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Negotiating for employment with the
By Peter H. Geraghty
You are an associate in a small firm that has a concentration in family law. You are considering a lateral move to a different family law firm that is currently representing the husband in a divorce matter in which your current firm represents the wife. While you are not lead counsel in the matter, you have been asked to research certain issues as they relate to the case.
Can you negotiate for employment with the firm?
If so, are you obligated to disclose to either the firm or to the firm’s client that you are engaged in negotiations?
In 1996, the ABA Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 96-400 Job Negotiations with Adverse Firm or Party (1996) that addressed many of the issues that can arise in this context.
In this opinion, the committee stated that a lawyer’s negotiations with an adverse firm or party raises conflicts issues under Rule 1.7 Conflicts of Interest: Current Clients of the ABA Model Rules of Professional Conduct; particularly those provisions of the rule that reference conflicts that can arise due to the lawyer’s responsibilities to “another client or to a third person, or by the lawyer’s own interests…”
The committee stated that there were two factors that would be determinative of whether there was a conflict of interest and a corresponding duty to consult with and obtain client consent under the rule: First, the lawyer’s degree of involvement in the matter, and second, the extent to which the negotiations have become concrete. With regard to the lawyer’s degree of involvement, the committee observed:
The likelihood that a lawyer's job search will adversely affect his "judgment in considering alternatives or foreclosing courses of action" is far greater when the lawyer has an active and material role in representing a client. Thus, if the posture of the case is such that there is no call on the lawyer's judgment in representing a client during the period of his job search, it is not likely that his search and negotiations will adversely affect his judgment. For example, for a lawyer who has fully litigated a case against the firm he wishes to join, who is awaiting the decision of the appellate court and who presently has no action to take or consider, we do not believe that Rule 1.7(b) comes into play during job explorations with the opposing firm, unless and until a point comes when the lawyer should consider some further action on the client's behalf.8 Similarly, if a lawyer has played a limited, but now concluded role for a client, there is ordinarily no basis for concluding that the lawyer's job search will prejudice the interests of the client on whose matter he had worked, even though others in the firm are continuing the representation.
With regard to the “concreteness” of the negotiations, the committee stated:
The criteria of concreteness, communication and mutuality can be met early in any job search process. They are certainly met at the point that the lawyer agrees to participate in a substantive discussion of his experience, clients or business potential, or the terms of an association.
The committee recognized that for lawyers who did not have the principal relationship with or any direct contact with the client, direct disclosure to the client about the job negotiations may not be necessary. In this scenario, the committee stated that the lawyer would have an obligation to disclose the existence of his job negotiations with either his supervising lawyer or with the lawyer who had the principal relationship with the client. They in turn would have to make a determination as to whether the lawyer should have no further involvement in the matter, and whether there should be full disclosure and consent obtained from the client. Until client consent has been obtained, the committee observed, the job-seeking lawyer could not continue to work for the client. The committee stated further that the lawyer’s conflict in this scenario was a personal one and would not be imputed to the rest of the lawyers in the firm under Model Rule 1.10 Imputation of Conflicts of Interest: General Rule.
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Note that Formal Opinion 96-400 was issued prior to the amendments adopted by the ABA House of Delegates in 2002 pursuant to the ABA Ethics 2000 Commission’s recommendations, and also prior to the recent amendments to Rule 1.10, which now permits the screening of a lawyer who moves from one firm to another who has learned confidential client information from his old firm that would have disqualified the new firm from continuing to represent an adverse party that were adopted by the ABA House of Delegates in 2009. See, the Recommendations submitted by the Standing Committee on Ethics and Professional Responsibility changes to Rules 1.0 and 1.10, Standing Committee on Ethics and Professional Responsibility Changes to Rule 1.10 .
