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The Ultimate Guide to Switching Law Firms
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Introduction
You've thought it over, considered your choices, and have concluded that the right next step for you is to leave your current law firm. Perhaps some friends have asked you to come along and help create a new firm with them. Or, you’ve decided to take the plunge and go solo. Whatever your reasons, once you’ve decided to make a change, there are lots of things to think about and lots of steps to take to ensure a transition that is as smooth, ethical, and professionally safe as possible.
Switching employers in the legal profession is not as straightforward or simple as it may seem to be in other professions. Beyond putting your personal mementos in a file box and waving goodbye to your colleagues as you wistfully but confidently walk out the door like in the last scene of a beloved television workplace sitcom, lawyers must address a wide range of practice rules and ethical and risk concerns before they close one office door and open the next.
Issues to be cognizant of in the process include ongoing professional duties of confidentiality and avoidance of conflicts, compliance with practice rules regarding solicitation of clients and withdrawal from representations, established law regarding business torts, and any contractual obligations arising under practice agreements or employment contracts.
Generally, the applicable rules and duties fall into the following categories:
Duties To Your Current Firm
- Compliance with contractual agreements
- Fiduciary and other legal duties to the entity and to individual colleagues
Duties To Clients
- Communication
- Confidentiality
- Avoidance of Conflicts
- Rules related to termination of representations
- Rules related to solicitation of clients
- Rules regarding protection of clients’ property
- Clients’ rights concerning selection of counsel
Most lawyers looking to leave their current practice are aware that they need to think about when and what they can tell their current and past clients; how much prep work they can do before announcing their decision to leave; and how they can comply with confidentiality and conflicts rules before, during, and after they switch. Not nearly as many lawyers put professional liability risk control into that mix— but they should.
This ebook offers insight into these issues, providing practical tips to help you navigate your path to a new practice properly and safely, with an eye toward lowering the risk that you will violate some professinal obligations along the way, so that facing a claim for professional liability, business interference, or ethical breaches is not something else you need to juggle as you start your new venture.
Section 01
Preliminary Planning
Whether you are a shareholder looking to take a group of people with you to start a whole new practice, or a long-time large firm lawyer deciding to pursue your dream of going solo and working from that beautiful sun room in the back of your house, there a number of preliminary steps to take before you actually make your move.
There Are Business Issues To Consider
- Where will my office be?
- How much money will I need in the bank?
- What should I call the new firm?
- What type of practice will I concentrate in?
- When should I go?
Luckily, you are not the first lawyer who has ever decided to switch firms or leave a practice to start a new one. And you won’t be the last. That means there are already many articles, handbooks, and other references out there that provide direction to help you with the business of starting a new firm. ABA Ethics Formal Opinion 99-414 is a good starting reference, providing easy to follow analysis of the potential pitfalls a lawyer can face when switching firms, and offering a broad set of guidelines for complying with applicable ethics rules.
Note, though, that there is not universal agreement across jurisdictions regarding what is allowed; you must consult your local jurisdictional rules and opinions for the particulars of your circumstance. We’ve included a list of several in an appendix to this ebook, as well as a checklist to help you keep track of some of the most important steps to keep in mind.
Knowing how many of these steps you may take while still working at your current firm and before telling anyone there of your plans is another challenge altogether. It turns out that, actually, you may do quite a lot before announcing your departure, as long as you remain cognizant of your legal and ethical duties to your current firm and colleagues, as well as those you owe to current, past, and potential clients.
Selected References To Examine When Planning to Switch Law Firms
Section 02
Review Agreements
Your first step upon concluding that you want to move on is to dig out and thoroughly examine any partnership, shareholder, or employment agreements you entered into at your current workplace. You want to look for any clauses that dictate actions you must take to implement your departure. These might include minimum notice periods, shareholder buy-out requirements, forfeiture of non-vested retirement funds, or other financial consequences. If you don’t have an actual employment contract, review any employee handbooks for similar rules and consequences. Once armed with this information, you can incorporate it into your departure planning process.
