletion of Non-Client Data from Personal Equipment

Departing attorneys are not entitled to, and should not retain information in their possession that involves non-clients.  Law firms have an obligation to secure the return or deletion of this type of data.

Communication with Former Clients

A separation agreement should both recognize and limit the ability of the law firm to communicate with the clients that are following the lawyer to his or her new position.  It may be critical in some cases to confirm that the clients recognize that the selection of a new law firm means that the old firm has been discharged without cause, and that there may be issues related to that discharge.  In our experience, unsophisticated clients may not understand the ramifications of firing an attorney.

The law firm will need to communicate with the former client about billing, any accounts receivable and may need to have other communications that continue after the firm has been discharged.  It will also have right to communicate with the client in an attempt to retain the business, as long as it does so truthfully and without disparaging the departing lawyer.

New Matters

Should the law firm open a new file for a client who wants to engage a lawyer that has given notice of their imminent departure.  That may well depend on the nature of the practice and the type of matter.  It is better to think about it beforehand.

Contact Us