New ABA Formal Opinion 19-489 is titled, “Obligations Related to Notice When Lawyers Change Firms.” Op. 489 discusses obligations, of both law firms and departing lawyers, to treat each other fairly and to put client interests first. The opinion also discusses the departing lawyer’s obligations to give departure notices to clients and the firm. Op. 489 is part of the ABA’s ongoing effort to make law firm departures more orderly.
Op. 489 has two problems. It is sometimes more bully pulpit than clear interpretation of the Rules of Professional Conduct. And it is not always clear about the interaction of ethics rules with the laws of fiduciary duty, partnership, employment, etc.
Op. 489 states that law firms may require of a departing lawyer both, (1) “some advance notice of an intended departure;” and (2) “contemporaneous” notice of departure to clients and the firm. The firm’s “requirements” appear, however, to be contractual, rather than ethical. A lawyer’s breach of a law firm contract does not necessarily entail or even have relevance to a violation of an ethics rule.
The most noteworthy position of Op. 489 is, “Under the Model Rules, departing lawyers need not wait to inform clients of the fact of their impending departure, provided that the firm is informed contemporaneously.” Under the Rules of Professional Conduct, must a lawyer who is leaving a firm notify clients and the firm at the same time?
Twenty years ago, ABA Formal Opinion 99-414 stated, “The lawyer does not violate any Model Rule in notifying the current clients of her impending departure … before advising the firm of her intentions to resign, so long as the lawyer also advises the client of the client’s right to choose counsel and does not disparage her law firm or engage in conduct that involves dishonesty, fraud, deceit, or misrepresentation.” Does the “contemporaneous” notice requirement in 19-489 overrule the “before advising the firm” permission in 99-414? I think not, but I also think that a formal opinion should answer the question more clearly.
The answer to whether Ops. 19-489 and 99-414 harmonize on sequence and timing of departure notices is in the meaning of “contemporaneous.” Op. 489 does not define the term. However, Op. 489 states in passing that, “the departing lawyer and the firm each may unilaterally inform clients of the lawyer’s impending departure at or around the same time that the lawyer gives notice to the firm… .” This statement would be clearer if it were prefaced by, “By ‘contemporaneous,’ we mean… .” Op. 489 does not purport to make notice requirements “simultaneous.” If Op. 489 regarded the notice-to-client-first permission of Op. 99-414 as no longer tenable, surely it would have expressly said so. Apparently the departing lawyer may notify clients on day one, and notify the old firm on day two, or perhaps five, or perhaps even seven.
Op. 489 creates uncertainty by also stating that the “ethical obligations” of a departing lawyer, “include providing the firm with sufficient notice of the intended departure for the firm and departing lawyer to notify clients… .” This statement suggests notice to the firm before notice to clients.”
Opinion 489 states, “This opinion is based on the ABA Model Rules of Professional Conduct… . ” Which Model Rule or Rules purportedly require the lawyer to notify the firm and client contemporaneously? A word-search on “rule” in Op. 489 produces surprisingly few hits. Op. 489 refers to “ethical obligations,” without citing the rule that purportedly create the obligations. The cited rules that apply to the departing lawyer primarily relate to the lawyer’s duties to clients. Most of the cited rules apply primarily to the law firm.
Opinion 489 declares, “Lawyers and law firm management have ethical obligations to assure the orderly transition of client matters…,” when a lawyer departs the firm. Which rules apply to departing lawyers? Rule 1.4 (reasonable communication) requires lawyers to notify current clients of their impending departure. If a lawyer is leaving the client behind at the old firm, Rule 1.16 (terminating representation) applies. Rule 1.6 requires certain confidentiality measures as to former clients when joining a new firm. There is no general “orderly transition” rule and these specific rules, cited in Op. 489, do not create obligations of a departing lawyer to the firm.
As a preface to the contemporaneous notice requirement, Op. 489 cites Rule 5.1. This rule provides that lawyers with managerial responsibility, “shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.” Rule 5.1 requires systems and measures to comply with the other rules. Op. 99-414 identified several such rules, as to which both the departing lawyer and the old firm must ensure compliance, e.g. that clients be notified of the departure and choice of lawyer, and that client files and confidential information be properly handled. However, Op. 99-414 also indicates that such responsibilities can be met without prior or even contemporaneous departure notice to the firm.
Rule 5.6 is by far the most-cited rule in Op. 489. Rule 5.6 generally forbids law firms and lawyers to enter into an “agreement that restricts the right of a lawyer to practice after termination of the relationship. …” Op. 489 warns law firms not to use departure notification requirements unreasonably, as when “they would affect a client’s choice of counsel or serve as a financial disincentive to a competitive departure,…”1
Such warnings could be needed if the lawyer contemporaneously notified the firm and clients of departure, and the firm exploited the situation by running a full-court press on clients to stay with the firm, while hindering the departing lawyer’s client communications. The Restatement of the Law Governing Lawyers would allow departing lawyers to solicit their active clients while they are still with the old firm if they first notify the firm, but a leading commentary states, “there is case law to the contrary.”2
The ABA often issues formal opinions to harvest the best of recent state bar opinions. However, Op. 489 cites only a few opinions, mostly to support the statement, “In the event that a firm and a departing lawyer cannot promptly agree on the terms of a joint letter [to affected clients], a law firm cannot prohibit the departing lawyer from soliciting clients.”
The goal of Op. 489 is admirable – to continue the ABA’s efforts, undertaken in Op. 99-414, to make law firm departures more orderly, for the benefit of clients. The ABA has made positive contributions, but the ABA can only do so much, for several reasons.
First, the rules themselves say very little about obligations and prohibitions between lawyers and their firms. Second, civil laws of partnership, agency, fiduciary duty, employment, tortious interference, etc. cover many lawyer departure issues. The rules do not cover all civil law issues, and the ABA has no special expertise regarding these laws. Third, because civil laws vary among jurisdictions, a national authority like the ABA cannot declare a single set of obligations. To these inherent limitations, Op. 489 unfortunately adds a lack of clarity about two crucial matters – the sequence of notices to client and the firm, and the specific rules that create certain purported obligations.
Minnesota law is sparse on departure notice issues. An unpublished case held that an associate who notified clients of departure before notifying the firm did not breach fiduciary duty or breach a general, implied employment contract.3 Two OLPR articles suggest that attempting a joint notice to clients is generally desirable, but the articles do not consider the issue of sequence of notices to clients and the firm.4
For further, more detailed consideration of the issues above, albeit from a perspective antedating Op. 489, excellent reviews of pertinent civil and ethics law are available.5