Ethics Opinion 273
Ethical Considerations of Lawyers Moving From One Private Law Firm to Another
* [NOTE: See how Opinion 273 has been substantively affected by the amendments to the D.C. Rules of Professional Conduct that became effective on February 1, 2007]
Lawyers who depart one law firm for another, and those law firms, must be attentive to ethical concerns arising from such changes in affiliation. Most importantly, client files must be made available to the lawyer or law firm continuing the client representation, clients must receive suitable notification of their lawyer’s change in professional affiliation, and conflict of interest inquiries must be made by the new law firm based on the new lawyer’s current and prior representations.
- Rule 1.4 (Communication)
- Rule 1.7 (Conflict of Interest: General Rule)
- Rule 1.8(i) (Conflict of Interest: Prohibited Transactions)
- Rule 1.10(b) (Imputed Disqualification: General Rule )
- Rule 1.16(d) (Declining or Terminating Representation)
- Rule 7.5(a) (Firm Names and Letterheads)
- Rule 8.4(c) (Misconduct)
The increasing movement of lawyers between firms creates a number of ethical issues that are the frequent subject of inquiries to the Bar’s ethics counsel. These issues, addressed in this Opinion, principally concern communications and relations with clients, possession and custody of files, conflicts of interest, confidentiality and recruitment of legal and other personnel.
Communications and Relations With Clients
The questions most frequently asked of the Bar’s ethics counsel in this area concern what communications with clients of the law firm may be had by the departing lawyer prior to the departure. Typically, a lawyer planning to change law firms will be interested in having the clients to whom the lawyer has provided professional services accompany him/her to the new law firm, and may want to make arrangements to that end before the actual departure.
Under the Rules of Professional Conduct, a lawyer responsible for a client’s matter would be obligated t o inform that lawyer’s clients of his/her planned departure and of the lawyer’s prospective new affiliation, and to advise the client whether the lawyer will be able to continue to represent it. Rule of Professional Conduct 1.4, “Communication,” obligates a lawyer to keep a client informed “about the status of a matter” and to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” In most situations, a lawyer’s change of affiliation during the course of a representation will be material to a client, as it could affect such client concerns as billing arrangements, the adequacy of resources to support the lawyer’s work for the client, and conflicts of interest. See, e.g., D.C. Bar Ethics Op. 221 (1991); D.C. Bar Ethics Op. 181 (1987); D.C. Bar Ethics Op. 97 (1980). Accord North Carolina Bar Ethics Op. RPC 200 (1995); Oregon Bar Ethics Op. 1991-70 (1991); Illinois Bar Ethics Op. 84-13 (1985).
Thus, not only does Rule 1.4 require the lawyer to communicate his prospective change of affiliation to the client, but such communication must occur sufficiently in advance of the departure to give the client adequate opportunity to consider whether it wants to continue the representation by the departing lawyer and, if not, to make other representation arrangements.
Advance communication is also necessary when the departing lawyer does not intend to continue a representation in his post-departure affiliation, as Rule 1.16(d) requires a lawyer, when terminating a representation, to give “reasonable notice to the client”, and to allow “time for employment of other counsel . . . .” (This discussion assumes that the departing lawyer’s withdrawal is otherwise proper under Rule 1.16(a) and (b).)1
The lawyer’s communication to the client should include the fact and date of the change in affiliation, and whether the lawyer wishes to continue the representation. The lawyer should also be prepared to provide to the client information about the new firm (such as fees and staffing) sufficient to enable the client to make an informed decision concerning continued representation by the lawyer at the new firm. The client would also need to be informed of any conflict of interest matters affecting its representation at the new firm. Any communication which exceeds that required by ethical rules—for example, an active solicitation of the client to leave the lawyer’s current firm and join the lawyer at the new firm—could run afoul of the lawyer’s obligations under partnership law (for departing partners), corporate law (for shareholders of a professional corporation) and the common law of obligations of employees (for lawyers who are employees of a firm). For example, solicitation of clients by a departing partner (i.e., activity going beyond neutrally informing a client of the lawyer’s planned departure and new affiliation) may be a breach of a partner’s fiduciary obligations to other partners and may constitute tortious interference with the law firm’s business relations. See, e.g., Adler, Barish, Daniels, Levin & Creskoff v. Epstein, 393 A. 2d 1175 (Pa. 1978); Graubard, Mollen, Dannett & Horowitz v. Moskovitz, 653 N.E. 2d 1179 (N.Y. 1995). Under partnership or other law, a departing lawyer may also be obliged to inform the lawyer’s firm, at or around the time the lawyer so notifies clients, of his/her planned departure from the firm. (There appears to be no ethical significance to whether the client or the law firm is first informed of the lawyer’s planned departure.)
