|Mark F. Vetter, Davis & Kuelthau sc; Dean R. Dietrich, Ruder Ware; Laura Skilton Verhoff, Stafford Rosenbaum LLP; Michael J. Klinker, Whyte Hirschboeck Dudek SC; Nathaniel Cade Jr., Michael Best & Friedrich LLP; Milwaukee County District Attorney E. Michael McCann.|
More and more lawyers are changing firms multiple times during their careers. Whether they are smooth or acrimonious, those transitions create challenges for the lawyer making the move, the old law firm, the new firm and clients who may be caught in the middle. Wisconsin Law Journal editor Tony Anderson met with a panel of law firm leaders and ethics specialists to discuss some of the things lawyers and law firms need to keep in mind when a lawyer moves. What follows is part one of their roundtable discussion.
WISCONSIN LAW JOURNAL: What are a few of the key things that lawyers and law firms need to keep in mind when a lawyer leaves?
DEAN R. DIETRICH: There are probably two key things. One is communication. Lawyers who are departing law firms have an obligation to communicate with the clients, who they have worked with or provided services to. Tell them they are leaving and explain what is happening with the file. As part of that communication, they generally will communicate that the client has a right to choose between keeping the file with the law firm, having the file go with the departing lawyer or going with another lawyer.
That same duty to communicate applies to the law firm as well. They have a duty to advise and keep the client informed as to what is happening. So there is a whole host of communication issues that need to be considered right from the start.
Dean R. Dietrich
Dean R. Dietrich practices Labor/Employment, Municipal and School Law at Ruder Ware in Wausau. Dietrich is treasurer of the State Bar of Wisconsin. He chaired the State Bar’s Committee on Professional Ethics from 2000-02 and is a member of the Professionalism Committee.
The second thing is conflicts of interest. The big concern becomes if a lawyer is transferring from law firm A to law firm B, are there conflicts? Are there cases that involve both of those law firms where due to the transfer, one or the other of the law firms has to be removed from the case or withdraw from it?
MARK F. VETTER: Let me add a third thing to what Dean was suggesting. I would say that you have to get a good handle on what was pending what the attorney was working on. As an addition to the communication vehicles, which Dean was referring to which are critical, you don’t want anything to lapse in that period of time when the attorney announces he or she is leaving and the time when they actually do leave. That’s absolutely critical in that respect.
DIETRICH: And it’s a problem when the departure is not necessarily amicable or an announced departure.
VETTER: Our experience has been that when someone is leaving and going with another competing firm, the issues are different than if the person is going to one of our clients to be an in-house counsel, is going off to start some type of non-legal business, is going to a public sector position, or is going to a political position. There, everyone is obviously on the same page. But if it’s a competitor there is more tension involved.
NATHANIEL CADE JR.: The one thing lawyers should keep in mind is that above all else, the client is paramount. Yes, the departing lawyer has duties, the law firm has duties, but everyone needs to remember that it’s about the client. If you, the departing lawyer, allow a deadline to lapse, your response cannot be, "Well, I was leaving the firm, it’s their responsibility." When OLR calls, or there is a malpractice claim, you might as well tell your new firm that there will be a potential claim there.
The other thing is communication. The legal business is not something where you can just give your two-weeks notice and walk out. It does take some advanced planning. You have to be adults on both sides. Mark had mentioned this tension of a competing law firm. That certainly is there, but if everyone realizes that the client is paramount and they act as adults, it should not be a problem. It’s kind of like parents divorcing when there is a child.
With regard to the firm where the lawyer is departing, there should be a lawyer or group of lawyers responsible for overseeing the transition. That’s true if someone voluntarily leaves, involuntarily leaves, dies or gets sick. The same rules apply someone should have the ability to quickly go through the files. It may take a few days, but most lawyers can scan through the files, try to figure out what the relevant dates are statute of limitations, filing deadlines, things like that. If there’s a deadline that has not passed other than a statute of limitation or something statutory, you can almost always get an extension. Write the court and let them know there’s a transition of counsel. Call the opposing counsel. Generally, they will allow that. It’s those dates which are absolute that you have to have a handle on. Once you do that, then all the other stuff falls into place.
Laura Skilton Verhoff
Laura Skilton Verhoff is a partner at Stafford Rosenbaum LLP in Madison. Her practice focuses on litigation, including litigation involving vehicle manufacturers and dealers, collection, subrogation and insurance litigation. She also handles a broad range of estate planning and probate matters.
