October 15, 2015
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.The Virginia attorney notification rule states that “Absent a specific agreement otherwise: (1) neither a lawyer who is leaving a law firm nor other lawyers in the firm shall unilaterally contact clients of the law firm for the purposes of notifying them about anticipated departure or to solicit representation of the clients unless the lawyer and an authorized representative of the law firm have conferred or attempted to confer and have been unable to agree on a joint communication to the clients concerning the lawyer leaving the law firm….” Rule 5.8
Rule 5.8 goes on to state that any procedure for notifying clients when no joint communication can be agreed upon must be timely and must include language regarding the client’s choices for representation. Similar provisions apply to situations involving dissolving firms.
Although Virginia is not the first state to adopt such a rule – Florida has a similar rule, Rule 4-5.8, enacted in 2006 – Virginia included language in its rule aimed at restricting unilateral communications to clients from both the departing attorney and from the law firm. (The Florida Rule was criticized by some as only requiring departing attorneys, but not firms, to attempt to meet and confer regarding a joint communication to clients.)
However, will this new Virginia rule, and similar notification rules that may be contemplated by other states, significantly change how law firm departures are handled? More importantly, will these rules promote a policy that is in the best interest of clients?
Virginia Rule 5.8 calls for the departing attorney and the law firm to meet and confer regarding proposed communication to clients about the departure… “absent a specific agreement otherwise.” Comment 1 to the rule states, “Any client notification agreement, whether pursuant to this rule or otherwise, must also comport with Rule 5.6(a). Lawyers may also have fiduciary, contract or other obligations to their firms that are outside the scope of these rules.”
This well-intentioned attempt to force lawyers and law firms to cooperate surrounding an impending attorney departure seems to ignore the practical reality that most partnership or shareholder agreements, especially within larger firms, already have contractual provisions that govern what departing attorneys can or cannot do with respect to communicating with clients regarding their departure. These agreements, which many consider some form of adhesion contracts, are not subject to negotiation by the incoming partners or shareholders, and often become take-it-or-leave-it propositions. And if firms are already binding partners and shareholders with “client notification agreements” from the outset, firms can more easily control how and when notice will be effectuated, to their own advantage. This puts the departing attorneys, and the clients who expect to hear from the primary attorney handling their matter about any changes in his/her employment, in a potentially difficult situation, which may also undermine that attorney-client relationship to the benefit of the law firm who hopes to retain the client.
In California, as in most states, attorneys have fiduciary and ethical duties to keep their clients “reasonably informed about significant developments relating to the employment or representation.” (Cal. Rules of Professional Conduct, Rule 3-500.) This rule has been interpreted as imposing an obligation on the partner to inform clients (those firm clients with whom the attorney has significant contact) of his/her departure from a firm as soon as practical to allow clients to make a choice in counsel and provide for a smooth transition in order to avoid prejudice to clients. (State Bar of California, Committee on Professional Responsibility and Conduct, Formal Opinion 1985-86.) This opinion also states: “To the extent practical, the law firm and attorneys involved in the dissolution or withdrawal should attempt to provide a joint notice to the clients regarding the change.”
To codify the joint notice requirement, but to leave open the possibility that partnership or shareholder agreements can simply contract around it, renders it mostly meaningless. It increases the likelihood that law firms will seek to notify clients of a withdrawing partner’s departure first, not jointly. It also creates a heightened tension for departing attorneys who are trying to comply with applicable ethical guidelines during this process, but have various, and sometimes competing, provisions in their partnership agreements to balance.
If client notification protocols are indeed a future trend, then such rules should include restrictions on if, and when, client notification agreements can be made between law firms and lawyers as a condition of employment or ownership, or impose the conference and joint notice requirements notwithstanding contrary provisions of a partnership or shareholder agreement. Until that time, these rules do little to solve the problem of attorneys failing to cooperate and working towards what is in the best interest of the clients. And ultimately, “absent a specific agreement otherwise,” is a loophole that swallows the rule.