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Avoid a bad break-up when leaving a law firm

By: dmc-admin//September 14, 2009//

Avoid a bad break-up when leaving a law firm

By: dmc-admin//September 14, 2009//

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Like many businesses during the recession, law firms have suffered their share of cutbacks.

But attorneys who leave a firm, either voluntarily or involuntarily, should do so professionally, say ethics experts, even though in a down economy there is greater temptation to try and retain clients.

“It’s not an auction or competition or dividing a property,” said University of Wisconsin Law School Professor Ralph Cagle. “It is client’s free, informed choice.”

Departures are “best handled by a joint letter that gives the client the opportunity to chose who they wish to have represent them,” said attorney Dean R. Dietrich, chair of the State Bar of Wisconsin’s Professional Ethics Committee.

While Wisconsin firms have not seen the same level of job loss as some other states, Dietrich said there has been a slight increase in the number of attorneys calling the bar’s ethics hotline and he generally offers the same advice.

“Be very aware of your duty to communicate with a client and handle your departure in a professional manner,” he said.

But that is sometimes easier said than done.

In his experience representing attorneys in professional ethics cases, attorney Daniel L. Shneidman says involuntary departures are often “worse than a divorce.”

He said the most dramatic situations involve attorneys who try to take their client list or other files with them when they leave.

“You get the events where a lawyer comes into the office and takes all the files at 2 a.m.,” he said.

The state’s Rules of Professional Conduct dictate that both the departing lawyer and law firm have a responsibility to act in the clients’ best interests and inform them of any potential changes in representation.

In most scenarios, case files and existing clients are the property of the firm, not the attorney.

“What really becomes troublesome,” said Dietrich, “is action taken by a departing lawyer to attempt to acquire those clients secretively.”

Shneidman said he’s handled cases in which a departing lawyer has been ordered by the court to reimburse the firm for time spent in the office marketing to keep a client.

Even though the attorney properly notified the client of his pending departure, Shneidman said judges concluded, “You did quite a bit of it on your employer’s time, and therefore you can keep the client, but have to pay back the firm all your salary.”

The moral of the story, said Shneidman, is “don’t use the boss’ phone to take business away from the boss.”

Cagle has advised both attorneys and firms in separations and said if a lawyer secretively takes clients, it can result in litigation or breach of fiduciary responsibility or contract claims.

“The concern for new firms who bring on that attorney is they could become parties to a lawsuit,” he said.

According to Dietrich, state rules and case law are “gray” when it comes to determining intellectual property issues if an attorney is laid off.

For example, a summary judgment may have been filed in a case, and while the research and paperwork were generated under the auspice of the firm, the ideas for the arguments were created by the individual lawyer.

If that lawyer is then let go, the argument is “that the lawyer is entitled to copies of the documents because [he or she has] some intellectual property rights,” Dietrich said.

“Those issues are not well defined,” he noted.

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