Trends and Analysis for Successfully Transitioning Lateral Partners
into New Partnerships While Minimizing Risk and Reducing Potential Liabilities

Law Firm Can’t Require Departing Partner to Forfeit Equity If Partner Takes Clients

In an important order that impacts the field of partner departures nationwide, a district court judge in the the Eastern District of Virginia held that a provision in a law firm’s operating agreement that provides that a withdrawing partner who “takes clients” forfeits up to fifty percent of his equity in the firm is void and unenforceable because it places an impermissible restriction on the partner’s right to practice law. (Moskowitz v. Jacobson Holman, PLLC, (E.D. Va. Jan. 28, 2016.)

The Court’s ruling was based on Rule 5.6 of the District of Columbia Rules of Professional Conduct, which prohibits lawyers from placing restrictions on the right to practice law, and is modeled on the ABA Model Rules.  Versions of this rule have been adopted in every state, except California, although California has its own Rule of Professional Conduct which prohibits “agreements restricting a member’s practice” in certain circumstances. (See California Rules of Professional Conduct, Rule 1-500.) More

Notice to Clients of Attorney Departure Not Likely Protected Speech in California

Earlier this month, California’s Fourth District Court of Appeal agreed with an Orange County trial court that several emails sent by a departing partner to clients and former clients announcing his departure to a new firm did not qualify as protected speech under anti-SLAPP laws.  Although the Court of Appeal’s opinion was unpublished, the Court provided a detailed analysis of what constitutes protected speech in the context of attorney departures.  The opinion also underscores that the anti-SLAPP statute has very limited utility in attacking claims related to partner departures. More

Court Found No Conflict of Interest with Dual Representation of Law Firm and Partner Against Claims from Departing Partner Shareholder

Earlier this year, California’s Fourth District Court of Appeal found that a partner’s status as 50% shareholder of a law firm did not give rise to a conflict of interest which would preclude the firm’s counsel from defending the firm and another partner against the departing partner’s lawsuit.  (See Coldren v. Hart, King & Coldren (2015) 239 Cal.App.4th 237.)  The Court also found that under the facts specific to that case, the departing partner did not have standing to bring a motion to disqualify the firm’s counsel based on an alleged conflict of interest. The Court’s analysis in this matter is helpful in guiding not only attorneys who are considering whether there is a conflict with such dual representations, but for law firm’s handling the transition of departing partners and who want to avoid potential conflicts in representing the firm’s interests in such disputes. More

Are Recent Ethical Rules that Establish Attorney Notification Protocols For Departing Attorneys Really in the Best Interest of the Clients?

Earlier this year, the Virginia State Bar enacted a new ethical rule governing how attorneys and law firms should notify clients in the event of an attorney departure or firm dissolution. The new rule, Rule 5.8 of the Virginia Rules of Professional Conduct, is an effort by that state to regulate what it viewed as a difficulty in getting attorneys and law firms to cooperate related to the handling of law firm departures and dissolutions, and in how attorneys notify clients of these changes. More

Partner Departure Tip: Don’t Let Your Emotions Rule the Day

Perhaps the single biggest factor partners underestimate when transitioning their practice to a new firm, or starting a new practice, is the emotional impact of the move. Even those who consider themselves stoic and rational by nature are often caught off-guard by how highly emotional this transition can be, for both the departing partner and for those whom he or she is leaving behind. In fact, there are a whole host of emotions that may accompany any departure including excitement, relief, sadness, anger, elation, fear, betrayal and sometimes a bizarre combination of them all. However, emotions can be kryptonite to judgment. And clouded judgment often results in poor decision-making. More