Opinion #219. Formal Ethics Opinion Regarding Lateral Transfers by Attorneys

Issued by the Professional Ethics Commission

Date Issued: December 5, 2018

Attorneys moving from one firm to another is a common occurrence. In light of the potential for conflicts of interest and imputed disqualifications resulting therefrom, the hiring firm, the transferring attorney, and that attorney’s former firm must give careful attention to the obligations imposed by the Maine Rules of Professional Conduct, the most commonly implicated of which are addressed in this Opinion.

1. When during the hiring process should the conflict identification take place and what are the obligations of the hiring firm and the potential new attorney? Can a hiring firm make a conditional offer, pending the outcome of conflict identification?

Short Answer: As soon as negotiations are more than merely theoretical, a review of all cases in which the potential attorney is or has been involved should begin in order to identify conflicts of interest. A firm may make a conditional offer, pending the resolution of the conflicts review.

Rules Implicated:

M.R. Prof. Conduct 1.6

M.R. Prof. Conduct 1.7
M.R. Prof. Conduct 1.9
M.R. Prof. Conduct 1.10

Discussion: The question of when to start discussing conflicts of interest is a sensitive one. Due to confidentiality concerns, conflicts should not be discussed until the new firm and the prospective transferring lawyer are beyond the initial “kicking the tires” phase, such that an actual transfer seems imminent. The precise time varies based on a number of considerations. For example, many firms defer asking for conflicts information from newer lawyers until a conditional offer has been made. Experienced lawyers, who are more likely to have potentially problematic conflicts, may compel an earlier analysis. However, a conditional offer can be, and often is, made prior to performance of a conflicts analysis.

Both the transferring lawyer and the new firm are required to protect current and former clients from harm due to conflicts of interest. Because of confidentiality concerns inherent in the disclosure of information about clients, Rule 1.6 dictates that only the minimum information necessary to allow a conflict analysis under Rule 1.7 should be provided, and then only after substantive discussions about a transfer have taken place. The disclosure of information consistent with Rule 1.6 is discussed thoroughly in ABA Formal Opinion 09-455 (October 8, 2009), entitled “Disclosure of Conflicts Information When Lawyers Move Between Law Firms.”

The permitted disclosure of client information is limited in scope. If matters are in litigation and a matter of public record for that reason, identification of potential conflicts can be made easily without risk of over-disclosing. In private matters, initial disclosures of information should be limited to client names and attorney areas of practice. If there is a need to disclose more specific information in order to determine whether a conflict exists, care must be taken not to compromise client confidentiality. The conflicts analysis should be completed using information from non-confidential sources apart from the transferring attorney whenever possible, consistent with Rule 1.6. If there are no non-confidential sources available to the new firm to complete the analysis of an identified potential conflict of interest, and a fact-intensive review of confidential information is necessary, then a neutral intermediary lawyer may be retained to receive and analyze the information, if the client consents.

Lastly, the transferring attorney and the new firm both have a duty not to reveal or use any of the disclosed information except to identify and resolve potential conflicts of interest.

2. What level of involvement in a case will give rise to a conflict of interest? What if the attorney’s prior work was limited to research and did not acquire any case strategy knowledge or confidential client information? Was performed when the attorney was a nonlawyer? Was performed when the attorney was a student attorney?

Short Answer: Where the transferring attorney actually represented a client who is truly adverse to the client of the hiring firm in the same matter or in a substantially related matter, or the transferring attorney has actual knowledge of protected information such that it will pose a risk of materially advancing the position of the hiring firm’s client, then a conflict of interest exists and must be addressed when hiring that attorney.

Rules Implicated:

M.R. Prof. Conduct 1.6

M.R. Prof. Conduct 1.7
M.R. Prof. Conduct 1.8
M.R. Prof. Conduct 1.9
M.R. Prof. Conduct 1.10

Discussion: The overriding, general principle against which the transferring attorney’s role is measured is that “[l]oyalty and independent judgment are essential elements in the lawyer’s relationship to a client.” M.R. Prof. Conduct 1.7 cmt. (1). Stemming from that principle are the more specific prohibitions against using confidences or secrets of a client to that client’s disadvantage (Rules 1.8(b), 1.9(c)); changing sides as the representing attorney in the same or substantially related matter, (Rule 1.9(a)); and representing one client with interests that are materially adverse to a former client and about whom the prospective attorney acquired material information protected by the Rules, (Rule 1.9(b)).

