Law Firm’s Non-Solicitation Agreement Restricts Mobility of Departing Partner
A recent legal ethics opinion from North Carolina provides interesting insight into the ethics of a non-solicitation agreement between law firms that restricts attorney mobility but not necessarily a client’s choice of counsel.
The North Carolina 2017 Formal Ethics Opinion No. 5 analyzed the issue of whether two law firms could enter into a non-solicitation agreement with respect to each other’s employees as part of their merger talks. In the proposed contractual provision, Law Firm A agrees not to induce or solicit any partners, associates or other employees of Law Firm B to join Law Firm A (and vice-versa), for the duration of the merger talks and for a period of two years following the merger discussions. The rationale for the provision was “to foster the trust necessary for both firms to disclose financial information about the productivity of the lawyers in the firms without fear that, should the merger negotiations be abandoned, the other firm would attempt to lure highly productive lawyers or ‘rainmaker’ lawyers away from the other firm” (See Opinion.) More
Planning is Key to Successful Attorney Transitions
Partner or group departures seldom go smoothly – at least that is what we hear in the legal news headlines. However, the transitions that do go well, and there are many of those, tend not to be newsworthy events. Most of us tend to be interested in the salacious details of where it all went wrong, who is to blame and who acted badly. But what makes successful departures different? Simple answer: preparation and planning. More
Are you Really a Partner? Non-Equity or Income Partners May Have Unique Issues During a Departure or Lateral Move
In today’s legal world, the traditional view of what it means to be a “partner” seems to be ever-changing. As more law firms move from two-tier to multi-tier partnerships, the question of what it truly means to be a non-equity, income, or salaried partner is becoming an increasingly important issue. Specifically, during any partner departure or lateral transition, the exact nature of the partner’s status has a variety of ethical, contractual, and legal implications for the lawyer, as well as for the law firm. This issue must be analyzed carefully as part of any law firm departure. More
Mitigating Risks For Departing Partners, Part 1: Control the Timing of Your Departure Announcement
Taking the plunge to embark upon an attorney transition inherently involves some risk. Like with most things, some of the risk you can control, some may be outside of your control. However, taking steps to mitigate risk whenever possible will reduce the likelihood that you are subject to ethical scrutiny, disputes with the firm or protracted legal battles following your departure. It will also increase the likelihood that the firm will cooperate with your client transition plan and the eventual return of your capital.
There are two main categories of risk a departing partner faces when considering his/her transition to a new firm. First, the risk that your firm will find out about the potential departure (or departure considerations) prior to the time that you are ready to tell the firm or provide formal notice. Second, the risk that your conduct with respect to your departure plans or considerations will expose you to potential claims by your firm or your clients of unlawful or unethical conduct. Sometimes attorney conduct will potentially implicate both categories of risks. The first part of this article on mitigating risks will analyze ways to avoid having your firm or clients finds out about your departure before you are ready to announce it. 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
Partner Departure Tip: Locate Your Partnership Agreement and Read It
If you are a partner in a law firm, your partnership agreement is the key document that defines your rights and obligations as a partner. It can govern everything from how you get paid, to how the firm is managed, to what liabilities you have agreed to assume. In addition, it most likely has specific terms that impact how you should properly withdraw or depart from your partnership when the time comes. However, the longer you serve as a partner in a firm, the further removed you often are from what is actually contained in the partnership agreement (which also may have been amended numerous times over the years.) More
California Supreme Court and Non-Compete Provisions in Partnership Agreements: Howard v. Babcock Holds that Partners Imposing a Reasonable Toll on Departing Partners who Compete with the Firm is Enforceable
Prior to considering departing from an existing partnership, a partner needs to give careful consideration and analysis to any non-compete agreement or restrictions on his/her right to practice law imposed by the existing partnership agreement. Understanding these types of provisions and their potential enforceability can properly shape a departing partners strategy for departure and help to minimize risk and potential liability when the departing partner leaves the existing firm. More