LAURA SKILTON VERHOFF: I agree with everything that was said so far. The only thing that I would add is that the other
part of communication that seems important to me is the in-house communication between the lawyer who is leaving and the lawyers that are staying. If the lawyers who are leaving are talking with clients and staff, before they announce that they are leaving, that can leave some hard feelings in the wake. To make things run smoothly, it’s important to make the in-house communication among lawyers open.
DIETRICH: There have been several cases that have come down that have found improper conduct by the departing lawyer trying to recruit staff. They note the fiduciary duty owed by the departing lawyer to the law firm the duty of loyalty. It was not litigated much in the past, but now we are seeing some cases one that came out of California that found liability and damages for the conduct of the departing lawyer.
E. MICHAEL MCCANN: My work is in the public sector and the rules in the public sector are quite different. Basically, if a lawyer is leaving to join another governmental agency, there isn’t any problem, whether it’s a local, state or federal agency. It’s usually a cooperative situation. When there’s a qualified lawyer and another agency decides to engage him or her, he has the duty to alert us. We always ask that the lawyer prepare a brief on the status of the case.
I have not, in the past, required the lawyers to notify the victims in the cases, except for one case. The cases define the client as the governmental agency. There was one case where the Wisconsin appellate court referred to a victim as a client. That’s rather unusual. In almost all sectors, the government agency is viewed as the client.
There are constraints about seeking jobs with private agencies, private individuals or corporations. The problem arises when the lawyer is hired by a client who is the subject of government scrutiny, investigation or prosecution. There, the rules are very clear that if the lawyer played a substantial role in the prosecution, he or she cannot join and serve the defendant, unless there is an express consent from the governmental agency.
There is a provision that if a firm represents a client that was the subject of an investigation, if they completely isolate the former governmental lawyer from any role in the representation of the client that was under investigation of prosecution, they can do that.
In the private sector, we have very rarely had complaints that a lawyer leaving government has somehow lined himself up with a defendant or the law firm of a defendant in an objectionable way.
Mark F. Vetter
Mark F. Vetter is the president of Davis & Kuelthau sc where he is responsible for implementing the firm’s strategic plan and managing the operations of the firm’s main office and five branch offices. He focuses his practice in the areas of private and public sector labor and employment law and school law.
MICHAEL J. KLINKER: Going last in this conversation, there’s not much room to improve on the answers that have been given so far. The point that we try to go back to is that while it may not be amicable, it should certainly be professional. That goes back to the perspective of what’s important to serve the client. You want to make sure their rights are not prejudiced.
The other policy point of view that the state of Wisconsin and our courts have expressed is that clients get to choose, so we really don’t have much room to stand in the way of that proposition.
DIETRICH: When you are dealing with the larger firms, either because there are other lawyers there to handle things or because it’s something that happens more often, it tends to be handled in a professional manner. I’ve seen a lot of instances where it is the two-person or the four-person firm where the departure does not go well. And there’s this fighting over the client list. There is a lot of controversy about the degree to which that departing lawyer can say things to clients before walking out the door. There’s the duty of loyalty, but there are also some ethical responsibilities that you can’t be communicating things that are going to adversely affect the relationship between the client and the law firm.
KLINKER: You are right. You don’t have to tell all of the clients of your law firm that this lawyer is leaving. There can be a core group of people who should receive the letter. There is that wider fringe where you say, "I brought this client to the firm. The lawyer who is leaving the firm did some work for that client. How active is that work right now?"
VETTER: The client is still going to make the final decision. I would anticipate that most of us with our firms have a specific engagement letter with clients, which indicates they are clients of the firm; they are not clients of the individual attorney. That’s very important as we move forward, as well. Make sure that distinction is clarified.
DIETRICH: What do you do when the attorney is looking to come with your firm? To what degree do you probe that attorney as to the clients that they represent?
Michael J. Klinker
Michael J. Klinker is Vice President of Whyte Hirschboeck Dudek SC, and is in charge of the Business and Planning practice areas. In that capacity, he oversees about 50 attorneys and is responsible for professional recruitment in those areas. His practice areas include charitable/nonprofit organizations, China practice, corporate transactions and business law, health care law, private equity and securities.
VETTER: We do it very extensively because of the conflict issue. We had a situation a number of years ago, which did not involve any of the firms represented at the table here today. We had an ad out and a second-year associate from a firm applied for the position. We made an offer. The person accepted. Then we found out that that individual had done one minor research memo on a case where we were adverse to the other firm.
