Legal Ethics Corner

Ethics Corner is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association for SDCBA members.



In Law Firm Breakups and Attorney Departures, the Client’s Interests Come First – Period.
 
Frankly, in just about all matters the client’s interests are to come first. However, of the circumstances in which this can easily be forgotten is that of a law firm dissolution or an attorney departure. “Unfortunately, law firm dissolutions or attorney withdrawals are often fraught with acrimony and accusations of wrongdoing. However, in the context of advising clients of these changed circumstances, lawyers must act professionally by subliming their own feelings for the benefit of their clients.” (Formal Opinion No. 1985-86, State Bar Standing Committee on Professional Responsibility and Conduct [COPRAC].) “[T]he interests of the clients must prevail over all competing considerations[.]”
 
Relying upon the predecessor to Rule of Prof. Conduct 3-700 (“Termination of Employment”), the relevant substance of which is still found in current Rule 3-700, COPRAC provides significant guidance on the duties owed to the client by both the departing attorney and the attorney’s firm or by the groups of lawyers that are going their separate ways. Whatever the change in the employment relationship, such “change does not vary the professional responsibilities the attorneys owe to the client.” Both sides have the continuing professional duty to act as the client’s fiduciaries.
 
Per Rule 3-700(A)(2), an attorney shall not withdraw until s/he has taken reasonable steps to avoid reasonably foreseeable prejudice to the client, including giving due notice, allowing time for employment of other counsel, and the return of the client’s file.
 
Additionally, COPRAC explains that to the extent practical, the law firm and the departing attorneys should provide joint notice to the client regarding the change, identifying the withdrawing attorneys, in what field they will practice, and their address and telephone number. Such a joint statement may also include whether the former firm will continue to handle similar legal matters and should advise the client who will handle the ongoing legal work during the transition. In addition, the attorneys must inform the client of the right to select either the former firm, the withdrawing attorneys, or another lawyer, to handle their legal matters. (Formal Opinion No. 1985-86.) Attorneys need to be mindful of limitations against in-person solicitation or untruthful advertisement (Rule 1-400(C), (D), [“Advertising and Solicitation”]). However, “[i]f the involved attorneys are unable, or unwilling to provide joint notice, each has an obligation and the right to communicate with the client in conformance with the guidance provided by this opinion.” (Ibid.)
 
The California Supreme Court acknowledged the importance of this joint notice in Reeves v. Hanlon (2004) 33 Cal.4th 1140, a disappointingly fine example of acrimonious attorney departure from a firm. Therein, two attorneys left their firm to form their own with a similar name. They compiled confidential client information, abruptly resigned, and left no status reports or deadlines on the matters they were handling. Among other objectionable conduct, they did not attempt to cooperate in sending a joint notice of the change to the clients. Instead, they sent out their own which made no mention of the prior firm’s continuing existence. Disapproving of such conduct, the Court cited to Opinion 1985-86 explaining that attorneys should cooperate with former employers to arrange for a joint notice, and that orderly transition is part of the professional obligation owned to the client.
 
Cooperation in preparing a joint notice is part of the professionalism and collegiality with which attorneys and firms should handle employment changes or law firm dissolutions. Whether in good economic times or not so good times like the present, the individuals involved, the profession on a whole, and most importantly, the client, are all better served by collegial and above-board conduct. Neither economic pressures to make money nor the general desire to win over a client justify departure from the guiding principle that the client’s interests come first.
 
--Luis E. Ventura
 
**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**