State Bar of Arizona Ethics Opinions

99-14: Withdrawal from Law Firm; Communication with Clients; Advertising and Solicitation
12/1999

A departing lawyer may contact persons for whom the lawyer has provided legal services while employed by the former firm. The restrictions of ER 7.3(a) do not apply where the lawyer has had significant personal contact with those persons although the content of the communication remains subject to ER 7.1(a) and 7.3(d)(2), (3). Moreover, a solicitation letter sent to former clients is not subject to the requirements of ER 7.3(b), although it must conform to the advertising requirements of ER 7.1. Where the departing lawyer has had significant personal contact with a client in connection with the provision of legal services to that client by the firm, the lawyer has a mandatory duty under ER 1.4 to notify the client of his or her departure. The client must be provided with the opportunity to choose between going with the departing lawyer or remaining with the firm. As noted, there are potential legal issues associated with contacting clients served while employed by the former firm, which are outside the jurisdiction of the Committee, but which should be considered in connection with any communications. [ER 1.4, 5.6, 7.1, 7.3]

FACTS[1]

 

The inquiring attorney is in the process of changing firm affiliations.  The attorney apparently has advised the present firm that he or she is leaving, but the transition is expected to require approximately six weeks.  The inquiring attorney states that the "majority of the clients [for whom work is being performed] do consider me to be their attorney."  Therefore, the attorney wants to advise the clients of the impeding departure to let the clients know that they may move their files to the new firm or remain with the present firm.  The inquiring attorney is unsure of the current employer's attitude towards such contact, including whether the firm would be willing to send a joint letter to the clients.

 

QUESTION PRESENTED

 

Whether an attorney who is terminating his or her association with a law firm may ethically contact clients for whom the attorney performed legal services while associated with the former firm in order to advise them that the attorney is changing firms and that the clients may transfer their files to the new firm or continue to be represented by the former firm?

 

RELEVANT ETHICAL RULES

 

ER 1.4            Communication

 

(a)            A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.

 

(b)            A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

 

ER 1.16            Declining or Terminating Representation

 

(a)            Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:

 

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(3)               the lawyer is discharged.

 

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(d)            Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned.  The lawyer may retain papers relating to the client to the extent permitted by other law.

 

ER 5.6            Restrictions on Right to Practice

 

                        A lawyer shall not participate in offering or making:

 

(a)            a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement;

 

ER 7.1             Communications and Advertising Concerning a Lawyer's Services

 

(a)            A lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services.  A communication is false or misleading if it:

 

(1)            contains a material misrepresentation of fact or law or omits a fact necessary to make the statement considered as a whole not materially misleading;

 

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(3)            compares the lawyer's services with any other lawyers' services, unless the comparison can be factually substantiated;

 

 

 

ER 7.3 Direct Contact With Prospective Clients

 

(a)            A lawyer may not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship in person or by telephone, when a motive for the lawyer's doing so is the lawyer's pecuniary gain.

 

(b)            Subject to all of the requirements of these rules concerning communications and advertising and the specific additional requirements of this section, a lawyer may initiate written communication, not involving personal or telephone contact, with persons known to need legal services of the kind provided by the lawyer in a particular matter, for the purpose of obtaining professional employment.  Such written communication shall be clearly marked on the envelope and on the first page of the communication contained in the envelope, as follows:

 

ADVERTISING MATERIAL:

           

THIS IS A COMMERCIAL SOLICITATION

 

Said notification shall be printed in red ink, in all capital letters, in type size at least double the largest type size used in the body of the communication.  No other statement shall be placed on the envelope which makes reference to the contents of the solicitation.  If the solicitation advertises representation on a contingent or "no recovery, no fee" basis, it shall also state that the client may be liable for costs and expenses.