Risk Control Tip
Beyond complying with the letter of written agreements and basic parameters of tort law, you should also consider some more customized actions designed to help diffuse possible professional liability or business claims arising from the way you handle your departure. Generally, a good rule of thumb to remember is, just because you are allowed to do something under your agreement or the broader rules doesn’t mean you should do it. The safest course of action will always be down a path of cooperation—with the firm you are leaving and with your soon-to-be-ex colleagues and clients. Adapt your actions to the circumstances and the personalities in play.
Do you have a client or a partner who requires a lot of hand-holding and reassurance? Try to give them as much lead time and personal communication as possible to help them get used to the idea of your departure.
Is there someone in the firm who is known to take issue with attorneys who show “disloyalty” by moving on? A little extra attention and deference to them, coupled with a strong effort to cross your T’s and dot your I’s, may well be enough to soften their attitude and keep them from looking for ways to put roadblocks in your path.
Additionally, if you are leaving a general partnership, remember that your departure will trigger a legal dissolution of the entire partnership, causing the remaining partners to have to follow some sort of “winding down” and reorganization. Even if that process is relatively formulaic, it is another reminder that your decision will cause more work and stress for them. Anything you can do to ease that stress and help them navigate the transition more comfortably is a step further away from the risk that they will lash out—including bringing suit—over your departure.
Section 03
Excercising Caution
You have certain ethical and legal obligations that require you to consider your current firm’s and colleagues’ business interests when planning and executing your departure. Those obligations lie in practice and ethics rules, contract law, and general business law. For instance, while you are a member or employee of your current firm, you mustn’t exploit your position for your own personal gain to the detriment of the firm. In other words, you should be careful not to appropriate your current firm’s resources for your own benefit or compromise your work for the firm or your current clients, and avoid interfering with your current firm’s prospective economic gain or current contracts with vendors, clients, or others.
What This Means In Practical Terms
- Don’t use firm resources like its season tickets to the football game to wine and dine a potential new partner or to woo a client to follow you in your new venture.
- Don’t disparage your old firm or colleagues before, during, or after you have left.
- Don’t start providing services to new clients until you actually have left your old firm.
- Don’t appropriate trade secrets or other materials or systems proprietary to your current firm.
Overall, anything in your planning and departure process that hinders your current firm’s ability to conduct business can be problematic, so step carefully.
Section 04
Pre-Departure Actions
With those cautions in mind, you can—and should—take a number of preparatory steps before announcing your plans to your firm or to clients. These include:
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Reviewing your current caseload and making a list of all matters with pending deadlines or other required actions that would need to be brought to clients’ or tribunals’ attention upon your withdrawal from the representation.
- You’ll need this so that you’ll know who to contact first regarding your departure, and so that you can help ensure these matters don’t suffer because of your withdrawal.
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Risk Control Tip
One of the biggest contributors to potential professional liability when switching firms is navigating the withdrawal from representation of any matters or clients who do not come with you to your new practice. A lawyer who withdraws from a matter for any reason has duties to protect clients’ interests and to act to avoid any adverse effects from the withdrawal. This includes guarding against missed deadlines or loss of property, as well as cooperating with substitute counsel to ensure a smooth transition.
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Making a list of all clients with whom you have had significant or substantial personal connection while at your current firm, including contact information and descriptions of past closed matters you worked on.
- You’ll need this information to help populate your new conflicts database.
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Compiling an account of all fees receivable related to work you have performed, including any advance fees paid and held in your firm’s trust accounts, or other client property held in trust or escrow.
- You’ll need this information to help calculate any division of fees between you and your firm that might not be determined until sometime after your departure. This may be especially important if you have been working on a contingency fee basis, since, often, when a lawyer withdraws from a contingency representation before the end of the matter, the fee will be converted into a quantum meruit recovery.
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Contacting an insurance provider to review your lawyers professional liability coverage needs, including determining whether you will need to purchase tail coverage or an extended reporting period to speak to any pending or potential claims arising from your work at your current firm.
- You may also want to get quotes for other types of insurance, including premises liability, cyber security, employment practices liability, and workers compensation.
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Risk Control Tip
Even though you may not be able to get a complete understanding of the state of pending or potential claims involving your matters until you can talk to someone in your current firm who can provide an actual comprehensive list, it is still useful to provide to your new insurer as much information as you can muster yourself to help them help you make good choices about the coverage that would make sense for you.
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Making a business plan, including consulting with others regarding organizational structure, management style, marketing plans, and the like.
