July 01, 2013
California Rules of Professional Conduct: Responsibilities and Restrictions on Departing Partners in Communication and Solicitation of Law Firm Clients
The California Rules of Professional Conduct place restrictions on an attorney’s conduct in soliciting clients for employment. The Rules define “solicitation” as “any communication concerning availability for professional employment of a member (of the State Bar of California) or law firm in which a significant motive is pecuniary gain,” whether in person or by telephone. (Cal. Rules of Professional Conduct, Rule 1-400(B).) Although generally client solicitation is prohibited, the rules provide that an attorney may solicit to “a former or present client in the discharge of a member’s or law firm’s professional duties.” (Cal. Rules of Professional Conduct, Rule 1-400(C).)
Although the Rules of Professional Conduct allow a departing partner to solicit its former and present clients, a partner should use caution in communicating with clients about his/her departure to avoid any breaches of fiduciary duties to the existing partnership. This is particularly true prior to the time that the partner has announced his/her intended departure to existing partners of the firm. There may also be specific provisions in the partnership agreement that limit or restrict the partner’s ability to solicit partnership clients, or liquidated damages provisions that impose actual penalties for doing so.
Nonetheless, attorneys also 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.) Depending on how such a communication is handled, it may or may not be considered to be an improper solicitation. However, the issue of what an attorney may communicate once choosing to make a lateral transition should always be “governed by the overall principle of what is in the best interest of the client.” (Jewel v. Boxer (1984) 156 Cal.App.3rd 171; State Bar of California, Committee on Professional Responsibility and Conduct, Formal Opinion 1985-86.)
Given this tension between fiduciary and ethical responsibilities to the existing partnership and to existing clients, it is extremely important for a departing partner to give thoughtful consideration to how and when to communicate to firm clients about a law firm departure. All communications should be focused on what is in the clients’ best interests (not necessarily the partners’) and the partner’s approach should be designed to minimize risk and liability to the existing partnership while avoiding alienating existing and potential clients.
Before a departing partner engages in any client communication that could be considered an improper solicitation, he/she should consult with counsel. This will ensure that the departing partner has the tools to comply with the standards set forth in the Rules of Professional Conduct, the related case law and any solicitation provisions set forth in the departing partners own partnership agreement.