There are several key concepts in assessing for conflicts of interest that may impact the hiring decision and that need to be addressed: (1) client representation; (2) same or a substantially related matters; (3) adversity; (4) information acquired; and (5) materiality.

First, the hiring firm should take care to confirm that the transferring attorney or their former firm in fact represented a client who is adverse to a client of the hiring firm. “An attorney-client relationship is established when ‘(1) a person seeks advice or assistance from an attorney, (2) the advice or assistance sought pertains to matters within the attorney's professional competence, and (3) the attorney expressly or impliedly agrees to give or actually gives the desired advice or assistance.’”1 If there is no attorney-client relationship, then there likely is no conflict of interest, of course.

Second, a conflict of interest exists when the representation of the former client by the transferring attorney occurred in a matter that is the same as, or substantially related to, the matter in which the hiring firm is representing the other, adverse client. However, Rule 1.9 defines a “substantially related” matter such that the transferring attorney’s knowledge may create a conflict of interest regardless of the similarity of that matter. The analysis focuses on the risk that “confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.” Rule 1.9(d). If that risk is substantial, then a conflict may exist to be resolved even in the instance of different or dissimilar matters.

Third, a conflict of interest impacting the transfer exists if the former client represented by the transferring attorney and the separate client represented by the hiring firm indeed are adverse. This determination requires an analysis of many factors and involves concepts of direct and indirect adversity, as well as the lawyer’s independent professional judgment, that are beyond the scope of this Opinion.

Fourth, a disqualifying conflict of interest arises if the transferring attorney’s level of involvement with a former client means that the attorney “has actual knowledge of information protected by Rules 1.6 and 1.9(c).” M.R. Prof. Conduct 1.9 cmt. (5). If there is no actual knowledge of a client’s confidences or secrets material to the pending matter, then there is no conflict of interest requiring disqualification “even though the interests of the two clients conflict.” Id. The determination of whether actual knowledge exists is made objectively from the facts and circumstances.2 There is no per se imputed knowledge in this context. M.R. Prof. Conduct 1.9 cmt. (5). The fact that attorneys of the former firm have actual knowledge of a client’s confidences and secrets, furthermore, does not necessarily disqualify the transferring attorney or the hiring firm from representation.3

Regardless of the transferring attorney’s status at the time the confidences or secrets were learned, e.g., unadmitted, law student etc., that knowledge will disqualify them and the hiring firm from representing an adverse client. However, the transferring attorney’s status at the former firm and role with the former client are relevant in determining whether that attorney, in fact, represented the client or knows confidences or secrets in the first place. If the attorney was a summer law clerk, for example, who was limited to “back office” work, e.g., researching discrete issues and the like, then the risk is low that they will know client confidences or secrets that will disqualify them. Furthermore, the chances are slim that any confidential information they do know would materially advance the interests if the hiring firm’s adverse client.4 A good rule of thumb appears in the commentary to Rule 1.9: “The underlying question is whether the lawyer was so involved in the matter that the subsequent representation can be justly regarded as a changing of sides in the matter in question.” M.R. Prof. Conduct 1.9 cmt. (2).

The hiring firm suffers no imputed disqualification, however, if an individual non-lawyer of the firm, such as a paralegal, assistant, or law student, has a conflict of interest. M.R. Prof. Conduct 1.10 cmt. (3). In the case of an attorney or a law student associated with a legal aid clinic, specifically, disqualification of that attorney or student is not imputed to any other affiliated attorney or student within the clinic or outside it. M.R. Prof. Conduct 1.10(e). However, the transferring non-lawyer must be appropriately screened from all participation in the matter in order to avoid conveying confidential information. Rule 1.10(e) & cmt. (3). For more guidance on screening non-lawyers, see Opinion No. 186 issued on July 22, 2004, entitled “Screening of Non-Lawyer Staff to Avoid Conflict.”

Fifth, materiality is important in the conflict-of-interest analysis applicable to a transferring attorney in three respects: (1) the adversity of the clients, (2) the actual knowledge the transferring attorney has of the former client’s confidences and secrets, and (3) the impact of confidential information in the advancement of the position of the hiring firm’s client. The interests of the former client must be “materially” adverse to the interests of the other client in order to generate a conflict of interest. M.R. Prof. Conduct 1.9(a) & (b)(1). Clients who are not truly at loggerheads, or whose interests align, do not pose a conflict-of-interest problem for the lateral hire or for the hiring firm. The knowledge the transferring attorney learned, furthermore, has to be material to the matter for which the hiring firm is representing the adverse client in order for their to be a conflict. M.R. Prof. Conduct 1.9(b)(2). Finally, in dealing with substantially related matters, the confidential information known by the transferring attorney must pose a risk of materially advancing the position of the hiring firm’s client in order for there to be a disqualification. M.R. Prof. Conduct 1.9(d).

