What You May and May Not Ask in Lateral Diligence

Four principles, in tension

Every rule about lateral diligence comes out of these, and they pull against each other on purpose. Understanding why is most of knowing where the line falls.

1. 01The client chooses their counsel

   Model Rule 1.16 and its Comment 4: a client may discharge a lawyer at any time, with or without cause. Without it there would be no lateral hiring at all. Not the firm, and not the departing lawyer. The client decides, because nobody owns the client.

2. 02The lawyer may change firms

   Model Rule 5.6: apart from agreements concerning retirement benefits, no agreement may restrict a lawyer’s right to practice after leaving a firm, which is why noncompetes have so little purchase in law. It follows from the first principle: a client’s right to choose counsel means little if that counsel is not free to move.

3. 03The partner owes duties to their partners

   This one comes not from the Rules of Professional Conduct but from the Revised Uniform Partnership Act, sections 404 and 603: a duty of loyalty and a duty of care. A partner may not appropriate a partnership opportunity, or compete within the scope of the firm’s business, while still inside it. The distinction that governs everything: a lawyer may prepare to compete while at the old firm, but may not compete.

4. 04Both sides owe duties to the client

   Model Rule 1.4(b), and ABA Formal Opinion 99-414. The departing lawyer and the firm being left are both responsible for seeing that the withdrawal does no material harm to clients with active matters, and that notice is prompt. A lawyer changing firms is material information the client is entitled to have.

So the lateral may move, may not solicit before leaving, and must keep clients informed. Reconciling those comes down almost entirely to notification and timing.

The wall

What a hiring firm may ask for, and what it must never ask for. The second column ends candidacies and starts litigation.

The questionnaire

A Lateral Partner Questionnaire earns its keep by being short. Lawyers will not complete a thirty-page form, or they complete it badly.

It should cover the practice, the history, and the disclosures any firm would want on record before admitting a partner. The best ones then do two things most do not. They state on the form that the firm does not want confidential information belonging to the current firm, and that the lateral should not solicit clients before giving notice. And they ask what the lateral expects to bring, rather than demanding historical records that belong to somebody else.

That second distinction is not a technicality. A questionnaire built around what the current firm’s systems say asks a partner to breach a duty in order to complete it.

Notification and timing

Where the four principles are reconciled. Get the order right and almost everything else follows.

1. 01The firm is told first

   Notice goes to the current firm before any client hears anything, in person, with the withdrawal properly documented and a plan for the dates already in the calendar.

2. 02Then a joint letter to the clients

   It goes to the clients for whose active matters the lawyer has direct professional responsibility at the time of notice. Working a matter alongside others, with little direct contact, does not make that client the lawyer’s for this purpose.

3. 03Three options, stated plainly

   Stay with the firm, move with the lawyer, or engage a third firm. The letter states that the choice belongs to the client alone, and it disparages nobody in either direction. Email is fine, and usually better, because timeliness matters more than ceremony.

4. 04If the letter stalls

   ABA Formal Opinion 489 is direct. If the parties cannot promptly agree on the terms, the firm cannot prohibit the departing lawyer from contacting firm clients, and the lawyer need not wait, provided the firm is told at the same time. A joint letter is the civilized route, not a veto.

What neither side may do

Departures go wrong in both directions. These are the moves that turn a resignation into a dispute.

The fiduciary duty runs until the last day, in both directions. A firm that behaves badly on the way out is writing the reference the next three laterals will hear.

May you?

Eight situations from an ordinary lateral move. Answer each one before you read why, because a line you have already guessed at wrong is the one you remember. Most firms cross this line by accident rather than by deciding to.