We note these other legal considerations without commenting on their applicability, as they are not questions of ethics law. There may be a cloudy area between communications required by ethics principles and communications that violate the lawyer’s obligations under other law. Because we cannot opine on the nature and limits of such other law, we can do no more than note that such a hazy border exists.
Files and Other Documents
Lawyers departing a firm to practice elsewhere will often have an interest in bringing with them files and other documents. These documents may relate directly to client representations, such as litigation pleadings, fact memoranda or transactional materials. Or they may be of a more general nature, such as name and address lists, general research memoranda or correspondence unrelated to specific client representations. May the departing lawyer take these materials with him/her when the lawyer leaves the firm?
This question is only partially answered by the Rules of Professional Conduct. Regarding client files—materials relating to the representation of a client—an initial inquiry is who will continue to represent the client after the lawyer’s change of affiliation. That inquiry is important because if the change of affiliation involves the termination of one representation (whether by the departing lawyer, or by the lawyers he/she leaves behind), then the lawyer(s) terminating a relationship must “surrender. . . papers and property to which the client is entitled . . . ” (Rule 1.16(d)), meaning that the client files must remain with or be transferred to the lawyer(s) who will be continuing the representation. See also D.C. Bar Ethics Op. 168 (1986) (decided under DR 2-110(A)(2), the predecessor of Rule 1.16(d)). Accord Utah Bar Ethics Op. 132 (1993); Oregon Bar Ethics Op. 1991-70 (1991).
Where the lawyer or law firm whose relationship with the client is being terminated in this process is owed money for legal services provided, a retaining lien against client files is available only to a very limited extent in the District of Columbia. Under Rule of Professional Conduct 1.8(i):
A lawyer may acquire and enforce a lien granted by law to secure the lawyer’s fees or expenses, but a lawyer shall not impose a lien upon any part of a client’s files, except upon the lawyer’s own work product, and then only to the extent that the work product has not been paid for. This work product exception shall not apply when the client has become unable to pay, or when withholding the lawyer’s work product would present a significant risk to the client of irreparable harm.
See also D.C. Bar Ethics Op. 250 (1994) (“it seems clear to us that retaining liens on client files are now strongly disfavored in the District of Columbia, that the work product exception permitting such liens should be construed narrowly, and that a lawyer should assert a retaining lien on work product relating to a former client only where the exception is clearly applicable and where the lawyer’s financial interests . . . ‘clearly outweigh the adversely affected interests of his former client.’ ”) (citing D.C. Bar Ethics Op. 59 (undated)). Thus, a retaining lien may be asserted against client files only in the narrowest of circumstances—against unpaid work product where the client is able to pay and where assertion of the lien will not risk irreparable harm to the client.2
It would not be unethical for the lawyer terminating the representation to retain copies of documents from the client’s file, although these (like any documents of a former client that contain confidential or secret information under Rule 1.6) would need to continue to be accorded the status and protection due them. We have previously opined that a law firm may, at its expense, make and retain copies of documents that it is obligated to provide to a former client. D.C. Bar Opinions 168 (1986) and 250 n.2 (1994).
Other questions of ownership of files vis-à-vis a client, and questions of ownership of files and other written materials as between departing lawyers and their former law firms, are not governed primarily by the Rules of Professional Conduct. Some ownership and control questions may be resolved by reference to statutory and common law rules of personal property. And, where the departing lawyer is a partner, partnership law principles would be relevant. Our Committee does not opine on such questions of law. Nevertheless, a lawyer should think carefully about whether the lawyer may take such materials with him/her, because a lawyer’s removal or copying, without the firm’s consent, of materials from a law firm that do not belong to the lawyer, that are the property of the law firm, and that are intended to be used by the lawyer in his new affiliation, could constitute dishonesty, which is professional misconduct under Rule 8.4(c).
Conflicts of Interest
When a lawyer departs one firm to affiliate with another, conflict of interest issues are raised for both firms. For the firm that the lawyer joins, conflict of interest concerns are raised whether the lawyer arrives with or without clients. The relevant Rules of Professional Conduct are 1.10(b) and 1.7. For the lawyer who arrives without clients, the work the lawyer performed at the former firm may affect the ability of the new firm to represent its clients. Rule 1.10(b) extends a variation of the “former client” provisions of Rule 1.9 to the new firm by prohibiting it from representing a person in a matter:
which is the same as, or substantially related to a matter with respect to which the lawyer had previously represented a client whose interests are materially adverse to that person and about whom the lawyer has in fact acquired information protected by Rule 1.6 [Confidentiality] that is material to the matter.
