May 29, 2009 7:37 PM
Making a Move: On Graceful (Conflict-Free) Exits
Posted by Brian Baxter
Our Churn columns have been busier than ever these days with lawyers switching Am Law firms. We'd like to believe all the partings have been amicable, but we know breakups aren't always easy.
The Am Law Daily asked McDermott Will & Emery partner William Schuman, chairman of the firm's professional responsibility committee since 1994, how to make a graceful exit.
With all the lateral movement over the past few months, what's the biggest thing partners need to know before heading out the door?
The first thing to remember is you're not allowed to solicit clients or the associates of your firm while you're still there. You can't take stuff that doesn't belong to you.
But when you're at your new firm you can?
Once you're gone you can solicit your old clients. But that's much different from telling a client while still at your old firm, 'Hey, I'm leaving, but I haven't told anyone yet and would like you to come with me.' That's solicitation and there is an ABA opinion on this.
Don't clients have a right to know what their lawyer's intentions are?
Some clients have a need to know, especially if they've got an urgent matter--like if they could be harmed when a transaction is supposed to close or a trial is about to begin. There certainly is a tension there that I wrote about in Legal Times a few years ago.
What should you say in that situation?
In an emergency circumstance, you're allowed to call your client and tell them you're leaving. You can give them three options: come with you to your new firm, stay at the old firm, or go with another firm entirely. You just tell them those options so they can evaluate them. I liken it to the Miranda warnings.
You're informing them of their rights.
That's right. The right way to go about this is to at least let your firm know that you're planning on moving before you tell your clients. Each firm has varying protocols in their partnership agreements for how much notice their partners must give before leaving.
What about recruiting associates?
Most associates can leave on their own. But there's a difference between them leaving and a partner pursuing them so they want to leave. Lawyers have to move properly and not breach their fiduciary obligations.
We've seen some folks starting their own firms. What type of preparation are they allowed to make while still at their old firms?
You're allowed to go to a bank and get a credit line or rent office space so you don't have to start the process after you leave. That prep work is fine because you're not hurting clients or doing anything wrong vis-à-vis your partners.
What kind of business information are you allowed to disclose about your former firm and what do you need to keep confidential?
What you make is not confidential, so that's fine. In the old days billing rates, what associates make, and other financial information was usually confidential. A lot of that has changed with the Internet. There is so much now that's public at the click of a button, so it's tough to give an absolute answer. If there's any doubt just leave it behind.
Do you think the economic downturn is making departures messier?
Definitely. So many firms are in distress and as they disintegrate, there may be claims that they were hurt when certain practice groups left incorrectly. We saw that with Brobeck. It's certainly getting hotter right now--all the more reason to move carefully.
Do you counsel other lawyers in this area?
All the time. I'm a conservative guy, so I always err on the side of caution. These people are not only your partners, but often your friends. The more open you are, the better. If things get nasty, you still have a duty to protect the client's interest.
This all seems fairly nuanced.
It is. Frankly, the cases in different states aren't consistent. Some states are tougher than others on the communication issues. But if you're careful, conservative, and aren't afraid to seek advice, there's no reason these things should end up in litigation.
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