California
Partner Departure Law

February 09, 2024

Law Firm Resolutions for a Happy New Year

Now that your personal New Year’s resolutions are kaput, February is a good time to consider some resolutions for your law practice that will lead to a happier and healthier law firm. Like most resolutions, these are things that you want to do, and probably know that you should do, but may have been avoiding or just haven’t yet gotten done.

To many lawyers, the concept of law firm planning around legal ethics seems odd or daunting. But it makes sense when you analyze what’s changed for lawyers recently. Law firms today have to be more proactive than ever in managing legal ethics. Why?

First, the rules continue to change, literally, for California lawyers. Since major revisions to the Rules of Professional Conduct took effect in November 2018, there continue to be new rules to keep up with, including new trust accounting reporting duties and Rule 8.3 obligations, to name a few. And, of course, keeping up with changes in the rules is critical if you want to stay out of trouble.

Second, the rules have changed, figuratively, for California law firms. Are you big or small? In many ways, firms are bigger and more complex than they used to be. It’s common now for law firms to span multiple states or multiple countries, with more attorneys working across borders among firm offices. Firms that used to have just a local practice, or just one type of client, or serve just one type of industry, now may have many more potentially overlapping clients and interests to consider. Add to this the fact that it’s now commonplace for partners to come and go from the firm regularly, with their clients, which means these overlapping interests are constantly evolving. There has also been a steady increase in the rise of smaller, more specialized firms taking over the marketplace, firms that typically rely heavily on technology and outsourcing to compete effectively in the marketplace.

Law firms are getting both bigger and smaller (and the less nimble, brick-and-mortar, midsized firms are slowly becoming obsolete) as the practice of law continues to evolve. While many things appear to be easier than ever, there is a growing roster of complex issues to manage, including remote work, online marketing and advertising, cyber security concerns, technology policies, outsourced vendors (for all or some parts of a practice), partner departures, and contract attorneys and staff, just to name a few.

It’s not difficult to conjure the legal ethics questions that can arise at a law firm based on these new and changing realities. What law firm services can be ethically outsourced to vendors, and how? Is it okay for firm attorneys to work on matters in a different firm office or location in a state in which they are not admitted? Are a contract attorney’s clients imputed conflicts for the firm, even if they work only on specific matters? What screening processes should be in place when admitting lateral partners to the firm? Is your firm advertising and the social media presence of the firm’s individual attorneys communicating a legally and ethically sound message to consumers viewing it worldwide? The list goes on and on, and if you think too much about these issues, they can cause you to experience what we refer to in the business as a freak-out.

Happily, there are solutions to help you sleep at night. A few relatively straightforward resolutions for the new year will set you on the right compliance path.

Find and review your firm’s documents. The first step in any analysis of your firm’s legal ethics systems is to find and review your firm’s organizing and governing documents. The firm’s partnership agreement or shareholder operating agreement will, or should, contain the framework for the firm’s governance and compliance, including rules regarding who makes decisions, how the firm sets policies, and what policies it sets. Next up is the firm’s policies and procedures. This should contain the firm’s guidelines for critical controls like client intake, data security, client confidentiality, trust accounting, departures, and conflicts of interest.

The point of this exercise is to determine whether the firm has policies, whether they are the right, up-to-date policies for the firm, and — most importantly — whether the firm is consistently following them. Of course, if you don’t have a partnership agreement, operating agreement, or policies and procedures manual, well, umm, get them.

Identify and analyze your firm’s systems. Another question to ask about your firm is whether you have systems in place to handle critical legal ethics issues, both to prevent them and to manage them if they arise. This is required under the rules and is different than asking what you typically do if a legal ethics issues comes up. Often, these systems are part of a firm’s policies and procedures, but not always.

Many firms deal with ethical issues on an ad hoc basis, discussing such issues only if they become open and obvious. But that’s not the best way to resolve legal ethics issues, and it does nothing to prevent them from arising. Rather, your firm should have consistent systematized protocols in place outlining both how to identify and how to address legal ethics issues in several categories.

If your firm has systems in place, that’s great. Check whether they are up to date, in writing, and whether anyone is following them.

Dedicate counsel or get outside counsel. If even these first few issues seem too daunting, you’re not alone. Many California law firms deal with legal ethics issues only when they have to, and sometimes not even then. If you dread these issues, you’re also not alone. But don’t let that prevent you from addressing them. It’s a good idea to dedicate a lawyer at the firm to handle coordinating these issues. If you’re at a smaller firm and no one has time to deal with these issues, or no one wants to, get outside counsel to assist you. Even if your firm has dedicated general counsel, the firm may need outside counsel’s perspective and experience to help see outside the box (comprised of the four walls of your firm).

Adopting these few law firm resolutions, or even working on them one at a time, can help put your firm on a path to compliance, which will not only minimize your risk, but also your freak-outs. Unfortunately, it won’t do anything to help you exercise more.

Dena M. Roche
Managing Partner
O’Rielly & Roche LLP
dena@oriellyroche.com

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