Leaving a law firm, particularly as a partner, can feel a lot like a divorce. There are logistical, financial and ethical issues at play that can cause all kinds of chaos in the professional lives of both the departing lawyer and those remaining at the firm. All that plays out against a backdrop of emotional upheaval and change.
My friends, Jim Calloway and Sharon Nelson, hosts of the Digital Edge podcast, tackled this issue in the excellent recent episode, When Lawyers Get Divorced: Ethically Breaking up a Law Firm. Their guest speaker, Tom Spahn, offered great advice and insights, and I highly recommend giving it a listen.
Spahn's advice included making sure the departing lawyer:
- complies with any partnership or employment agreement
- continues to work full-time at the old law firm
- doesn't use law firm resources for planning or executing the move to the new firm
One of the thorniest issues that comes up when a lawyer leaves her firm to either go solo or join another firm is determining when to inform the clients of the change. The move creates tension between the departing lawyer's fiduciary duties to the old firm and her duty to her clients, according to Spahn. Anyone who has made a change like this would likely agree.
Spahn noted in the podcast that the trend generally is toward emphasizing the departing lawyer's duty to her clients over her fiduciary duty to the old firm. To get dialed in how the situation is analyzed in North Carolina, I reached out to Deanna Brocker of the Brocker Law Firm. Deanna concentrates her practice on professional licensing issues and frequently counsels attorneys planning to leave their law firm.
Deanna had this to say:
In North Carolina there is no rule or ethical prohibition against an attorney first informing clients of his departure from the firm before informing the law firm. At the same time, I think the State Bar would say that as a matter of professionalism, an attorney ought to inform the firm first before clients, even where there is no duty to do so. The attorney's duty to inform clients of his departure, and to do so in a timely fashion, is clear, however. The timing of such disclosure may depend upon a particular client's circumstances and pending deadlines.
Spahn goes on in the podcast to discuss some of the mechanisms law firms are putting in place to penalize a departing lawyer; we're not bound by non-compete agreements, but firms are starting to turn to financial penalties such as eliminating bonuses, forsaking the return of invested capital, and so on function in some firms to make a departing lawyer think twice before leaving.
It's a great podcast and Calloway, Nelson and Spahn pack a lot of information into a short time frame (partially through talking fast - music to this native New Yorker's ears). Whether you are staying, going or just want to be informed, tune in and check it out.