3. What if the potential new attorney worked as an attorney for the government?

Short Answer: The transferring attorney is disqualified from representing a client of the hiring firm in two circumstances: (1) against the government in a matter in which they participated personally and substantially, absent government consent, and (2) against a person about whom the transferring attorney has actual knowledge of confidential government information. However, the rest of the hiring firm is not disqualified if there is appropriate screening of the transferring attorney from the matter, they get no fee from it, and the involved governmental officer or agency consents.

Rules Implicated:

M.R. Prof. Conduct 1.9

M.R. Prof. Conduct 1.10
M.R. Prof. Conduct 1.11

Discussion: Rule of Professional Conduct 1.11(a)(2) dictates that a transferring attorney may not represent a client of the hiring firm in a matter in which the attorney participated personally and substantially while employed by the government, without the consent of the appropriate governmental officer or agency. Consented representation, however, does not permit the lawyer to reveal or use the confidences or secrets of the government to its disadvantage. The prohibitions of Rule 1.9(c) indeed apply to former government attorneys.

If a transferring lawyer is disqualified from representing a client against the government, the conflict of interest is not necessarily imputed to the rest of the hiring firm. “Where a lawyer has joined a private firm after having represented the government, imputation is governed by Rule 1.11(b) and (c), not ... Rule 1.10.” M.R. Prof. Conduct 1.10 cmt. (7). So long as the appropriate governmental officer or agency consents to the firm’s representation, the disqualified attorney is “timely screened from any participation in the matter,” and the attorney “is apportioned no part of the fee therefrom,” the firm is not also disqualified. M.R. Prof. Conduct 1.11(b).

When the transferring attorney has actual knowledge of confidential government information about a person, that attorney is disqualified from representing a client of the hiring firm adverse to that person in a matter in which the information could be used to the material disadvantage of that person. M.R. Prof. Conduct 1.11(c) and cmt. (8). The disqualification is not imputed to the rest of the hiring firm, however, so long as the disqualified lawyer is screened from the matter and gets no fee from it. Id.

4. If the imputed disqualification rule is implicated, what are the best practices for providing disclosure and seeking client consent by the hiring firm? By the attorney’s former/current firm?

Short Answer: Generally, a conflict of interest imported by the transferring lawyer will not be imputed to the new firm if the disclosure of information necessary to identify the conflict is appropriately limited, informed consent from the affected client is properly obtained, and the transferring, disqualified lawyer is sufficiently screened.

Rules Implicated:

M.R. Prof. Conduct 1.0

M.R. Prof. Conduct 1.6
M.R. Prof. Conduct 1.9
M.R. Prof. Conduct 1.10
M.R. Prof. Conduct 1.17A

Discussion: The consideration of an imputed disqualification involves several issues. The first is how much information can be revealed about a lateral hire’s clients to the new firm in order to determine whether any conflict of interest exists. Rule 1.6 imposes on an attorney the obligation to keep all information related to the representation of clients confidential. Some exceptions are provided in Rule 1.6(b)(6), which allows a lawyer to reveal a confidence or secret of a client to the extent the lawyer reasonably believes is necessary in connection with the sale of a law practice under Rule 1.17A, to detect and resolve conflicts of interest arising from the lawyer's change of employment, or to identify and address conflicts arising from changes in the composition or ownership of a firm. A “confidence” is information protected by the attorney-client privilege under applicable law. M.R. Prof. Conduct 1.6(d). A “secret” is any “other information relating to the representation if there is a reasonable prospect that revealing the information will adversely affect a material interest of the client or if the client has instructed the lawyer not to reveal such information.” Id.

Rule 1.6 provides for limited disclosures in those circumstances, permitting a lawyer to disclose

with respect to each affected client the client's identity, the identities of any adverse parties, the nature and extent of the legal services involved, and fee and payment information, but only if the information revealed would not compromise the attorney-client privilege or otherwise prejudice any of the clients. The lawyer or lawyers receiving the information shall have the same responsibilities as the disclosing lawyer to preserve the information regardless of the outcome of the contemplated transaction.