The Rule applies a four-part conjunctive test for disqualification based on the newly arrived lawyer’s former legal work: (1) the lawyer must have formerly represented the client; (2) the new matter must be the same as or substantially related to the prior representation; (3) the position of the prospective new client must be adverse to that of the former client; and (4) the lawyer must actually (not just imputedly) have learned information confidential to the former client which is material to the new representation. One notable feature of the Rule is that it leaves open the possibility that a lawyer, such as an associate who had only a peripheral involvement in a matter (as by preparing a research memorandum on a point of law), would not subject his new law firm to a disqualification under Rule 1.10(b) because that lawyer did not learn any client confidences in the course of the representation.
As we noted in D.C. Bar Opinion 174 (1986) (decided under the former Code of Professional Conduct), a conflict of interest disqualification of a firm cannot be cured by screening from a matter the lawyer whose prior representation created the conflict. The affected former client may, however, consent to the new law firm’s representation of the new client (Rule 1.10(d)), and might seek such screening as a condition to its consent. See also Brown v. District of Columbia Bd. of Zoning Adjustment, 486 A.2d 37, 48-49 (D.C. 1984) (en banc) for a discussion of the meaning of “substantially related” as that term is used in Rule 1.10.
A different conflict scenario is presented with respect to clients who accompany a lawyer to a new firm. The new firm must treat each of those representations as new ones for it, testing its ability to undertake those representations against the requirements of Rules 1.7 and 1.9.
Finally, the firm from which the lawyer departed is subject to an ethical constraint in respect of the representations of persons who became former clients when the lawyer departed. Under Rules 1.9 and 1.10(c), the firm may not represent persons with interests materially adverse to those of a former client in matters which are the same or substantially related to those in which the formerly associated lawyer represented the client while at the firm. The firm also has continuing obligations under Rule 1.6 to preserve the confidences of its former clients.
Former clients, whether they become so because a representation has been completed, because the client terminates the relationship or because the lawyer departs the firm at which the representation arose, are entitled to the same protection of secrets and confidences as current clients. See Rule 1.6(f). And so, where a lawyer who departs one firm for another, leaving the representation of certain clients with the former firm, that lawyer must insure that he/she continues to guard against unauthorized use or disclosure of information protected under Rule 1.6. Where the lawyer brings files of a former client to the new law firm, care must be taken not to reveal confidential information in those files to others, including the lawyer’s new professional colleagues.
Efforts to Interest Other Lawyers or Staff in Changing Firms
Another question frequently posed to the Bar’s ethics counsel is whether a departing lawyer may, prior to departure, recruit lawyers or non-lawyer personnel to accompany the lawyer to the new firm. We believe that this issue is resolved primarily, if not entirely, under law other than ethics law, such as the common law of interference with business relations and fiduciary obligations.3
Law Firm Name
Lastly, what must the departing lawyer’s firm do if that lawyer’s name appears in its firm name and/or on its stationery? The answer is found in Rule 7.5(a), which prohibits the use of a firm name or letterhead which is false or misleading. Where a lawyer has departed one firm to practice elsewhere, it would plainly be misleading for the law firm to continue to use that lawyer’s name in written materials used for external communications. See Rule 7.5, Comment : “[I]t is misleading to use the name of a lawyer not associated with the firm or a predecessor of the firm.”
Inquiry No. 97-1-1
Adopted: September 17, 1997
1. If neither the departing lawyer nor the former firm wishes to continue the representation of a client after the lawyer leaves the firm, the lawyer responsible for the representation must insure that such complete withdrawal from representation can be accomplished consistent with Rule of Professional Conduct 1.16. Most importantly, such withdrawal must be capable of being accomplished “without material adverse effect on the interests of the client. . . . “ Rule 1.16(b).
2. The availability in the District of Columbia of retaining lien against client files is substantially narrower than under the ABA Model Rules of Professional Conduct. ABA Model Rule 1.8(j)(1) permits a lawyer to “acquire a lien granted by law to secure the lawyer’s fee or expenses” and ABA Model Rule 1.16(d) permits a lawyer, when terminating a relationship with a client, to “retain papers relating to the client to the extent permitted by other law.”
3. In an extreme case, where deception and/or dishonesty were employed by the departing lawyer in inducing other law firm personnel to depart their current employer, the lawyer’s conduct might run afoul of Rule 8.4(c), under which it is professional misconduct for a lawyer to “engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.” Recruiting activity, however, would not ordinarily constitute an ethics violation.