One of the first questions that likely comes to mind is whether — and when — you can tell clients, your firm, colleagues and staff. As it turns out, there are some clear guidelines regarding whom you can tell, and when. Like so many things related to a partner departure, it can get complicated. It’s important to know the general landscape, but then you need to analyze how the rules apply to your situation.
First, the Starting Point: Your Clients’ Interests Must Come First
You have a duty to protect your clients’ interests at all times during any transitions, and so does your future-former firm. This duty is not mitigated by your individual business considerations, by your old law firm’s interests, or by your new law firm’s interests.
Second, You Have Duties to Your Old Firm
If you are a partner at the firm, you may have a fiduciary duty to tell your firm about your departure before you tell anyone else. This means that if you tell your clients or tell your team and staff before you tell your firm, you may be creating exposure for a claim for breach of fiduciary duty.
Third, Your Partnership Agreement Creates Obligations
Your partnership agreement it most likely contains a notice provision, detailing the requirements for how you must give notice to the firm, and how much notice you must give to the firm, regarding any departure. This means that if you leave before the notice period expires, you may be creating exposure for a claim for breach of contract, namely the partnership agreement.
Fourth, Check Your State’s Ethics Rules
Some states — California, Florida, Ohio, Pennsylvania, Virginia, to name a few — have enacted specific ethics rules or have issued ethics opinions that create notice obligations or describe best practices for how to go about giving notice.
With those general guidelines in mind, the tricky part is to balance these requirements in application to your situation. It’s not difficult to imagine scenarios where these requirements can be at odds with each other. What if your clients’ best interests dictate that you leave your firm on one day’s notice, but your partnership agreement requires 30, 60 or 90 days’ notice? What if servicing your clients’ matters requires that your team and staff continue their work uninterrupted, suggesting that you better find out before you go whether your team will remain intact? What if you were called a “partner” at your firm, but you have never signed any partnership agreement and do not have any ownership interest in the firm?
From the law firm perspective, consider whether your firm has a valid client-centered rationale for a notice provision — permitted — or whether the notice provision is just a means to stifle competition by preventing attorney mobility and the departing partner’s ability to practice law — not permitted — and not likely to work anyway.
So, the general guidelines outlined above are just the starting point. These scenarios and similar complicating issues are quite common. That means devising the right plan to balance these interests, in a defensible way, requires closely considering these potentially divergent interests before you leave. The good news is that you can create a departure plan that balances these interests, protecting your clients’ interests and meeting your obligations to your firm. You just need to plan ahead.
Daniel O’Rielly, a partner at O’Rielly & Roche LLP in Los Angeles, counsels California attorneys and law firms on strategic transitions: partner departure law, attorney ethics counsel, partnership agreements and firm structure, law firm compensation systems, law firm succession planning, and law firm dissolutions. He also handles partnership disputes, in litigation and arbitration. He blogs at California Attorney Ethics Counsel.
Dena Roche is a partner at O’Rielly & Roche LLP in San Francisco. She provides counsel to California attorneys and law firms related to partner departures and other transitions, general partnership matters, and attorney ethics and law firm practice management. She blogs at California Partner Departure Law.
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