The “no surprises” rule is always a good one to follow when it comes to relationships with outside counsel. But what’s a general counsel to think when her lawyer reveals that trouble’s afoot—and he’s departing for another firm?
Howrey’s recent collapse has me musing about partners who may have anticipated the firm’s unraveling and let key clients know about the possibility ahead of time. Nobody likes surprises, but in a situation like that, the partner may have been sounding out the client’s willingness to shift legal services to a different firm if the partner moved there. A disquieting situation.
More troublesome is the situation where the partner chooses to leave one healthy, strong firm and join another. Then solicitation rules, noncompete agreements and competition over the client’s book of business come more into play.
What is a General Counsel to Do?
- Feel free to talk. I don’t know the case law around solicitation of to-be-former clients, but my basic instinct is that a general counsel doesn’t run afoul of it. The law firm partner may be at risk, but not the client. A general counsel owes loyalty to his own company, not to the law firm or a particular partner. So he or she should feel free to discuss the likelihood of whether that work will follow the partner or remain with the partner’s former firm.
- Don’t put anything in writing. If there is an alternative fee agreement, the general counsel will have to be more circumspect about transferring work along with the partner, since the commitment was with the firm as a firm, not just with the partner. Regardless, the general counsel should not put anything in writing to the partner who is about to leave.
- Be realistic. When deciding whether to go along with the departing partner, general counsel must bear in mind that professionals often overestimate their personal role in a successful client relationship and under-value the contribution of their firm. Performance can be situational.
Rees Morrison, Esq., has consulted to law departments on virtually every kind of management issue for 24 years, assisting more than 275 law departments on four continents. He has published more than 160 articles as well as three books on law department management. Rees hosts the award-winning blog Law Department Management, with 6,200+ posts since February 2005, and writes a biweekly column for Inside Counsel. His firm, General Counsel Metrics, LLC, conducts the largest law-department benchmarking study with more than 800 participating departments.