M.R. Prof. Conduct 1.6(b)(6). Before revealing that information, however, the lawyer first must make a good faith effort to provide the client with reasonable notice of the intended disclosure.

Rule 1.9 maintains the protection of a former client and permits a conflict to be waived under certain circumstances where the client gives informed consent, so long as the lawyer does not reveal or use the former client’s confidences or secrets to the disadvantage of that client. M.R. Prof. Conduct 1.9(c). Pursuant to Rule 1.0(e) “informed consent” means, among other things, a person’s agreement to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of, and reasonably available alternatives to, the proposed course of conduct. Consent must be confirmed in writing, as defined by Rule 1.0(b), when a lawyer represented a client in a matter and the interests of that former client are materially adverse to the interests of a current client in the same or a substantially related matter, or when the lawyer’s firm represented a former client whose interests are materially adverse to the current client and the lawyer acquired certain material information protected by M.R. Prof. Conduct 1.6 and 1.9(c).

Rule 1.10, regarding imputed disqualification, addresses the conditions under which the transferring lawyer’s new firm may represent a client in the case of a conflict of interest involving a client of the transferring lawyer’s former firm. There are three conditions. One is screening the transferring lawyer from the matter and ensuring they get no fee from it. M.R. Prof. Conduct 1.10(a)(2)(i).

The second condition is providing written notice to the affected former client. The Rule specifies that

written notice [be] . . . promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule, which shall include a description of the screening procedures employed; a statement of the firm’s and of the screened lawyer’s compliance with these Rules; a statement that review may be available before a tribunal; and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures.

M.R. Prof. Conduct 1.10(a)(2)(ii). Pursuant to the Advisor Notes effective April 2018, the notice required by this paragraph generally should include a description of the screened lawyer’s prior representation and should be given to the former client as soon as practicable after the need for screening becomes apparent. It also should include a statement by the screened lawyer and the firm that the client’s material confidential information has not been disclosed or used in violation of the Rules. The notice is intended to enable the former client to evaluate and comment on the effectiveness of the screening procedure.

The third condition for the new firm’s representation of a client who is adverse to a client of the transferring lawyer’s former firm is written certification of compliance with the screening procedure “to the former client by the screened lawyer and by a partner of the firm, at reasonable intervals upon the former client’s written request and upon termination of the screening procedures.” M.R. Prof. Conduct 1.10(a)(2)(iii). The certifications give the former client assurance that the client’s material confidential information has not been disclosed or used inappropriately, either prior to timely implementation of a screen or thereafter. If compliance cannot be certified, then the certificate must describe the failure to comply.

It is important to note throughout this process that a client does not “belong” to either the departing lawyer or the former firm and therefore both have ethical obligations, including to inform the client of the departure so the client can decide whether to follow the departing lawyer or remain with the current firm. When a lawyer ceases to practice at a law firm, both the departing lawyer and the responsible members of that firm have ethical responsibilities to the clients on whose matters the lawyer currently is working to assure, to the extent reasonably practicable, that their representation is not adversely affected.6

5. Under what circumstances can a firm use screening, such as that mentioned in M.R. Prof. Conduct 1.10(a)(2)(i), to manage a conflict caused by a transferring attorney, and what should such screening involve?

Short Answer: A transferring lawyer may be screened from participation in a matter in a variety of circumstances in order to manage a conflict of interest caused by that lawyer’s change of firms. Maine has not articulated the precise elements necessary for an effective, comprehensive screen applicable to all circumstances, but M.R. Prof. Conduct 1.10 and other resources provide some valuable guidance for an effective screening process.

Rules Implicated:

M.R. Prof. Conduct 1.10

M.R. Prof. Conduct 1.11
M.R. Prof. Conduct 1.12
M.R. Prof. Conduct 1.18

Discussion: A core concern of a former client is protection of that client’s confidential information and secrets from disclosure or from their use to the disadvantage of that client. Lawyers and law firms can address this legitimate concern and prevent a disqualified lawyer’s conflict of interest from being imputed to the other lawyers within the same firm by using an ethical “screen.” The Maine Rules of Professional Conduct permit the use of a system of safeguards and procedures to prevent the imputation of conflicts when, for example, a disqualified lawyer leaves a law firm for a judgeship or third-party neutral position (Rule 1.12) or a disqualified lawyer moves from a private firm to a government position, or vice versa (Rule 1.11). Screening also is a permitted procedure to avoid imputed disqualification when a lawyer transfers from one private firm to another (Rule 1.10(a)(2)), when a lawyer has a conflict of interest based on a personal interest (Rule 1.10(a)(1)), when a former non-lawyer has become a lawyer (Rule 1.10, cmt. (4)), and when a lawyer received confidential information from a prospective client who did not become an actual client (Rule 1.18).

