Ethics Opinion Articles - NC State Bar Journal

The Firms, They are a' Changin'

By Deanna S. Brocker

Partners and associates come and go, but the questions remain the same. I get at least one call a day from either an attorney who has decided the pastures are greener somewhere else, or a managing partner who's just received an associate's notice. No matter what the specific circumstances are, the attorneys have the same general inquiry: How do I handle the separation in the right way?

There are three concerns for both the firm and the departing lawyer. The first is client notification—that is, which clients must be notified of the departure, who may contact the clients, how should notice be given, and what should the notice say. The second is client files—when should the file be transferred and should copies be made by the firm. The final concern is legal fees—how are they to be divided?

When an attorney leaves a firm, every current client with whom the departing attorney has a personal professional relationship must be notified. Although a client may have a contractual relationship with a law firm, any professional relationship with regard to legal matters is necessarily personal as between the client and at least one identifiable attorney. If an attorney has some responsibility for the client's legal matter and has had personal contact with the client, then a personal professional relationship exists. An attorney, who merely has consulted on a particular matter or performed research on a specific legal issue but has never met the client, does not have a personal professional relationship with the client. See RPC 200.

Ideally, the departing attorney and the firm will agree on the content of the notice, who will send it, to whom it will be sent, and when it will be sent. Ultimately, any attorney in the firm who has an ongoing professional relationship with the client has an obligation to see that the notice is sent. The notice should inform the client of the attorney's departure and of the right to choose counsel freely. Specifically, the client should be advised of the option to stay with the firm, continue with the departing attorney, or retain completely new counsel. The notice also should inform the client of the need to instruct the firm what to do with the file. If necessary, the notice may apprise the client of the status of the matter and whether a decision as to representation needs to be made on an expedited basis. See RPC’s 48 and 200.
Although written notice is preferable, the notice need not be in writing or made jointly by the firm and the attorney. RPC 200. If the attorney has a personal professional relationship with the client, he also may contact the client personally or by telephone. Likewise, a representative attorney with the firm also may contact the client directly to notify her of the departure and advise her of the right to freely choose counsel. Both the firm and the departing attorney may express to the client an interest in continuing to represent her.

On occasion, an associate may feel the need to notify clients of his departure before informing his firm. Even though this practice is not specifically prohibited by the Rules of Professional Conduct, I always advise against it. As a matter of professionalism, the firm ought to be informed first so that the firm can assist in handling the separation in the appropriate manner. Likewise, denying a departing attorney access to a client contact list or refusing to reveal to inquiring clients the whereabouts of a former partner or associate not only is unprofessional conduct but also violates the Rules of Professional Conduct. See RPC 48 and Rule 8.4(c).

Another concern is client files. When may the files be transferred to the departing attorney or other counsel? The files may be transferred only after receiving a directive from the client. When an attorney leaves a firm, he may not take files with him unless the client already has elected to follow the attorney. An oral directive is technically sufficient; however, a written directive will eliminate uncertainty about the client's decision. It is important that the client be given enough notice about the departure so that her file may be transferred promptly. In this way, the client's interests will not be prejudiced should she choose to leave the firm.

If a client chooses to go with the departing attorney, the firm may have a reasonable period of time to copy the file before transferring it. The copying may not, however, interfere with the client's representation. If the departing attorney needs the file immediately, arrangements should be made to have the file available for the firm to copy at a later time. The firm is responsible for any copying charges. See generally RPC 178.

Finally, an area of some contention is the division of legal fees. Suppose an attorney leaves a firm and takes a client with him before the client's representation is complete. A significant advance fee was collected and placed in trust. Upon final settlement or judgment, how will the fee be divided?

Until the attorney leaves the firm, the attorney's employment agreement governs how the fee is handled. For example, if the attorney is an associate, he is paid a salary for work done up to the date of departure. The firm would take that portion of the fee earned and expenses incurred as of that date. The remainder of the fee ordinarily would go to the attorney who completes the matter. Similarly, if the client had a contingent fee arrangement with the firm, the departing associate and the firm should agree on a proportional division of the fee based upon the amount of time expended before the attorney left the firm and the amount of time spent to complete the matter.
Rule 1.5(e) of the Revised Rules of Professional Conduct allows fees to be divided between lawyers not in the same firm under certain circumstances. Thus, the firm and departing attorney may agree to divide the fee for work done subsequently by the departing attorney under Rule 1.5(e).

Pursuant to that rule, the firm could take a portion of the fee earned after the attorney left only by written agreement with the client wherein the departing lawyer and the firm assume joint responsibility for the representation. Rule 1.5(e). Apart from Rule 1.5(e)'s requirements, the State Bar does not ordinarily become involved with disputes between attorneys over legal fees, so long as (1) the lawyers deal honestly with one another, (2) the client does not pay more than he originally agreed, and (3) the client is not dragged into the dispute.

Sometimes, when firms dissolve or when associates leave a firm, the separation gives rise to disputes amongst the attorneys. As a matter of professional responsibility and professionalism, it is paramount that such disputes be resolved amicably if possible, without client involvement. Although the firms are "a' changin'," the professional responsibility to protect the clients' interests remains the same.

Deanna S. Brocker is the ethics counsel for the North Carolina State Bar.

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