 

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(d)            A lawyer shall not send, or knowingly permit to be sent, on behalf of himself, his firm, his partner, an associate, or any other lawyer affiliated with him or his firm a written communication to a prospective client for the purpose of obtaining professional employment if:

 

(2)            the communication involves coercion, duress, fraud, overreaching, harassment, intimidation, or undue influence;

 

(3)            the communication contains a false, fraudulent, misleading, deceptive or unfair statement or claim or is otherwise improper under these rules;

 

OPINION

 

With greater mobility in the practice of law, the collision between the competing interests of the departing attorney and the former firm in the clients served by the departing lawyer has given rise to a recurring problem of widespread interest to the bar.  "One of the thorniest issues that arise when lawyers leave a firm is the extent to which these lawyers may solicit the firm's clients."  ABA/BNA, Lawyers' Manual on Professional Conduct § 91-701 (1993).

 

A lawyer has an ethical obligation, under ER 1.4, to advise his or her clients of the impending departure, so that the clients may decide who they want to continue the representation.  The starting point for analysis of how to contact the clients is ER 7.3(a), which prohibits a lawyer from soliciting "professional employment from a prospective client" either in person on by telephone.  By its terms, the Rule exempts from its ban the solicitation of family members and persons with whom the lawyer has had a prior "professional relationship."  The exclusion of these categories of persons is based upon the assumption that there are safeguards against overreaching inherent in such relationships.  In the case of current or former clients, the rationale for the exception is that those persons "will have sufficient basis upon which to judge whether to continue or reactivate a professional relationship with a particular lawyer."  2 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 7.3 201 (Supp. 1998).

 

The Committee previously has concluded that the term "prior professional relationship" as used in ER 7.3(a) is not restricted to current or former "clients" but embraces all individuals with whom the lawyer had "significant personal contact" while at the law firm.  Ariz. Op. 91-17, p.3.  This conclusion is moored firmly to both the rationale for permitting certain types of direct personal contact and the text of ER 7.3(a) itself.  Because ER 7.3(a) uses the term "prior professional relationship" rather than the more specific term "client", it is "no longer necessary to consider whether the clients were originally the firm's clients or those of the departing lawyer in this context."  2 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 7.3 204 (Supp. 1998).

 

Other Ethical Rules support the conclusion that the term "prior professional relationship" used in ER 7.3(a) should not receive a needlessly cramped interpretation.  For example, the Rules give the client—and only the client—the unfettered right to choose whether the client will stay with the former firm or move on with the departing attorney ER 1.16(a)(3); Comment, ER 1.16 ("A client has the right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer's services"), ABA/BNA Lawyers' Manual of Professional Conduct § 91.705 (1993).  To meaningfully exercise this right, a firm's clients necessarily have a right to receive (and hence lawyers have a right to provide) information about alternative legal services that would be available following the departure of a lawyer from the firm.  2 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 7.3 202 (Supp. 1998).

 

Moreover, as noted above, under ER 1.4(b), a lawyer has an obligation to advise the client of his or her impending departure "to permit the client to make informed decisions regarding the representation."  Without such information, the client can hardly make an "informed" decision about continued representation by either the former firm or the new firm.[2]  ABA Formal Op. 99-414, pp. 2-3.

 

Other ethics committees have reached similar conclusions regarding the interpretation of the term "prior professional relationship" in ER 7.3(a).[3]  Most recently, the ABA Standing Committee on Ethics and Professional Responsibility opined that a departing lawyer does not engage in improper solicitation under ER 7.3(a) by notifying current clients of the lawyer's new affiliation because a professional relationship exists with those persons.  ABA Formal Op. 99-414, p. 3.  The ABA Committee observed that a "prior professional relationship" sufficient to permit in-person or live telephone solicitation would not exist where the departing lawyer had merely "worked on a matter for the client along with other lawyers in a way that afforded little or no direct contact with the client." Id. at 4.  The Committee explained that it "views the exception under Rule 7.3(a) to permit in-person solicitation only of those current clients of the firm with whom the lawyer personally has had sufficient professional conduct [sic] to afford the client an opportunity to judge the professional qualifications of the lawyer and are not extending beyond the text of the Rule to apply to firm clients with whom her relationship is solely personal and not professional."  Id. at 4 n. 6 (emphasis in original).

