Tuesday, July 7, 2015

Risky Business: Laterals (Legal and Otherwise), Client Files, Jiggery-pokery and Argle-bargle


With apologies to those reaching for a dictionary, come several updates (hopefully choate) on and related to the topic of laterals. First, from Bloomberg comes a bit of news about the business side: "Stepping Up Lateral Partner Recruiting and Analytics" --
  • "Recent surveys indicate that while lateral partner hiring remains as robust as ever, a large number of managing partners question the overall efficacy of such efforts. In particular, this year’s Citi-Hildebrandt Client Advisory reports that managing partners when asked responded that only 54 percent of laterals reach a break-even point five years after their hire. And that percentage has steadily declined over the past three years."
  • "A variety of reasons are given for such uneven results, including failure by firms to do proper due diligence with regard to lateral candidates, failure of “promised” portable business to transfer to the new firm, and inadequate lateral integration programs."
  • "This contrasts with the very sophisticated analytics other professional services’ firms use in their hiring, strategic growth and retention programs. Indeed, a recent report by Deloitte Consulting indicates that 'companies that build capabilities in people analytics outperform their peers in quality of hire, retention, and leadership capabilities, and are generally higher ranked in their employment brand.'"
When clients do move, following laterals or otherwise, the subject of files can sometimes get heated, which brings us to an opinion (not a ukase) from the ABA: "Who Gets the Notes? The ABA Sides With Firms" --
  • "Clients may come and clients may go, but until now it hasn’t been entirely clear who gets the documents, as well as the notes and drafts, when a client decides to change attorneys. To resolve the ownership question, the American Bar Association has issued an opinion clarifying that when a client severs relations with an attorney or firm, the client is entitled to completed legal documents and correspondence, along with some other materials."
  • "In Formal Opinion 471, the ABA’s Standing Committee on Ethics and Professional Responsibility said that some jurisdictions follow a so-called “entire file” approach. Under that view, a lawyer must turn over any property or papers related to representation unless specifically exempted."
And on a related note, see: "New Ethics Rule Governing Lawyer Mobility Adopted in Virginia: Virginia Joins Florida as the Second State to Adopt Departing Partner Ethics Rule Regarding Client Notification" --
  • "Virginia's recent adoption of a new ethics rule will provide guidance on a common issue to lawyers and law firms managing lawyer departures. For years, lawyers and law firms have handled difficult and sometimes contentious departures guided only by a patchwork of ethics opinions and commentator advice. However, the recent codification of Virginia's new Rule 5.8, which goes into effect on May 1, 2015, sets forth specific procedures for client notification prior to a lawyer's departure."
  • "The new rule may also signal a trend toward state bar regulators' increased attention to the rules governing lateral mobility and the need for clear guidance on how to effectively comply with the bedrock duty of client communication in the midst of a lateral transition. By passing Rule 5.8, Virginia joins Florida, which was previously the only other state that had passed such a rule."
  • "Virginia's new Rule 5.8 provides clear direction on two important issues related to lateral mobility. First, the rule states – as a matter of ethics – that neither a departing lawyer nor the law firm shall contact a client prior to engaging in a joint effort to affect notification under the rule... Where a client fails to respond to a notice given by a departing lawyer, the client remains a client of the law firm until the engagement is terminated by either the client or the law firm. In the case where the law firm is dissolving and the client fails to respond to the notification, the client is deemed to be a client of the lawyer primarily responsible for the client's legal services."
Finally, from the world outside of legal, comes a fascinating news story that initially evoked some lateral-like analogies (though any attempt to match fact patterns to the legal industry would be clearly judged as somersaulting logic best deemed pure applesauce). Still, it makes for interesting reading (particularly if you happen to have family alumni from each institution...): "UCSD sues USC, noted Alzheimer's researcher" --
  • "UC San Diego on Thursday sued the University of Southern California and a nationally recognized Alzheimer's disease researcher, saying they illegally conspired to take over a major Alzheimer's study it is running."
  • "The lawsuit, filed in San Diego Superior Court through the UC Regents, also names as defendants eight colleagues of the scientist, Dr. Paul Aisen. He left UC San Diego to head a new Alzheimer's institute founded by USC in San Diego, bringing the eight with him."
  • "While universities commonly recruit or poach faculty from each other, lawsuits arising from the recruitment are much rarer. This lawsuit says USC and the other defendants went beyond recruitment to commit a variety of illegal acts, including interference with contract, breach of duty of loyalty by employee, commission of computer crimes and civil conspiracy."
  • "In 2013, the NIA announced a 5-year grant of up to $55 million for ADCS; its total funding from government and private sources is $100 million, the lawsuit stated."
  • "Aisen and the other individual defendants also took unauthorized control of the ADCS data, the university said in the lawsuit. They placed the data on an Amazon account not under the control of UC San Diego. The defendants have not responded to the university's request to hand over all data, passwords and access credentials, the lawsuit said. A request to USC for assistance didn't produce results, according to the suit."
  • "USC has also raised eyebrows with high-octane faculty recruitment coups in Los Angeles and aggressive national fund-raising. In April, USC President C. L. Max Nikias traveled to Texas for a three-day fundraising trip, part of a "corporate-like" approach to fundraising a Los Angeles Times article said some found offputting."
For those interested, here's a PDF of the lawsuit.

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