Technically, I don’t think it would have been a problem if we went into court. We probably
would not have been disqualified on the case. But we tried to take the high road on it and talk to the other firm. But they would not waive the conflict for this one-page research memo that didn’t even deal with the crux of the case. To me, that was not the high road. On neither side would the clients have been affected by it, but we were concerned for our client. If this had thrown a red herring into the case, it just wouldn’t have been fair to our client. So we had to withdraw the offer because we didn’t want to take that chance.
CADE: We have an associate who we just hired, who was going from one small firm in town to another small firm in town. He had worked on the opposite side. He did the same type of research memo. The first firm played hardball. Not only did that create bad feelings, but the firm that he was leaving now knew he wanted to leave, so all the partners started to shun him.
There is going to be some instance in the future where that person is dealing with that firm and they are going to want a professional courtesy and he’s going to say, "No." The attorney he’s dealing with may not understand what happened years ago. That’s why I say, "Take the high road. Be an adult."
All they had to do in your case was issue a screen memo saying, "This person will not work on the file."
VETTER: That was exactly what we proposed. He wouldn’t have been involved, wouldn’t have any dealings. In fact, it was even more extreme than that. This particular case was being handled out of our Milwaukee office. The new attorney was going to be working out of our Madison office.
Nathaniel Cade Jr.
Nathaniel Cade Jr. is a partner practicing in litigation at Michael Best & Friedrich LLP in Milwaukee. He is a member of the firm’s Tort Liability Focus Group and has experience in products and premises liability, tort law, personal injury defense, construction law, insurance defense and commercial litigation. He chairs the State Bar’s Committee on Professional Ethics and served on the Ethics 2000 Commission.
DIETRICH: We’re all talking within the context of conflicts related to litigation cases. I’m not so sure the departing lawyer should be disclosing the names of all the clients he has worked with at the old firm.
KLINKER: Technology can come into play to help us. We normally do conflict checks, and so on. Obviously when we open new matters, we have over the years tried to build a database that includes not only parties, but who’s the adverse counsel, and those sorts of things. So we can check to see in what matters we are adverse to Davis & Kuelthau, for example.
WLJ: There was some discussion early on about the fact that law firms and the departing lawyer need to be communicating with the client. How does that communication take place?
DIETRICH: Well, the American Bar Association and State Bar of Wisconsin have issued ethics opinions that strongly recommend a joint letter be sent. It does depend upon the circumstances. When the lawyer is departing to open a competing law firm, it’s difficult to expect that type of a letter to go out from both the existing law firm and the lawyer who’s departing.
There’s a great deal of controversy as to the obligations, once that letter goes out. That’s really where often the departing lawyer may step over the line by having further communication with that client they previously worked with, even though they’ve now transferred to the new law firm. That’s not clear what the rules are.
VETTER: I think there’s a big difference between communication while you’re still employed at your current firm and communication after you leave. You referred to it earlier as the duty of loyalty, fiduciary obligation to your firm, and so on. Other than the joint letter, unless there’s a call coming from the client to the departing attorney, I don’t believe that attorney should make a call to the client soliciting the work for their prospective firm.
DIETRICH: I think that’s the standard that applies.
CADE: While they are still at the old firm?
VETTER: That’s correct while they’re still at the old firm.
CADE: Turn your computer off. As soon as you walk out the door, it’s a different ballgame.
E. Michael McCann
E. Michael McCann has run the Milwaukee County District Attorney’s office continuously since his first election in 1968. He oversees an agency with five deputy district attorneys and a legal staff composed of approximately 125 assistant district attorneys.
DIETRICH: But there are a lot of different interpretations of what you can and cannot do after you depart.
KLINKER: I think it’s reasonable to expect when a client gets this joint letter, there’s going to be at least one inbound call from the client. "I have this letter. What is this all about?" It may go to the person who’s departing, or it may go to someone else at the firm. Certainly you expect fair play. I think you also expect that there’s some modicum of self interest at work here, and somebody’s going to be an advocate for moving that client.
DIETRICH: When you have a two-person firm that’s breaking up, the question of how to handle the fee splitting issue comes up. That always becomes very difficult.
CADE: There’s actually a case that was in the Court of Appeals recently. I know there’s a petition in State Supreme Court, but I don’t think it’s been granted yet. It’s Piaskoski [& Associates v. Carl L. Ricciardi]. Essentially, an ass
ociate left a law firm. He did contingency work and there was an issue as to who should get the fee.