Courts have held that simple isolation of a disqualified lawyer from an affected client or client file is insufficient to avoid an imputed conflict of interest. In order to be effective, a firm must adopt “formal, institutionalized screening measures” that minimize the likelihood of a disqualified lawyer’s contact with the matter.7 Those measures should be reduced to writing and implemented before a disqualified lawyer transfers to a firm.

Maine courts, the Rules of Professional Conduct, and previous ethics Opinions have not specified the elements of an adequate screen when one is required under the Rules. “Screened” is generally defined under Rule 1.0(k) as the isolation of a lawyer from any participation in a matter through the timely imposition of a procedure within the firm that is reasonably adequate under the circumstances to protect information that the lawyer is obligated to protect under the Rules or other law. Following the ABA’s 2009 amendment of Model Rule 1.10 to allow screens to be employed in this respect, other jurisdictions have struggled to define the scope and details of an effective ethical screen. The Connecticut Bar, in particular, has endorsed the following components, all of which should be in place before the disqualified, transferring attorney begins working at the new firm. Each condition should be described in an agreement or memorandum provided to, and signed by, the disqualified attorney and others who may work on the affected matters.8

  1. All attorneys and non-lawyer staff must be prohibited from communicating with the disqualified attorney about the representation by any means, and the disqualified attorney should be prohibited from communicating with other firm members about the matter.

  2. The disqualified attorney must be barred from access to any aspect of the affected file. Electronic file materials must be password protected or otherwise encrypted so as to be quarantined, and hard copies should be kept in a locked area.

  3. The disqualified attorney should be prohibited from keeping or sharing any material concerning the affected client with new firm’s lawyers or non-lawyers.

  4. If feasible, the disqualified attorney should be located remotely from attorneys and staff working on the affected matter.

  5. All law firm physical files should be conspicuously marked with indications that the disqualified attorney may not be permitted access to them.

  6. Copies of the firm’s screening memorandum or agreement should be provided to all attorneys and staff assigned to the affected matter.

  7. All outside vendors, experts, consultants, and others engaged to work on the affected matter should be required to sign a certification that they have received, read, and will comply with the screening memorandum.

  8. Any firm publications or newsletters should avoid mention of the affected matter.

  9. The law firm’s managing partner or committee should inform affected clients about the conflict before the disqualified, transferring attorney begins working at the new firm.

  10. The law firm should inform the disqualified, transferring attorney’s affected client of the conflict and all measures taken to protect client confidences and secrets.

  11. The disqualified attorney should receive no compensation derived from the affected matter.9

  12. The disqualified lawyer should be isolated from all contacts with an affected client and those affiliated with the client or matter, including witnesses for or against the client.10

  13. The affected law firm should designate personnel to monitor and ensure compliance with the ethical screen, and reminders should be sent at regular intervals to the disqualified lawyer and personnel.

This screening mechanism is at risk for being ineffective, however, without regular instruction about the conflict of interest rules to lawyers and relevant firm personnel in the form of continuing education, risk management bulletins, and other means. Firms should create and maintain checklists for establishing and monitoring ethical screens in order to ensure compliance.

Rule 1.10 requires that, in addition to being screened from participation in a matter, a disqualified lawyer must not received a fee from that matter. M.R. Prof. Conduct 1.10(a)(2)(i). The Rule further mandates that the affected former client receive prompt written notice, including a description of the screening procedure used, a statement of the screened lawyer’s compliance with the rules, a statement that review of the screening is available by a tribunal, and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedure. M.R. Prof. Conduct 1.10(a)(2)(ii). Finally, the firm is required to provide periodic certifications of compliance with the adopted screening procedure to the affected former client at “reasonable intervals,” if requested, and of the screening procedure’s termination, when it occurs. Id.

An ethical screen does not resolve a disqualified, transferring attorney’s conflict of interest as if it no longer exists. Rather, the screen avoids imputing to the new firm the conflict of interest of the transferring attorney by forming a barrier between that attorney and the rest of the firm.

