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September 01, 2013

Scruples: Interfering with Client Relationships

What can you do under current ethics rules if a rival steals a client?

Michael Downey

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“Nemesis stole our client!” Paradox dropped into the chair opposite Ethox. “This is too much! We have to get Nemesis. Let’s sue! Let’s file an ethics complaint!”

Ethox weighed in quietly, “What did Nemesis do?”

“Nemesis stole our client,” Paradox barked the response.

Ethox again tried a quiet, deliberate voice. “I heard you say that before. But I still don’t know the details of what happened.”

Now Paradox understood. “Remember Lance?” Paradox asked.

“Wasn’t that the client you thought was lying?” Ethox responded.

“Well, yes . . . ,” Paradox was slowing. “It turns out Lance was not lying. In fact, we learned that Lance had a pretty strong case.”

“That’s great,” said Ethox, sounding surprised. “Shouldn’t you be happier?”

“I would be,” Paradox muttered, “except that then we lost Lance as a client. The moment I challenged Lance’s truthfulness, Nemesis swooped. Nemesis apparently convinced Lance to hire a new lawyer, one that fully believed in Lance’s case. Lance listened, hired Nemesis, and fired us.

“The matter is still going,” Paradox added. “That’s why I want to get the ethics complaint filed right away. You’ll help me with the ethics complaint, right?”

“I can help you,” Ethox answered, “but I am not sure you have a valid ethics complaint.”

“What?” Paradox fired back. “Nemesis spoke to—and stole—our client!”

“There was probably nothing wrong with Nemesis speaking to our client,” Ethox explained. “Rule 4.2 prevents a lawyer from communicating with another lawyer’s client about the subject matter of the representation. But Rule 4.2’s so-called anti-contact rule only applies when the lawyer having the communication—here, Nemesis—is also representing a client. People often skip over the first words of Rule 4.2, ‘In representing a client . . . .’”

Paradox caught Ethox’s lesson. “Since Nemesis was not representing a client in Lance’s matter, Rule 4.2 did not prevent Nemesis from speaking to Lance about the matter, right?”

“Exactly,” Ethox said, sounding like a proud teacher. “Rule 4.2 is designed to prevent a lawyer from benefiting his or her client by taking advantage of another lawyer’s client. Since Nemesis was not representing a client, the anti-contact rule did not apply.”

“But surely some rule must prevent client-stealing!” Paradox retorted.

“Nemesis had to obey a lot of other rules in dealing with Lance,” Ethox answered. “For example, the limits on in-person and targeted solicitations in Rule 7.3. Also, the duties to avoid fraud and misrepresentation in Rules 7.1 and 8.4.”

Paradox was not out of ideas yet, inquiring, “So, what about a lawsuit—say for tortious interference with business relationship?”

“That may be very difficult as well,” Ethox answered. Ethox picked up a printed opinion from the desk. “The New Jersey Supreme Court just looked at this issue in its March 2013 decision in Nostrame v. Santiago. There, the court found such an interference claim very hard to state.”

Passing Paradox the opinion, Ethox continued, “The opinion notes there could be circumstances where a lawyer could be liable for ‘stealing’ another lawyer’s client. In fact, the court suggests finding a violation of another rule—like Rules 7.1, 7.3, and 8.4 that I mentioned earlier—may give rise to a tort claim. But even then the claims are pretty hard to make.”

Looking forlorn, Paradox flipped through the Nostrame opinion. “I guess I should have challenged Lance a little more softly,” Paradox mused.

“Well, everyone loses clients,” Ethox said, trying to be reassuring. “At least you didn’t write Nemesis a threatening letter with ethics charges or claims you ultimately could not back up. After all, that might have given rise to an ethics problem—for you.”

In the next issue: the ethics of making threats.

Michael Downey

The author is with Armstrong Teasdale LLP, St. Louis. He also teaches legal ethics at Washington University of Law.