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Risk Control Tip
Organizational structure of your new practice has connections to controlling both general business liability risk and professional liability risk. It is important to give thorough thought to the implications of each available structure (e.g., Limited Liability Partnership, Limited Liability Corporation, Professional Corporation) before settling on what your new practice will look like.
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- Obtaining office space and practice tools, including furniture, computers, and practice management systems.
- Building a website as long as it is not made active until you have left your current firm.
- Arranging for financing, as long as it is not based on nonpublic, confidential information of your current firm or clients.
- Lining up non-lawyer staff.
Section 05
Communicating Your Plans
After all that preliminary work come probably the trickiest steps of all: telling your clients and colleagues about your decision to move on. Why is it tricky? Because it requires navigating a quagmire of rules and obligations, balancing your business needs with your duties to clients and to your current firm.
Talking to Clients
Hopefully, you have developed a good relationship with some current clients and think that they would be interested in following you to your new practice. Indeed, from a business start-up perspective, your venture will be much more likely to succeed if you can begin with some clients and active matters already on board. Likely you know other lawyers who branched out on their own who had active matters from the day they opened their doors, including matters for clients they worked with at their old firm. So, they must have worked things out with those clients before they officially left their old practice. But, in light of your fiduciary duties to your current colleagues, how is that possible?
The answer: it's complicated
It is complicated because it involves walking a very thin line which every jurisdiction has drawn differently. ABA Formal Opinion 99-414 Sept. 1999 and several jurisdictions have concluded that it is permissible for a lawyer to discuss her impending departure with her current clients before consulting with her current firm.7 Meanwhile, other jurisdictions hold that the departing lawyer must first talk with the firm before notifying clients, if at all possible.
The main issues surrounding when and whether you can tell clients you are thinking of leaving are grounded in the rules regarding solicitation of potential clients coupled with your fiduciary and contractual obligations to your current firm, flavored with the rules concerned with withdrawal from representation.
Under the solicitation rules, you are prohibited from soliciting face-to-face or through direct personal contact (like over the telephone or individual texts or emails) any individual for the purpose of getting them to hire you as a lawyer, unless they are family or current or past clients with whom you have had a prior significant connection. This would include representatives from clients whose matters you worked on at your current firm, if you have had direct interaction with those individuals.
Risk Control Tip
Even if your jurisdiction allows you to contact current clients on your own and before actually announcing your resignation publicly, the better approach is to contact your firm first and issue a joint communication to clients, if your old firm is willing to do so. In that way, all parties’ interests are laid on the table and any concerns can be addressed before they develop into arguments or claims of legal or ethical trespass. Ultimately, it is important to weigh your personal business goals against the risk of facing liability claims as a result of your choices. A joint announcement will look very similar to a unilateral one, except that it ought to also include information about who at the old firm will take over the matter if the client stays on, and lay out the old firm’s responsibility to cooperate in facilitating any change of counsel if the client decides to move on.
To make things even more complicated, you may sometimes have an affirmative duty to inform current clients of your impending departure even without your firm’s cooperation, like when you reasonably believe that your departure won’t be amicable. If you expect that you will be immediately escorted out the door when you announce to your managing partner your plan to move on, you should notify clients in advance so that they are alert to any issues they should bring to your old firm’s attention to avoid missed deadlines or other time-sensitive actions, especially in matters pending before tribunals.
Section 06
Talking to Clients
If you do choose to reach out to clients on your own, draft the message carefully. In particular, remember that you can inform current clients that you are leaving and remind them of their freedom to retain counsel of their choice, but you cannot outright ask them come with you until after you have announced your resignation to your firm.11 And communicate only with those clients who would be directly and immediately affected by your departure. This includes clients on any matter you are actively working or for which you are the lead or billing attorney.
Client Communication Checklist
- Notice that you are planning to leave by a certain date.
- Information about where you are going and how you can be reached.
- A statement that you would willing and able to continue the representation at your new practice.
- An explanation that the client has the option to stay with the current firm, go with you, or seek other counsel all together, and that you will assist in ensuring a smooth transition no matter what choice the client makes.
- A statement providing a time period for the client to respond regarding its choice and the consequences of not responding.
- Information about where the client’s file will be and who will handle things until the client indicates what it wants to do.
