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 is.

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. If not for this principle there would be no lateral hiring at all. The firm does not get to decide. The departing lawyer does not get to decide. The client decides, because nobody owns the client.

2. 02The lawyer may change firms

   Model Rule 5.6: no agreement may restrict a lawyer’s right to practice after leaving a firm, which is why lawyers do not have noncompetes. It follows directly from the first principle. A client’s right to choose their counsel means very little if that counsel is not free to move.

3. 03The partner owes duties to their partners

   This one does not come from the Rules of Professional Conduct at all. It comes 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 actually 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 they are leaving must both ensure the withdrawal happens without material adverse effect on clients with active matters, and that prompt notice is given. 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. Those three do not conflict as often as they appear to, but reconciling them 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 is the one that ends candidacies and starts litigation.

The questionnaire

A thorough Lateral Partner Questionnaire, kept concise, because lawyers hate a thirty page one and a thirty page one gets filled in badly.

It should ask for clients, originations, rates, production, collections, compensation where local rules permit it, employment and education history, and any disciplinary, malpractice, bankruptcy or criminal history.

The best ones then do two things most do not. They state plainly, 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 about 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 is a questionnaire asking a partner to breach a duty in order to complete it.

Notification and timing

Where the four principles are actually 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 a notice of withdrawal, a proposed joint letter, a client election document, 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. Having worked on a matter alongside others, with little direct contact, does not make someone your client for this purpose.

3. 03Three options, stated plainly

   Stay with the firm, move with the lawyer, or engage a third firm entirely. The letter states clearly that the choice belongs to the client alone. No disparagement 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 about this. If the parties cannot promptly agree on the terms of a joint letter, the firm cannot prohibit the departing lawyer from contacting firm clients, and the departing lawyer need not wait to inform them, provided the firm is informed 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 that the next three laterals will hear about.