Protecting Your Firm When an Attorney Leaves the Practice

In New Jersey and across the country, it’s a fact as certain as death and taxes: job-hopping is an inevitable part of workplace culture. It’s also a fact that attorneys leave their law firms on a continual basis. Gone are the days when they get hired fresh out of law school and stay until retirement. There are many reasons why an attorney may wish to break with his or her firm: disagreements, personality clashes, better opportunities, work/life balance issues and others.

Regardless of the reason, having an attorney separation agreement in place at your law firm can make the process a smooth one for all involved — and ensure business operations continue seamlessly during the transition. To facilitate this, The American Bar Association’s ethics panel has given its approval to agreements that require resigning attorneys to give minimum notice before their departure – ABA Says Minimum Notice Requirements Are Ethical.

An ethical and effective separation agreement should contain a number of critical elements:

1. Minimum notice before departure. The ABA allows for minimum notice as long as it does not restrict competition. Attorney ethics rules prohibit restrictive covenants or any agreement that limits a lawyer’s ability to practice. Assuring continuity of service is the main reason why the ethics panel held that the requirement is permitted.
2. Joint notification of clients. Competition for clients may be intense when a lawyer leaves a firm. The rights of the clients must be protected. That involves being notified of the separation, and the freedom to choose which firm they want to align with. Joint notification is preferred by ethical authorities and can be agreed upon in advance.  The departing attorney’s solicitation of clients before the firm has been notified of the resignation may well be a breach of fiduciary duty.
3. Employee solicitation. The firm cannot impose control over how the departing attorney notifies staff within the firm of his or her intended departure — as that may be deemed unethical. However, a mass exodus of staff must be avoided, as it will be disruptive to clients and the firm. For this reason, it’s wise to set some agreed-upon guidelines.
4. Dealing with accounts receivable and charging liens. Disputes over work in progress and outstanding receivables is something that can be avoided with an agreement in advance.
5. Intellectual property and proprietary information. A law firm often has made significant investments in various processes and forms. Similarly, client lists often qualify as trade secrets.  Separation agreements should address these important issues.
6. Transfer of matters and files. A departing lawyer is very likely to take some matters to their new firm. Making sure that the transfer of the files, filing of substitutions and assuring compliance with short-term deadlines is the responsibility of both the existing law firm and the departing attorney.

A more detailed look at attorney separation agreements can be found on the website of Weiner Law Group attorney Jay R. McDaniel: Does Your Law Firm Have an Attorney Separation Agreement? It Should.

Contact the business litigation team at Weiner Law Group

The dedicated business divorce litigators at Weiner Law Group serve clients throughout New Jersey and in the New York City metropolitan area. Contact us. should you have any questions or would like assistance in implementing a separation agreement.

 

Tags: attorney separation agreement, business contracts, business divorce, business litigation