Risk Management

Have license, will travel, Part II:
Preserve clients' rights when you change firms

By Ann Massie Nelson

Your clients should never feel like forgotten baggage on your way out the door to a new firm. To make a smooth transition, keep in mind that clients have certain rights, some compelled by professional responsibility rules, others by common courtesy.

Madison family law practitioners Linda Balisle and Linda Roberson, who left one firm to form another, and Sally E. Anderson, who practiced in two Milwaukee firms before joining Wisconsin Lawyers Mutual Insurance Co. as claims counsel, shared their experiences for the development of this client "bill of rights."

When you leave your law firm for new ventures, your clients have the right to:

1. Know you are leaving. Ideally, you and the firm you are leaving will carefully script a joint letter to current and former clients, giving them reasonable notice of your departure. You are not obligated to tell them why you are leaving the firm; you can simply say you are leaving to "pursue new opportunities." If the legal matter is in litigation, you will need to ask the court for permission to withdraw. (See SCR 20:1.16.) Reinforce that the client has retained the firm - not you individually - and that the firm will continue to serve the client until he or she directs the firm to do otherwise. "While the client is the client of the firm, in reality, clients often believe they have hired the individual lawyer," Roberson says.
2. Select other counsel. Your client is not limited to choosing between you and the firm, a fact that could be overlooked when communicating your departure to clients. Tell clients, "Your legal matter has not concluded. You will continue to need legal representation." Some lawyers, particularly sole practitioners who don't want to leave clients in a lurch, feel obligated to refer their clients to another attorney. Be aware that you could be accused of negligent referral if your successor acts negligently. Rather than recommending one lawyer, refer clients to three or four lawyers or the State Bar's Lawyer Referral & Information Service, at (800) 362-9082.
3. The contents of their file. You know that the color-coded, identity-encrypted, punched, bound, legal-size document in your locked file cabinet is the client's property. Odds are, the client believes the file belongs to you. In your letter, tell the client he or she owns the file and may choose who maintains custody of it. For example, "Your file and all original documents related to your legal matter belong to you. You may pick up your file at the firm's reception desk any time. Alternatively, I would be happy to send the file to another lawyer, with your written authority and at your direction." Get a signed receipt from whomever picks up the file. Keep copies of the file (or at minimum your work product and all correspondence) to document your work in the event that the client later claims you were negligent.
4. Progress. Your departure should not cause undue delay in the client's legal representation, Anderson says. If you are transferring the file to the client or another attorney, highlight the immediate obligations and deadlines that must be fulfilled.
5. Confidentiality. Attorney-client privilege and confidentiality rules continue, even after the attorney-client relationship ends. Make certain when referring client matters or transferring files you don't reveal information that would compromise the client's interests. (See SCR 20:1.6.)
6. Expect you to fulfill obligations to third parties. For example, if you hire expert witnesses, surveyors, appraisers, court reporters or others, the client can expect you to pay for services rendered on the client's behalf. Likewise, if you are holding clients' money in escrow, you need to distribute the funds in the time and manner you promised.
7. Be billed fairly. Establish a "stop point" on billing for continuing matters to ensure that clients are not double billed, Balisle and Roberson recommend. For example, you might write, "All legal services provided and expenses incurred before April 30, 1998, will appear on an invoice you will receive from Law Firm A and will be payable to that firm." Your time spent talking with successor counsel and any costs resulting from your departure (photocopies, telephone and delivery charges) are your responsibility, not the client's.
8. Approve any fee-splitting agreements. Who bills for what is a "spicy question" in contingency fee cases, says Anderson. Contingent fees may be split between law firms in proportion to the services performed, or by written agreement with the client when the lawyers agree to be jointly responsible for the representation. The division of responsibility and fees needs to be specified in a written agreement between the firms, Anderson says. (See SCR 20:1.5.)

   Ann Massie Nelson is director of communications at Wisconsin Lawyers Mutual Insurance Co. Past risk management columns appear on the WILMIC web site, with permission of the State Bar of Wisconsin.

9. Expect that your departure will not create a conflict of interest. Your knowledge of clients' affairs cannot be erased when your name is removed from the firm letterhead. The hazards of lateral transfers are greatest in small to mid-size firms, where a new associate or partner's mere presence could disqualify the firm from representing some long-term clients. "Both firms must write to the client, explain the situation, and request the client's permission to continue representation," Anderson notes. Before making a lateral transfer, the lawyer and the hiring firm should examine each other's client lists to identify potential conflicts of interest and confidentiality concerns. See the rule and the comments to SCR 20:1.10 (Lawyers Moving Between Firms) for a discussion of vicarious disqualification.
10. Expect you to maintain adequate insurance protection. While malpractice may be the last thing on your mind when making a life change, your clients should not lose their home or life savings as a result of errors or omissions in your representation. Make sure there are no gaps in your professional liability insurance protection when transferring to another firm or leaving private practice. (See Part I of this series in the December 1997 Wisconsin Lawyer, page 29, which discusses "tails" and prior acts coverage.)

Finally, go gently with clients. People come to you to solve their problems, not become a part of yours. "Your first consideration is to protect your client's interests," says Balisle. "It's not just the professional way to approach the situation, it's the pragmatic way. We have nothing if we don't have satisfied clients."

Watch the June issue for the next installment: Exit interviews.

Wisconsin Lawyer