April 19, 2017 – There is a difference between sending out resumes, and a mutual expression of interest between a lawyer and a firm. So, just when do you need to let a client know that you are seeking a job with another firm?
Have an Ethical Dilemma?
Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by the State Bar’s ethics counsel Timothy Pierce and Aviva Kaiser, are intended to provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.
As a State Bar member, you have access to informal guidance in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys. To informally discuss an ethics issue, contact Pierce or Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m. to 4 p.m.
Lawyer practices in a medium-sized firm and is representing a client in a contract dispute. One other attorney from the firm is assisting Lawyer in the matter, and negotiations have broken down, so Lawyer is preparing to file a complaint. The other side is represented by Firm B, which enjoys an excellent reputation, which Lawyer has pondered as a future employer as Lawyer has grown more frustrated with things at her own firm.
One day, Lawyer gets a phone call from a friend who works at Firm B, who tells her that a partner is retiring, and that Firm B would likely be very interested in bringing in someone like Lawyer to replace retiring partner. This friend offers to speak to managing partner at Firm B to see about setting up a lunch meeting.
May Lawyer accept an invitation to meet with Firm B to discuss a possible job in this situation?
SCR 20:1.7(a)(2) states:
(a) Except as provided in par. (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.
Paragraph  of the ABA Comment to the Rule explains further:
 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. 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 Restatement (Third) of the Law Governing Lawyers, §125, comment d. 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).
ABA Formal Ethics Opinion 96-400 (Job Negotiations with Adverse Firm or Party) states that the lawyer must consult with the client before engaging in “substantive job negotiations with an adversary":
We, therefore, conclude that a lawyer who has an active and material role in representing a client in litigation must consult with and obtain the consent of that client, ordinarily before he participates in a substantive discussion of his experience, clients or business potential or the terms of an association with an opposing firm. The consultation that the Committee here concludes that a job-seeking lawyer should have with a client whom he is currently representing, before he participates in substantive employment discussions, should include all facts that the client should consider in making an informed decision. These include the posture of the case, the nature of the work that the lawyer could or should be doing, and the availability of others in the firm to assume the work that the lawyer is doing.
When Disclosure and Consent is Required
Thus, it is clear from a review of relevant authorities that substantive job discussions with a firm representing an adverse party require disclosure and consent. While a lawyer who is merely sending out resumes need not make such disclosures, once there is a mutual expression of interest and a request for substantive discussions, disclosure must be made. Thus, Lawyer must disclose to client if she wishes to meet with the opposing firm to discuss possible employment.1
Cease Working on the Matter
An alternative course for Lawyer is to cease working on the matter and allow other lawyers in the firm to assume responsibility for the representation of the client. SCR 20:1.10 states in relevant part:
(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by SCR 20:1.7 or SCR 20:1.9 unless:
(1) the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm;
ABA Formal Opinion 96-400 further elaborates:
The Model Rules do not require that every lawyer who is associated with a firm demonstrate his loyalty to clients by staying with the firm indefinitely. Indeed, Rule 1.9 specifically contemplates that a lawyer may properly join a firm that he or his firm currently opposes in a matter, and provides protection for the former client in those circumstances. And, as stated above, Rule 1.7(b) protects the client while the lawyer is negotiating for a new association with a firm he is opposing in a matter, by requiring the lawyer either to obtain the client's consent to simultaneous representation and negotiation, or to withdraw from the representation. But client protection is not furthered even in a theoretical sense, in this case, by imputing the negotiating lawyer's interest in new employment to others in the lawyer's present firm, and we conclude that Rule 1.10 should not be read to extend to this situation. In sum, the Rule 1.7(b) conflict that the negotiating lawyer would have if he continued to work on the matter while pursuing such discussions need not, through Rule 1.10, be imputed to others in the firm.
Thus, Lawyer’s interest in employment with an adverse firm is based on personal interest, and that interest will not ordinarily be imputed to other lawyers in the firm. Therefore, Lawyer may inform the firm and ask to be taken off the case, as long as other lawyers in the firm are in a position to competently assume the representation of the client.
A Third Option: Defer Job Negotiation
Both of these options present Lawyer with the perhaps risky proposition of informing their current firm that they are actively pursuing employment elsewhere, which is why many lawyers in this situation will choose a third option and defer job negotiations until after the matter is concluded.
In Case You Missed It: Read Past Ethical Dilemmas
Ethical Dilemmas appears monthly in InsideTrack. Check out these topics from recent issues:
File-sharing and the Privilege of Confidential Materials, March 15, 2017
In the era of cloud-based computing, security must be a paramount concern for lawyers when it comes to client information. Who is responsible when an office staff person inadvertently shares a link to confidential files to the opposing party in discovery?
Must Former Counsel Provide a Client File in a Second Format?, Feb. 15, 2017
When a former client retains new counsel and that counsel requests the client’s file, the former counsel has an obligation to provide the file in a format useable by the client. But is the former counsel ethically required to give the file in both electronic and paper formats?
For more, search “ethical dilemmas” on WisBar.org.
1 The consequences of failing to make the required disclosure are not limited to professional discipline. In McCafferty v. Musat, 817 P.2d 1039 (Colo. Ct. App. 1990), a malpractice verdict was upheld against a lawyer who obtained an inadequate settlement for a client after accepting a job offer from opposing counsel.