NYCLA COMMITTEE ON PROFESSIONAL ETHICS FORMAL OPINION
Publicity; Partner withdrawal from firm partnership
Conditions under which a law firm should notify clients of a partner’s withdrawal from firm partnership and when representation should be discontinued.
DR 2-102, 2-107, 2-110, 6-101
The inquiring law firm was comprised of three partners, one of whom has elected to withdraw. The firm inquires (1) whether the firm may take steps to protect itself against claims of clients arising out of the conduct of its former partner; and (2) what steps the firm may take with respect to such clients on matters the firm’s remaining partners are not competent to handle.
Whether and to what extent the law firm may be liable to clients for the actions of its former partner, and the actions if any that a law firm may take to address such liability issues, are questions of law on which this Committee may offer no view. We note only the following: Nothing in the Code of Professional Responsibility prohibits a law firm from notifying its clients that a partner is no longer with that firm. A law firm may not hold out a lawyer as a partner in the firm if in fact that lawyer is no longer a partner in the firm. DR 2-102(C). While a law firm may not indicate that a lawyer no longer with the firm is a partner, we do not believe that the Code requires a law firm to notify all of its clients whenever a partner withdraws from the firm. Nevertheless, there may be circumstances in which a failure to notify certain clients of a particular partner’s withdrawal from the firm could be misleading to the clients, in particular in circumstances in which specific clients believe that the client’s legal matters at the firm are being handled by the former partner. In such circumstances, the law firm is ethically obliged to notify those clients of the fact of the partner’s withdrawal from the firm.
Regardless of whether the law firm is obliged to notify particular clients of a partner’s withdrawal, the law firm may not continue to represent clients on legal matters “which the lawyer knows or should know that he or she is not competent to handle, without associating with a lawyer who is competent to handle” such matters. DR 6-101(A)(1). When a law firm loses a partner who alone in the firm was experienced and competent to handle certain types of legal matters, the law firm has three choices.
First, the law firm may bring into the partnership, or hire an associate, with a lawyer who is competent to handle the matter. Whether and to what extent the law firm must advise the client of the change in its own personnel depends on the particular circumstances, including representation and the relationship between the client and the firm and whether the change in personnel involves a partner or associate. The firm must also assure that its efforts to obtain competence in a particular area are sufficiently immediate to avoid prejudice to any ongoing client matters in that area.
Second, with the informed consent of the client, the lawyer may refer the client to another law firm competent to handle the matter. Whether the law firm may continue to represent the client in the matter along with this other firm depends on the circumstances of the particular matter. Many client matters require competence in more than one area of law, and it is not uncommon for a lawyer to bring in another firm to assist in rendering legal services to a client in a particular area in which the law firm lacks competence. In the event that the law firm seeks to continue to represent the client and to divide the legal fee paid by the client with another law firm, the law firm must comply with the provisions of DR 2-107(A), which requires not only informed client consent but also that any division of the legal fees be in proportion to the services performed by each firm or that each firm, in a writing given to the client, assume joint responsibility for the representation. NYCLA Op. 715. DR 2-107(A) requires also that the total fee for both firms may not exceed reasonable compensation for all services rendered.
Finally, in the event that the law firm is unable or unwilling to avail itself of either of the first two choices, then the law firm must withdraw from the representation. A law firm seeking to withdraw in these circumstances must comply with the provisions of DR 2- 110(A). Thus, for example, if the legal matter is pending before a tribunal and “[i]f permission for withdrawal from employment is required by the rules of [that] tribunal, a lawyer shall not withdraw from employment in a proceeding before that tribunal without its permission.” DR 2-110(A)(1). Thus, if the departing partner’s matters are pending before a tribunal that requires permission for withdrawal, then the law firm must seek permission of the tribunal before withdrawing. In addition, DR 2-110(A)(2) states:
“[A] lawyer shall not withdraw from employment until the lawyer has taken steps to the extent reasonably practicable to avoid foreseeable prejudice to the rights of the client, including giving due notice to the client, allowing time for employment of other counsel, delivering to the client all papers and property to which the client is entitled, and complying with applicable laws and rules.”
The import of this requirement will vary on a case-by-case basis. At a minimum, the law firm must notify the client of the circumstances requiring withdrawal, and take whatever reasonable steps may be appropriate to avoid injury to the client from those circumstances.