6. What may a firm say to the departing attorney’s clients, and when may they say it? How are such clients identified? What may the departing attorney say and when can they say it?

Short Answer: Attorneys have a duty to keep clients reasonably informed about the status of their matters, which includes timely notifying clients that the attorney is leaving a firm if they have had significant professional contact with the client.

Rules Implicated:

M.R. Prof. Conduct 1.4

M.R. Prof. Conduct 1.16
M.R. Prof. Conduct 7.1
M.R. Prof. Conduct 7.3
M.R. Prof. Conduct 8.4

Discussion: Current clients who have had significant professional contact with the transferring attorney need to be told of the attorney’s departure and where the attorney will be practicing. This information facilitates the ability of the client to make “informed decisions regarding the representation.” M.R. Prof. Conduct 1.4(b). ABA Formal Ethics Opinion 99-414 provides a good discussion of the several ethical obligations incumbent on the departing attorney and the firm, including required communications with that attorney’s clients.

Since the transferring attorney may be terminating their representation of clients, in effect, by making the move, Rule 1.16 applies and provides some guidance on the timing of the required notification to clients. The clients might choose to follow the attorney to their new firm, but the attorney cannot assume that to be the case. The attorney must “take steps to the extent reasonably practicable to protect a client’s interests, including giving reasonable notice to the client, [and] allowing time for employment of other counsel . . .,” M.R. Prof. Conduct 1.16(d), if a client so chooses.

Ideally, the notification to the client would be in the form of a joint letter from the firm and the departing attorney. If a joint letter is not feasible, due to a hostile relationship for example, then the transferring attorney must undertake to provide the proper notification to their clients. Nothing prevents the firm from issuing a separate notice to the clients, too, but the departing attorney ultimately is responsible. If the firm issues its own, separate notice to clients, it “must not take actions that frustrate the departing lawyer’s current clients’ right to choose their own counsel.”11

The letter should be sent to all current clients of the departing attorney and objectively outline the clients’ options, including instructions on how to remain with the firm or follow the departing attorney to continue the representation. Clients should be informed expressly that they have the right to choose. It should go without saying that neither the departing attorney nor the firm may “make a false or misleading communication about the lawyer or the lawyer’s services” or about the firm. M.R. Prof. Conduct 7.1. Both the firm and the transferring attorney should avoid commenting negatively on the other in the letter in an effort to sway the clients’ in their decision. See, also, M.R. Prof. Conduct 8.4(c)(Misconduct, “dishonesty, fraud, deceit or misrepresentation”).

If the letter is not jointly issued, the departing attorney may be subject to the restrictions of Rule 7.3 relating to direct contact with prospective clients. The attorney may not “solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship.” M.R. Prof. Conduct 7.3(a). Clients of the firm with whom the attorney has not worked in a significant capacity fall within that prohibition. If an attorney’s relationship with a client arises “solely by having worked on a matter for the client along with other lawyers in a way that afforded little or no direct contact with the client,” then Rule 7.3 applies to govern the lawyer’s communications about the transfer.12

7. When and how may a departing attorney gain custody of a client file? Of a closed file?

Short Answer: Whether a matter is ongoing or closed and whether the departing attorney or the firm will continue to represent the client in the matter documented by the file, the attorney shall be provided with either the original file or a copy, depending on whom the client chooses to continue the representation.

Rules Implicated:

M.R. Prof. Conduct 1.15

Discussion: Determining what documents, data, or information comprise the “file” or the “client’s property” to which the client is entitled is beyond the scope of this discussion. However, there are several discussions of those issues, as well as issues of access and retention, to be found among the Commission’s prior Opinions.

  • Opinion No. 74, dated October 1, 1986, answered the question of what duty a firm has to retain custody of closed client files on matters for which it is no longer providing services.
  • Opinion No. 120, posted on December 11, 1991, discussed whether an attorney who is terminating his relationship with a client is obliged to pay the expense of turning the file over to the client.
  • Opinion No. 143, issued on July 19, 1994, commented on how to handle client files when a lawyer's practice is unexpectedly terminated through death or disability.
  • Opinion No. 183, written on January 28, 2004, addressed whether an attorney has an obligation to keep a paper copy of the attorney’s correspondence, if they also retain a copy of the correspondence in electronic storage.
  • Opinion No. 185, dated April 1, 2004, answered the question whether tangible documents in a file can be destroyed when scanned into an electronic format.
  • Opinion No. 187, issued on November 5, 2004, addressed the scope of an attorney’s obligation to provide a client with the contents of the client’s file, including the confines of the duty to maintain a file, what constitutes the client’s property, and the duty to deliver the file to the client.
  • Opinion No. 201, created on November 1, 2010, addressed client file retention responsibilities and client notification duties when an attorney leaves a law firm.