One of the amendments proposed by E2k to the Comment to Rule 1.7 was in effect a “codification” of the essence of Opinion 96-400. Paragraph 10 of the Comment to Rule 1.7 as amended states:
 The lawyer's own interests should not be permitted to have an adverse effect on representation of a client. For example, if the probity of a lawyer's own conduct in a transaction is in serious question, it may be difficult or impossible for the lawyer to give a client detached advice. Similarly, when a lawyer has discussions concerning possible employment with an opponent of the lawyer's client, or with a law firm representing the opponent, such discussions could materially limit the lawyer's representation of the client.(emphasis added) In addition, a lawyer may not allow related business interests to affect representation, for example, by referring clients to an enterprise in which the lawyer has an undisclosed financial interest. See Rule 1.8 for specific Rules pertaining to a number of personal interest conflicts, including business transactions with clients. See also Rule 1.10 (personal interest conflicts under Rule 1.7 ordinarily are not imputed to other lawyers in a law firm).
The E2K official reporter’s Explanation of Changes memo on paragraph 10 of the Comment Rule 1.7 states:
…The third sentence is intended to incorporate ABA Formal Opinion 96-400, which addresses a lawyer negotiating for employment with opposing counsel, which might lead to a lawyer switching to the law firm opposing the lawyer's client in the middle of a representation.
As always, bear in mind that the ABA Model Rules of Professional Conduct are advisory only. Always remember to check your local rules!
The Restatement of the Law Governing Lawyers (2000) takes an approach that is similar to Formal Opinion 96-400 with regard to this issue. §125 cmt. d of the Restatement states:
d. A lawyer seeking employment with an opposing party or law firm. This Section applies when a lawyer seeks to discuss the possibility of the lawyer's future employment with an adversary or an adversary's law firm. The conflict arises whether the discussions about future employment are initiated by the lawyer or by the other side. If discussion of employment has become concrete and the interest in such employment is mutual, the lawyer must promptly inform the client. Without effective client consent (see § 122), the lawyer must terminate all further discussions concerning the employment, or withdraw from representing the client (see § 32(2) & (3)). The same protocol is required with respect to a merger of law firms or similar change (see § 123).
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State and local bar opinions
There have been some state bar ethics opinions issued on this topic. See, Kentucky Opinion E-399 (1997) that is in substantial agreement with Formal Opinion 96-400:
…we believe that the lawyer who is actually involved in the representation of one of the adverse clients or who has actual knowledge of information protected by Rules 1.6 and 1.9(b) should not participate in such negotiations without the consent of the lawyer’s client obtained after appropriate consultation.
If the lawyer is not involved in the matter and has no actual knowledge of information protected by Rules 1.6 and 1.9(b), there may still be an arguable question of professional duty, depending on the size of the firms involved, the importance of the matter, or other circumstances. – Kentucky Bar Association Ethics Opinion E-399 (1997) …
See Also joint opinion of the Philadelphia Bar Association Professional Guidance and Pennsylvania Bar Association Legal Ethics and Professional Responsibility Committees 2007-300 (2007). This opinion addressed the issues implicated if the job-negotiating lawyer were to learn confidential information about an opposing party to one of his firm’s clients during the course of the negotiations:
…The type of conflict addressed in ABA Formal Opinion No. 96-400 may arise anytime a lawyer in a firm negotiates with another firm if the two firms are opposite one another in any matter. Were a job-seeking lawyer, in the course of the job negotiations, to be exposed even inadvertently to confidential information regarding a matter in which the old firm and new firm are opposite one another, the lawyer would be obligated to disclose that fact to the lawyer’s existing firm, i.e., to the lawyers within that firm with managerial authority under Rule 5.1, so that the firm could properly address the situation. Thus, a job-seeking lawyer should be vigilant, while remaining at the old firm, to avoid any involvement in or being exposed to any confidential information relating to any matter where the firm with which the lawyer is negotiating is on the opposite side.8 Moreover, the negotiating lawyer has a duty of disclosure to the lawyer’s current firm if circumstances should arise in the course of the negotiation which raise a realistic possibility of conflict.
Related ABA ethics opinions
Other ABA ethics opinions that address issues as they relate to the general topic of lawyers moving between law firms include Formal Opinions 09-455 Disclosure of Conflicts Information When Lawyers Move Between Law Firms (2009) and 99-414 Ethical Obligations When a Lawyer Changes Firms (1999). For further information on these opinions See the YourABA Eye on Ethics articles entitled, “Breaking up is hard to do” and “Recent ethics opinion: Disclosure of conflicts information when lawyers move between law firms” that appeared in the March 2007 and November 2009 issues of YourABA.
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