By Don P. Foster
Special to the Legal
Lawyers are changing law firms at an ever-increasing rate. No news there. The reasons are manifold and include personality conflicts, culture, career advancement, boredom or even following a spouse or significant other to another city or state. But face it, we all know that there is one over-arching reason why an attorney changes firms … money. The increasing commoditization of the legal profession, or at least of the attorneys that comprise the profession, has created an environment in which the attorney’s value – and, hence, his or her compensation – is measured by the number of dollars the attorney controls, and has created a market place where attorneys are for sale to the highest bidder.
If the goal is more money and that goal can only be realized if the successor firm enjoys the financial benefit of the attorney’s portable book of business, there are powerful incentives for the attorney to make sure the book is as thick as he or she represents it to be to any potential new firm – and that it is, in fact, portable. There are equally powerful incentives on the firm and individual attorneys who might inherit the business to retain as many of the clients serviced by the departing lawyer as possible. This is the ugly tension created by lateral moves of attorneys from one firm to another and implicates legal ethics, the law of fiduciaries (including partnership law), and common law principles of contract and unfair competition. See the ABA Commission on Ethics and Professional Responsibility, which says: “The departing lawyer must also consider legal obligations other than ethics rules that apply to [his/her] conduct when changing firms, as well as … fiduciary duties owed the former firm. The law of agency, partnership, property, contracts, and unfair competition impose obligations that are not addressed directly by the Model Rules …”
The next two posts in this series, which will be published over the next two days, are a check-list of “do’s” and “don’ts” when an attorney moves to another law firm. The list is prepared from the vantage point of the departing lawyer, but largely applies to the law firm – for example, the proscription against non-disparagement. The list is a by-product of Joint Formal Opinion 2007-300, “Ethical Obligations When A Lawyer Changes Firms,” case law and experience. It is not exhaustive because the rules can change somewhat from state to state depending upon what a partnership or employment agreement provides and how the courts interpret those agreements.
Check back on Wednesday for Part 2.
Don P. Foster is a principal at Offit Kurman, which he recently joined as a lateral from another Philadelphia firm. He has represented both attorneys and firms in matters related to departures, dissolutions and related compensation.
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