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Best practice protocol for the conduct of legal practices and solicitors leaving firms or incorporated legal practices

(Adopted by the Council of the Law Society of New South Wales on 16 March 2006 to replace previous protocol first adopted on 25 September 1998 and revised 20 June 2002)

Preamble

The increasing mobility of solicitors within the profession including the dissolution of partnerships, incorporated legal practices and solicitor corporations has led to an increasing number of problems being drawn to the Society’s attention involving failure to notify clients that a legal practice has dissolved as well as disputes about notifying clients that a solicitor has left the practice. Additionally concern is being expressed about departing practitioners 'poaching' clients.

There are a number of important issues to recognise:

• Ethical considerations must have at least equal importance as commercial considerations and commercial considerations cannot override ethical implications.
• Unless otherwise specified the solicitor/client retainer is between the legal practice and the client and not between any individual partner or director and the client.
• Only a principal or solicitor/director of a legal practice can act as the solicitor for a client although obviously a principal or solicitor director can delegate carriage of a client’s matter to an employed solicitor and assign the matter to another solicitor or retain direct control.
• It is the decision of the client who will act for the client and this is also true when an employed solicitor, partner or director leaves a legal practice. A solicitor acts purely as the client’s professional agent.
• A solicitor leaving a legal practice cannot simply take a client’s file from the legal practice without the authority of the legal practice and without making appropriate arrangements with the legal practice and without obtaining the client’s authority.
• As between employed solicitors and employer there may be express contractual terms and there are implied duties (including the duty of confidentiality owed to clients and to the legal practice).

It is not the Society’s function to express a view about the validity of individual restraint of trade clauses which is a matter of law on which the respective solicitors and legal practices should obtain their own advice. The following is designed to reflect appropriate ethical principles and procedures to guide the parties’ future conduct. With these points in mind, the Ethics Committee of the Law Society has formulated a protocol.

Protocol

The interests of the client are paramount. The client is free to instruct any solicitor of the client’s choice subject to the terms of any current retainer.

Solicitors are bound by any legal obligation arising out of their former contract of employment or partnership agreement or corporate engagement and should not breach ethical obligations (including the duty of confidentiality owed to the legal practice). It is strongly recommended that written agreements be entered into.

Partnership and employment agreements should contain express provision as to the procedure to be adopted when a legal practice is dissolved or an employee leaves a legal practice in relation to the manner in which the respective parties may inform clients of the change.

In the case of a complete or partial dissolution of the legal practice, partners and directors should be aware of Professional Conduct and Practice Rule 30 relating to transfer of a solicitor’s practice and comply strictly with it.

After leaving the legal practice, it is not necessarily improper for a practitioner to contact clients of the practice. The practitioner must always be mindful of any applicable contractual, statutory or fiduciary obligations.

No member, officer or employee of the legal practice should give a client of the legal practice misleading information about the future practice details of the departing solicitor or the reason for or circumstances surrounding the partner, director or employed solicitor’s departure.

On request by a client the legal practice should provide contact details of a departing solicitor if the departing solicitor has provided the contact details and consented to those details being given out on request.

The departing solicitor cannot take the contents of clients’ files or documents, including photocopies, without the agreement of the legal practice and the authority of the client, nor any material such as client lists etc without the consent of the legal practice.

Departing solicitors should not mislead clients into believing they have an obligation to instruct them nor should they improperly undermine any existing solicitor/client relationship.

All solicitors should be mindful of the provisions of Rule 31.2 of the Revised Professional Conduct and Practice Rules relating to communicating with another solicitor’s client and which provides:

31.2 A practitioner who receives notice from another practitioner that the practitioner’s client has instructed or retained that practitioner may, after notifying the other practitioner, communicate with the former client for the purpose of confirming the client’s instructions and arranging for the orderly transfer of the client’s affairs to the other practitioner.

In keeping with the aim of maintaining professional comity neither the legal practice nor the solicitor should make critical comments of the other to any client.