The confluence of those Opinions and the current Maine Rules of Professional Conduct lead to the following conclusions relevant to a client file when an attorney who is presumed to have worked in some substantial capacity on the matter documented by the client’s file transfers to another firm.

Rule 1.15 dictates that the lawyer shall promptly deliver any property to which the client is entitled upon request, to include the client’s file. M.R. Prof. Conduct 1.15(d). In the case of a closed file, meaning the representation has ended, that duty does not end. The lawyer must return the client’s file or safeguard all information and data to which the client is entitled in a retrievable format. M.R. Prof. Conduct 1.15(f).

Given the client’s right to the file and the lawyer’s duty of safekeeping, the disposition of the file is the largely the same whether it is the departing attorney who continues the client’s representation or the former firm, and whether the file is for a matter that is open or closed. The departing attorney shall be permitted to take the original file if they will continue to represent the client in that matter. The client gets to decide who will be their attorney, and that attorney gets the original file upon the request of the client. Rule 1.15(f) absolves the firm, as the former attorney no longer representing the client, of the obligation to safekeep the file or to maintain a copy of it once returned to the client or to the departing attorney authorized by the client to take it. When the client wishes the firm to continue the representation, on the other hand, the firm keeps and maintains the original file in order to provide the requested legal services to the client. The departing attorney in that instance has no obligation to safekeep information and data to which the client is entitled.

The question remains whether the departing attorney or the firm whom the client does not choose, and who does not get to keep the original file, may obtain a copy of it nonetheless. The Rule does not answer this question expressly, but there is guidance to be found in Opinion No. 201, which notes that they are entitled to a copy. “While the departing attorney and/or the departing attorney’s law firm may each wish to retain file information for their own purposes or protection, the attorney’s ethical duty is for the benefit of the former client and his or her right of access to file information. Hence, whether this is accomplished through retention by the departing attorney, the firm, or both, the location of the information must be clearly communicated to the client.”13

When the matter is closed because the representation of the client has ended, the result is similar: the client can direct the firm to surrender the original file to the departing attorney and the former firm may keep a copy for itself. The departing attorney then bears the burden of the duty to safekeep and maintain the file imposed by M.R. Prof. Conduct 1.15(f).

8. If a client has paid an advance or retainer, and there is an unearned portion remaining, under what circumstances may the client demand that the firm release it so that it can be paid to the departing attorney?

Short Answer: If a client terminates the representation by a firm after the departure of a lawyer who represented the client, the firm must return any unearned portion of the paid advance or retainer.

Rules Implicated:

M.R. Prof. Conduct 1.0

M.R. Prof. Conduct 1.5
M.R. Prof. Conduct 1.16
M.R. Prof. Conduct 1.15

Discussion: Rule 1.0(o) defines “ ‘[a]dvance,’ ‘advance payment of fees,’ or ‘retainer’” as “a payment by a client in anticipation of the future rendition of services that is not earned until such services are rendered and that is to be credited toward the fees earned when such future services are rendered.” The release of such advance or retainer to either the firm or the client depends on the extent to which fees have been earned by providing services to the client and the terms of the agreement between the client and the firm. M.R. Prof. Conduct 1.5 cmt. (4) (“A lawyer may require advance payment of a fee, but is obliged to return any unearned portion.”); M.R. Prof. Conduct 1.15(b)(1) (a lawyer or firm may withdraw an advance or retainer “only as fees are earned or expenses incurred”).

If a client chooses to discharge a firm after the departure of the lawyer with whom the client worked so that the client may continue the attorney-client relationship with the departing lawyer, the representation of the client by the firm is terminated. M.R. Prof. Conduct 1.16(a)(3). Rule 1.16(d) provides that, on termination of representation, a lawyer or firm must “take steps to the extent reasonably practicable to protect a client’s interests, including … refunding any advance payment of fees or expenses that has not been earned or incurred.” Comment 4 to the Rule notes, “A client has a right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer’s services.” Therefore, a firm may withdraw any earned portion of the advance payment or retainer, but must return the unearned portion to the client upon discharge. A firm may not withhold from a client any unearned advance fee in the event the firm and departing lawyer are involved in a disagreement over the departure.