 

This Committee continues to believe that ER 7.3(a) extends beyond persons who were or are technically clients of the departing attorney and includes anyone with whom the lawyer had "significant personal contact" while at the firm.  In this context, "significant personal contact" means that the departing lawyer had substantial, direct contact with the client in connection with rendering professional services at the former firm.  This conclusion avoids a debate over whether a person is or was "represented" by the firm or attorney where the purpose of the Rule is not furthered by such distinctions.[4]  Accordingly, if the departing attorney complies with the advertising and solicitation provisions of the Rules of Professional Conduct, there is no ethical restriction on contacting persons for whom the lawyer provided legal services while associated with the former firm.  See Ariz. Op. 91-17, p. 3.  See also ABA/BNA Lawyers' Manual on Professional Conduct § 91.706 (1993)[5].

 

With respect to their content, communications by the departing lawyer with the prospective clients must not be misleading or overreaching.  See ER 7.1(a) and 7.3(d)(2), (3).  If the communication by the departing lawyer is made in writing, the requirements of ER 7.3(b) also arguably come into play.  ER 7.3(b) provides that written communications to prospective clients for the purpose of obtaining professional employment shall be "clearly marked" on the envelope and on the first page of the communication that it is "Advertising Material" and "a Commercial Solicitation."  The Rule further requires that the notification be printed in red ink with capital letters of a certain type size.

 

This Committee previously concluded that the predecessor provision to ER 7.3(b) did not apply to communications which merely notify persons with whom the departing lawyer had a prior professional relationship that the lawyer was changing employment with the new address given and that the client was free to choose whether to stay with the former firm or move the representation to the new affiliation.  Ariz. Op. 91-17, p. 4.  The Committee stated its belief that such neutral announcements were not "for the purpose of obtaining professional employment" within the meaning of the Rule.  ER 7.3(b) does not apply to such benign announcements by a departing attorney.  Once the lawyer leaves the firm, the lawyer could send a solicitation letter to the former clients, if the letter conformed with the general advertising requirements set forth in ER 7.1.  Solicitation letters sent to former clients need not follow the strictures of ER 7.3(b).

 

Finally, the question of when a departing lawyer may communicate with those persons with whom the lawyer has had a significant personal contact while at the firm is not addressed by the ethics rules.  If the lawyer and the firm can agree on the content and timing of a joint announcement, then many of the potential dilemmas faced by the departing lawyer, including the timing of any announcement, are obviated.  See, e.g., ABA Formal Op. 99-414, p. 4; ABA/BNA Lawyers' Manual on Professional Conduct § 91.711 (1993).  However, there is no prohibition in the Rules on the departing attorney advising clients of the impending departure while the lawyer is still physically present at the former firm.  ABA Formal Op. 99-414, p. 5, n. 11 (rejecting implication of earlier opinions that notices to current clients and discussions about departure as an ethical matter had to wait until after actual departure from firm).  Thus, where agreement is not possible, the Committee does not believe that the Rules of Professional Conduct by themselves dictate when the announcement must be made.  Nevertheless, if the departing attorney is just laying the groundwork with clients for a departure and has not told the firm of his or her intention to leave, there could be serious legal issues raised by such conduct.  See n. 5, supra.  See also ABA Formal Op. 99-414, pp.2, 6-7.[6]

 

CONCLUSION

 

A departing lawyer may contact persons for whom the lawyer has provided legal services while employed by the former firm.  The restrictions of ER 7.3(a) do not apply where the lawyer has had significant personal contact with those persons, although the content of the communication remains subject to ER 7.1(a) and 7.3(d)(2), (3).  Moreover, a solicitation letter sent to former clients is not subject to the requirements of ER 7.3(b), although it must conform to the advertising requirements of ER 7.1.   Where the departing lawyer has had significant personal contact with a client in connection with the provision of legal services to that client by the firm, the lawyer has a mandatory duty under ER 1.4 to notify the client of his or her departure.  The client must be provided with the opportunity to choose between going with the departing lawyer or remaining with the firm.  As noted, there are potential legal issues associated with contacting clients served while employed by the former firm, which are outside the jurisdiction of the Committee, but which should be considered in connection with any communications.



