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Bar News - January 16, 2009


Attorney Departure Practice Tips

By:

A number of books have been written that discuss the many issues raised by the departure of a firm’s attorney. These books often cover everything from partnership law and the fiduciary duty of loyalty to whether or not a firm’s client list is a trade secret. While such books can and do offer a plethora of valuable information, I suspect many attorneys depart from firms without anyone’s ever taking the time (if for no other reason than lack of time) to study the issues by reading one of these books cover to cover. In recognition of our need to have the basics presented in a succinct format, I offer the following tips to help guide you through an attorney departure.

A law firm cannot prohibit an attorney from leaving the firm and competing against that firm for clients. That said, the departing attorney cannot ignore his or her fiduciary duties to the firm. Generally the departing attorney may make necessary logistical arrangements prior to departure, such as renting office space, opening bank accounts, or purchasing office equipment, but such planning must not include secret discussions to lure away staff, other firm attorneys, or firm clients, nor should it involve unilaterally deciding to move client monies to a new trust account.

With regard to notice, timing is everything. The firm should be notified as soon as possible after an attorney decides to leave. While there are no clear time lines, there is a difference between thinking about leaving a firm and committing to actually leaving. Committing to actually leaving does not mean waiting until after an agreement spelling out the terms has been formalized. It means notifying the firm when the departing attorney has made the mental decision to begin investigating options; one should not allow a firm to make untimely, potentially poor, business decisions while unaware of an upcoming departure. Of course, if a partnership agreement exists and the document spells out the notice requirements for an attorney departure, one must abide by the terms of the agreement.

Clients for whom the departing attorney is primarily responsible are to be promptly notified once a decision to depart has been made. Avoid the client grab. The file belongs to the client and the attorney and the firm are in the employ of the client. This means that the decision as to who gets the file post departure will always remain solely with the client: period, end of discussion. In a perfect world, a joint letter from the firm and the departing attorney will inform impacted clients of the upcoming change and the options they may have.

If the departing attorney will remain in practice, the options would normally be that the client’s matter/s a) may stay with the firm, b) may go with the departing attorney, or c) may be transferred to a different firm, at the client’s request. There is no rule prohibiting differing default options should any particular client not respond to the said letter. Regardless of how the notice to the client is handled, neither lawyer nor firm should disparage the other.

The departing attorney should not unilaterally decide to remove client files, computer equipment, and the like off-site in the middle of the night. By the same token, the firm, should not unilaterally decide to prevent the departing attorney from continuing to work on client files that he or she has primary responsibility for. Unfortunately, this advice does need to be emphasized to all involved parties.

When a client file leaves with the departing attorney or is going to go to a different firm, keep the following in mind. Unless you can do so without causing harm to the client, you cannot hold a client file until the firm is paid for its share of the work or the account is brought current. Further, the file must be delivered within a reasonable timeframe. The question of what documents belong to the client and must be delivered versus which do not, can be a difficult one. A practical guideline is this: going beyond client originals, if you billed for producing the document, it belongs to the client.

If you have any concerns about potential liability on any given file, make a copy of it before the file physically leaves the premises, because obtaining a copy later may be difficult. If you have concerns about the overall skills of the departing attorney, perhaps a file review of all outgoing files prior to delivery would be warranted. Keep a record of what files went where and when they left.

Mark Bassingthwaighte writes articles on the legal profession for ALPS, a professional liability insurance carrier. ALPS coverage may be available through the NHBA Insurance Agency, Inc.

NHBA offers a three-hour online seminar "Closing a Law Practice: The Rest of the Story" through a partnership with the State Bar of Arizona (original program date 8/07). Visit http://www.nhbar.org/nhbacle and click on the yellow starburst.



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