As an additional note, Comment 8 clarifies that the limitation on fee divisions in Rule 1.5(e) “does not prohibit or regulate division of fees to be received in the future for work done when lawyers were previously associated in a law firm, nor does paragraph (e) prohibit payment to a former partner or associate pursuant to a separation or retirement agreement.” A firm may pay some of the earned portion of a retainer to a departing attorney for fees the lawyer earned during the time they was associated with the firm. Such payment may be by agreement; nothing in the Maine Rules of Professional Conduct mandates or prohibits such payments.

9. May a firm require attorneys to sign non-compete agreements?

Short Answer: A law firm may not require an attorney to sign a non-compete agreement whether that attorney is joining or leaving the firm.

Rules Implicated:

M.R. Prof. Conduct 5.6

Discussion: Maine Rule of Professional Conduct 5.6 states, in relevant part,

A lawyer shall not participate in offering or making:

(a) A partnership, shareholders, operating, employment, or similar type of agreement that restricts the right of a lawyer to practice after the termination of the relationship, except an agreement concerning benefits upon retirement;....

While Maine once allowed such agreements, as noted in Opinion No. 126, that Opinion was superseded when Maine adopted Maine Bar Rule 3.2(g) in 1997. The commentary is nearly universal in prohibiting covenants not to compete, in part because they place the lawyer’s or the law firm’s own interests above the clients’ right to freely choose their own lawyers.

Footnotes
1Doe v. Reg. School Unit No. 21, No. 2:11-CV-25-DBH, 2013 WL 492540 *10 (D. Me. Feb. 7, 2013) (citing Board of Overseers of Bar v. Mangan, 2001 ME 7, ¶ 9, 763 A.2d 1189, 1192–93 (citations and internal quotation marks omitted)).
2See id., 2013 WL 492540 *9 n. ¶9.
3Id., 2013 WL 492540 *8 (citing M.R. Prof. Conduct 1.9 reporter’s notes, ¶ 8).
4See id., 2013 WL 492540 *5 (attorney “never personally represented [the defendant] . . . , merely performed ‘back office’ work,” but billed 140 hours working with the lead attorney, discussing strategy, filing briefs, and researching legal issues so court found it a “stretch” to say definitively that she did not represent defendant and found it a “closer” question whether there was a violation of Rule 1.9(a)).
5See the discussion in Question No. 5, below, for more information about screening.
6ABA Formal Opinion 99-414 (September 8, 1999).
7See, In re Columbia Valley Healthcare System, L.P., 320 S.W.3d 819, 826 (Tex. 2010).
8See M. Stovall, Lawyer Mobility and Imputed Law Firm Disqualification: Implementing Timely and Effective Ethical Screens, An Illustration of What Not to Do, Connecticut Lawyer (Nov. 2010).
9Id. at pp. 20-21. See also, District of Columbia Bar, Ethics Opinions Nos. 227, 277, 279; Kesselhaut v. United States, 214 Ct Cl. 124, 127-128, 555 F.2d 79, 793 (Ct. Cl. 1977); In re Del-Val Financial Corp. Securities Litigation, 158 F.R.D. 270, 273 (S.D.N.Y. 1994).
10M.R. Prof. Conduct 1.10(e)(2).
11ABA Formal Ethics Opinion 99-414, p. 5 n. 15 (September 8, 1999).
12Id., p. 3
13See Moore v. Ackerman, 24 Misc. 3d 275, 876 N.Y.S.2d 831, 280-81 (Sup. Ct. Kings Co. 2009) (even if retention is not mandatory, a lawyer may make a copy of the outgoing file)(citing N.Y. State Bar Op. 780 (2004) (“[a] lawyer may generally retain copies of documents in the client’s file at the lawyer’s own expense, even over the client’s objection”). Attorneys moving from one firm to another is a common occurrence. In light of the potential for conflicts of interest and imputed disqualifications resulting therefrom, the hiring firm, the transferring attorney, and that attorney’s former firm must give careful attention to the obligations imposed by the Maine Rules of Professional Conduct, the most commonly implicated of which are addressed in this Opinion.

Enduring Ethics Opinion