- Notice that any outstanding fees or property held in trust will be accounted for and handled accordingly based upon the client’s choice of counsel.
- Information about any impending deadlines or other important issues that could be affected by your departure.
Remember:
Do no disparage your current firm or colleagues, and do not actively solicit the clients to come with you.
Sample Letter From Individual Lawyer Regarding Impending DepartureSection 07
Confidentiality
Practice rules prohibit lawyers from revealing information relating to the representation of a client without consent from that client. (MRPC 1.6) At the same time, the rules also require that lawyers be loyal to current and past clients and avoid conflicts of interest. (MRPC 1.7, 1.8, and 1.9) So, how can you work out with your new colleagues what conflicts you or they may have without revealing to them the names and details of the matters from your old firm?
Thankfully, this matter is addressed in the rules themselves, and in formal opinions on the subject. See, for example, MRPC 1.6(b)(7), ABA Formal Opinion 96-400 (Jan. 1996), and ABA Formal Opinion 09-455 (Oct. 2009), which clarify that a departing lawyer may reveal limited information relating to the representation of a client in order to detect and resolve conflicts of interest due to change of employment. This disclosure only is permitted if the information does not compromise the attorney-client privilege or otherwise prejudice the client. The information should be limited to that reasonably necessary to detect and resolve conflicts and should include no more than the identity of the client or entity involved in the matter, a brief summary of the general issues, and information about whether the matter is ongoing.
Once at your new firm, that duty of confidentiality and avoidance of conflicts remains, of course, so it is important to secure—in writing—permission from any clients who come with you to share more details with your new colleagues to help ensure proper compliance with conflicts rules going forward.
Section 08
Post-Announcement Actions
In addition to planning for your new practice and communicating with clients, take some time to plan how and when you will announce your plans to your current colleagues, aiming for it to be as congenial an interaction as possible. This is important not only for your peace of mind, but to manage the risk that ill-will leads to problems in the separation process and ultimately harm clients, leaving you facing potential legal malpractice and/or business tort claims.
As mentioned above, the best path in these situations is to be able to issue a joint announcement to clients, laying out clearly how your move could affect them, and offering options for how they may proceed. Further, congenial or not, the firm you are leaving will have its own obligations with respect to clients who choose to follow you, and you should aim to help protect those interests. For instance: your former firm must assist in transferring all relevant materials and files to the client who is leaving the firm. If possible, you can oversee that process before you depart.
Risk Control Tip
If a client isn’t following you to your new practice, you may still take copies of documents relating to your representation of them as long as you ensure their confidentiality is protected. You may also take copies of your own work product. This is a good idea, especially if you are concerned that you may face a professional liability claim later.
Steps To Take After Your Announcement To The Firm & Clients
- Prepare and file any necessary motions to withdraw or notices of substitution of counsel.
- Contact any opposing counsel in transaction work to inform them of changes of contact information or changes of counsel.
- Notify your state’s attorney licensing entity of your change of address.
- Confirm that your name will be removed from all of your old firm’s accounts, name plates, website, and other marketing materials.
- Ensure that your old firm has your contact information and will give it to callers who ask for you, and do the same at your new practice for callers looking for your old firm.
- Confer with your old firm’s insurance person to compile a comprehensive list of reported or potential claims involving clients or matters you have been associated with.
Remember:
Finally, if the process has not been entirely amicable, consult an attorney to help navigate any potential actions you may face.
Once you have officially left your old firm, you should remember to include your past matters in all of your risk control efforts going forward. For instance, you should continue to be vigilant about monitoring conflicts of interest arising from your work and presence at your old firm. And you should monitor your old firm’s lawyer professional liability activity so that you are aware of any claims brought that involve matters you worked on in some capacity and can timely report any such claims to your new carrier.
Section 09
Conclusion
When you put your client’s concerns and needs top of mind, you will be more likely to stay on good terms with them, making it less likely you’ll fail them and, even if you do make a mistake, less likely that you’ll trigger them to respond with a claim against you. Likewise, treating your current colleagues with respect is not only good risk management but also good business. Treated well, those colleagues are more likely to send you off on your new venture with a congratulatory handshake and an intention to send clients your way when the opportunity presents itself.