There was an agreement that was done above board regarding which clients wanted to go with the departing associate.
Then there was an issue in terms of how the fees were to be split. The associate sent a letter [detailing the agreement] to the law firm, but he didn’t hear back from them. He sent them checks [from nine] cases. Then when a case [with a $780,000 settlement and a $227,542 fee came in], he never sent a check. The old firm filed a lawsuit saying you owe us 50 percent of the money. The former associate said, "You never agreed to my offer. Therefore, I withdraw it, and it’s void."
The Court of Appeals came down saying there was an agreement, it was accepted because these other checks were accepted, and all this work was done. It was interesting because the departing associate tried to argue that it was improper fee splitting. The court found it wasn’t, because the agreement was made while the associate was still at the firm. I’m not sure what the Supreme Court will do.
Obviously, if they don’t have that fee agreement when the person leaves, it’s a whole different issue under the rules, because now you have essentially a joint responsibility for the matter. It’s not clear once you’ve departed and you take the client with you, that the old firm is going to want to have that joint responsibility.
WLJ: We had discussed internal communication with regard to where cases are, and existing deadlines. How does that play out in the district attorney’s office when somebody departs?
MCCANN: It’s very much the same. What we don’t do, generally, which might be subject to improvement, is notify the victim in the case, because the client is viewed as the government.
The volume in misdemeanor court is so high, it would be almost impossible to expect an assistant to do a memo on each misdemeanor. A high-profile misdemeanor with peculiar problems, I would want a memo on. But the felony assistants prepare a memo briefly on the status of the case. They are part of a team, so frequently there will be some knowledge on behalf of another assistant district attorney of that case.
There’s no economic incentive, which I think probably generates the disputes which occur in the private sector. It’s just a matter of professionally serving the victim well and the government agency well.
VETTER: Before you get on to a different topic. We’ve all talked about the right way to do things. In the real world we all have had situations with our firms where there are departing partners/shareholders who did it the absolute wrong way. All the contacts with the clients where they’re aggressively pursuing it while they’re still employed by the firm they’re departing from.
I’ll raise a couple of issues there. One, do you, as the firm that they’re leaving, want to take an aggressive posture on that? It is very difficult, because if you do, often the client looks at you and asks, "What is your problem?" There’s a backlash, actually.
The client’s primary contact has been with the person leaving. It’s a very delicate situation. [If you threaten a lawsuit], you’ll never keep the client then under those circumstances. Is there any ethical obligation that we have, or that the firm has if somebody is taking a position or following a course of conduct which is in violation of the code?
DIETRICH: If a lawyer is violating the rules of professional conduct, you have to do an initial analysis as to whether or not the behavior reflects negatively upon the departing lawyer, and their reputation, their honesty, their truthfulness to the extent that you may have a duty to report that lawyer. In doing a lot of discussions with different lawyers about that, generally, the behavior doesn’t rise to the level that it would be reported to the Office of Lawyer Regulation.
Interestingly, you could make that a threat, and not be in trouble under the rules. You have an obligation, as the departed law firm, to make sure that you have staff available to do the work, and that you preserve the files. But, I think, it’s a rare circumstance that you would have an obligation to report on a departing lawyer based on their behavior.
KLINKER: It seems to me that you’re angry about it, and you think to yourself, "Well, we’re lawyers, so we’ll sue this guy." But who are the witnesses going to be to establish his bad behavior? It’s your clients. Now you’re dealing the client in the middle, and ultimately you say, "I don’t want to do that."
MCCANN: Going back to the issue of an employee coming in to the firm and being sensitive to the possibility of conflicts with existing clients we have had situations where a person, say a public defender or a person representing a defendant, applies to become an assistant district attorney. The unknowing client who’s being represented by the defense attorney, doesn’t appreciate that his lawyer is pursuing a job with the district attorney’s office.
Most of us know as lawyers that such an individual will aggressively represent this client in order to show the district attorney that he’s truly a qualified lawyer who ought to be hired. The client doesn’t see it that way at all. The client says, "This man was trying to curry favor with the district attorney, and perhaps compromise my representation to my detriment."
It’s case law, that the attorney who’s pursuing this job has to tell the defendant. I’d like to see that on the record if at all possible. When we have these applications, we handle them as expeditiously a
s possible, so that they don’t come back later and haunt us on a case. A young lawyer who’s applying to become an assistant district attorney, should be aware of that. Be sensitive to that.