[1] Formal Opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceedings.  © State Bar of Arizona 1999

[2] In addition, the Ethical Rules prohibit lawyers from entering into partnership or employment agreements that restrict the right of a lawyer to practice after the relationship ends because such restrictions interfere with the client's right to choose counsel.  See ER 5.6(a); Comment, ER 5.6 (such an agreement "limits the freedom of clients to choose a lawyer").  The law firm itself could not prohibit a departing attorney from contacting clients of the firm consistent with ER 5.6(a).  To interpret ER 7.3(a) as limiting permissible contact to those persons who were technically clients of the departing lawyer as opposed to the firm would effectively impose a post-termination restriction at odds with the purpose underlying ER 5.6.  See Mich. State Bar Ethics Comm., Op. RI-224 (1995); Ariz. Op. 91-07,  p. 3. 

[3] See, e.g., Kan. Bar Assoc. Ethics Advisory Comm., Op. 82-18 (persons notified could include withdrawing attorney's clients and firm clients that asked specifically for lawyer but not clients generally of firm); Ala. State Bar Ethics Comm., Op. 82-689; Ky. Bar Assoc. Ethics Comm., Op. 317 (1987); D.C. Bar Legal Ethics Comm., Op. 273 (1997); Assn. of Bar of New York, Ethics Op. 80-65 (1982).  But see Mich. State Bar Ethics Comm., Op. CI-1133 (1986) (withdrawing associate could not send announcements of change of affiliation to clients of former firm even if lawyer had substantial personal contact with them, unless they were clearly associate's clients and not firm clients).

[4] Nowhere do the Rules address whether the firm or the individual lawyer in the firm represents the client.  2 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 7.3 202 (Supp. 1998).  While, as noted above, this question may not be relevant in an analysis of solicitation issues, it "is still relevant in making disposition of the clients who elect not to follow a departing lawyer to the new firm." Id.  As a matter of professionalism, if not ethical compulsion, the lawyer should educate whoever is taking over a pending matter about the file.  By contrast, if the departing lawyer is considered to have been the client's lawyer, as the inquiring attorney seems to suggest is the case here, then the lawyer "has an affirmative duty to see that new counsel is provided and that no detriment results to the client in the interim." Id.  See ER 1.16(d); ABA Formal Op. 99-414, p. 2 n. 1 Without further facts, it is not possible to determine here whether the law firm or the departing lawyer represented the clients.  Moreover, the issue presents a question of law on which the Committee cannot express an opinion.  See Ariz. Op. 91-17, p.4.

[5] The jockeying for position to see who will control the clients creates both ethical and legal issues.  Solicitation of clients by the departing lawyer has resulted in claims against both partners and associates for interference with business relations, breach of contract and breach of fiduciary duty.  See, e.g., Dowd and Dowd, Ltd. V. Gleason, 693 N.E.2d 358 (Ill. 1998); Graubard Mollen v. Moskovitz, 653 N.E.2d 1179 (N.Y. 1995); Meehan v. Shaughnessy, 535 N.E.2d 1255 (Mass. 1989).  However, the legal issues that can arise are beyond the jurisdiction of the Committee.

[6] In some instances, courts also have upheld disciplinary sanctions on the grounds that the departing lawyer engaged in activity involving fraud, deceit, dishonesty or misrepresentation.  Such conduct included removing files without client consent, secreting files in preparation for withdrawal, clandestinely meeting with clients to obtain signed retainer agreements prior to withdrawing and failing to inform clients of the change in nature of representation.  In the Matter of Cupples, 979 S.W. 2d 932 (Mo. 1998); In re Cupples, 952 S.W.2d 226 (Mo. 1997); In re Smith, 853 P.2d 449 (Or. 1992).   See generally ER 8.4(c).