United States: New Ethics Rule Governing Lawyer Mobility Adopted In Virginia

Allison Martin Rhodes is a Partner in our Portland office, Trisha M. Rich is an Associate in our Chicago office, Mellori E. Lumpkin is an Associate in our Atlanta office.

HIGHLIGHTS:

  • Virginia's recent adoption of new ethics Rule 5.8 will provide guidance on a common issue to lawyers and law firms managing lawyer departures.
  • The Florida Supreme Court took on this issue in 2005, noting then that the debates between departing lawyers and their law firms were prioritizing lawyer and law firm interests ahead of the interests of the clients.
  • Lateral mobility is not simply a business issue – it is a matter of professional responsibility and carries with it the risk of potential discipline.

Virginia's recent adoption of a new ethics rule will provide guidance on a common issue to lawyers and law firms managing lawyer departures. For years, lawyers and law firms have handled difficult and sometimes contentious departures guided only by a patchwork of ethics opinions and commentator advice. However, the recent codification of Virginia's new Rule 5.8, which goes into effect on May 1, 2015, sets forth specific procedures for client notification prior to a lawyer's departure. The new rule may also signal a trend toward state bar regulators' increased attention to the rules governing lateral mobility and the need for clear guidance on how to effectively comply with the bedrock duty of client communication in the midst of a lateral transition. By passing Rule 5.8, Virginia joins Florida, which was previously the only other state that had passed such a rule.

Virginia's Rule 5.8: Procedures For Notification to Clients When a Lawyer Leaves a Law Firm or When a Law Firm Dissolves

Prior to the adoption of Rule 5.8, the procedure for client notification articulated by ethics opinions and commentators generally recommended that the departing lawyer and their soon to be former firm meet upon notice of the lawyer's resignation and agree on a form of joint notification that sets out each client's choices between the law firms and seeks each client's election.1 These procedures and recommendations have grown from the tension between traditional concepts of fiduciary duties owed to the law firm by the departing lawyer, juxtaposed against the client's right to make informed and voluntary decisions about his or her legal representation.2 In this arguably ideal example, clients learn for the first time of the lawyer's intended departure immediately following notice to the firm, but with sufficient time to exercise choice.

In practice, however, business considerations, pressure from the lateral hiring market and acrimony over lawyer departures have resulted in entirely different procedures. Although unprofessional and probably unethical, it is not completely uncommon for departing lawyers and their old law firms to engage in a variety of "bad behaviors," including departing lawyers secretly soliciting client engagement for the new law firm in advance of notifying the old firm of their intended departure, laterally hiring firms insisting on assurances regarding client transition before making offers to potential lateral candidates, some legal recruiters to similarly insisting that "everyone does it," to law firms attempting to prohibit departing lawyers from contacting clients at all until after their departure, or interfering with notice attempts through lockouts or partnership agreement provisions that impose draconian consequences for attempts at seamless transition. These practices have resulted in a number of expensive disputes between lawyers and law firms, with most playing out in confidential, expensive and protracted arbitrations.

Although Virginia is an early adopter in passing an ethics rule to assist with managing lateral partner departures, it is not the first state to do so. The Florida Supreme Court took on this same issue in 2005, noting then that the debates between departing lawyers and their law firms were prioritizing lawyer and law firm interests ahead of the interests of the clients. Based on Florida's RPC 4-1.4 (the duty of communication) and RPC 4-1.16 (duties upon termination of employment), The Florida Bar enacted RPC 4-5.8, which set out the practices described above as affirmative rules of professional conduct.

By rule change recommended by the Virginia State Bar and adopted Feb. 27, 2015, by its Supreme Court, Virginia has now followed suit. As stated in the Dec. 16, 2014, petition for rule change, these rules "do not change the Committee's interpretation of lawyer's obligations in these circumstances, but it does make clear that these are obligations, not suggestions."

Timely Client Notification and Soliciting Are Defined by Rule 5.8

Virginia's new Rule 5.8 provides clear direction on two important issues related to lateral mobility. First, the rule states – as a matter of ethics – that neither a departing lawyer nor the law firm shall contact a client prior to engaging in a joint effort to affect notification under the rule. This language resolves a common issue that often arises during lateral transitions: attempting to distinguish between timely notification to a client of a lawyer's move and "soliciting" the client's work for a competing law firm in violation of fiduciary duties to the old firm.3 The result is sometimes viewed as a culture of nodding and winking, which Rule 5.8 clearly rejects. Lawyers and law firms must attempt to confer about notification prior to informing a client of a move and must apprise the client of all available representation options.

Notably different than the Florida version of Virginia's rule are the implications for lawyers at the old firm who similarly may not unilaterally contact or solicit a departing lawyer's clients, bringing an end to the practice in Virginia of receiving a lawyer's notice of departure and privately beginning a full court press on clients before any formal notification is issued or while silencing the departing lawyer. The rule encourages – if not insists – upon transparency and communication by and between the departing lawyer and their law firm.

Rule 5.8 Addresses Clients' Failure to Respond to Notification

Finally, the new Rule 5.8 prescribes welcome guidance for situations in which clients fail to respond to the notification. Where a client fails to respond to a notice given by a departing lawyer, the client remains a client of the law firm until the engagement is terminated by either the client or the law firm. In the case where the law firm is dissolving and the client fails to respond to the notification, the client is deemed to be a client of the lawyer primarily responsible for the client's legal services.

Mismanaged Lateral Hiring May Involve Risk of Discipline

Virginia and Florida are not alone in focusing on the ethics of lawyer mobility. On March 28, 2015, the New York State Bar House of Delegates voted to approve new comments to Rule 1.6 of the state's professional conduct rules regarding disclosure of confidential client information in lateral negotiations. Proposed comment 18B to Rule 1.6 describes exactly what client information must remain confidential during the lateral recruiting process and what limited disclosures are permitted for business purposes. The comment seems to seek a balance of confidentiality and business reality, but does so in the context of the lawyer's ethical duties.

The efforts of state bar regulators in Florida, Virginia and New York, which represent three large legal markets, are almost certainly an indication of increased regulation to come in the area of lawyer mobility. Specifically, the codification of client notification procedures into state rules of professional conduct warrants heightened risk management considerations for both the lawyers and law firms involved in lateral movement. As evidenced by the implementation of these unambiguous rules and procedures regarding lawyer departure and reinforced by the all-important duty of client communication, lateral mobility is not simply a business issue – it is a matter of professional responsibility and carries with it the risk of potential discipline.  

Footnotes

1. Robert W. Hillman, Client Choice, Contractual Restraints, and the Market for Legal Services, 36 Hofstra L. Rev. 65 (2007); Philadelphia Bar Ass'n Prof'l Guidance Comm. & Pa. Bar Assn'n Comm. on Legal Ethics & Prof'l Resp., Joint Formal Op. 2007-300.

2. Meehan v. Shaughnessy, 404 Mass. 419, 437, 535 N.E.2d 1255, 1265 (1989); Hillman, supra note 1.

3. See Dowd & Dowd v. Gleason, 181 Ill.2d 460, 481, 693 N.E.2d 358, 369 (1998).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions