Excellent article by Don Foster, chair of Offit Kurman's business litigation practice group: "Limiting Disclosure of Client Information When Changing Firms" --
- "When an attorney is contemplating moving from one law firm to another, both parties need to identify potential client conflicts, and will want to share baseline financial information about the other in order to assess the economic benefit behind the move, which invariably is the driving force behind the discussions in the first place. Both considerations are governed by the limitations contained within Rule of Professional Conduct 1.6. This article explores the tension between the desire to fully vet the economics of a potential lateral transfer and the need to protect client confidences."
- Disclosing information about client relationships is no simple matter, and must be approached with care. Both the moving attorney and the receiving law firm are subject to ethical limitations on the form and content of the information exchanged."
- "Before the moving attorney can consider sharing client-specific information—even the identity of the client (if not already publicly known)—the conversations must have progressed to the point where the two parties are ready to discuss specific deal terms."
- "Unfortunately, many receiving firms do not want to wait until the point at which discussions get to such detail. Instead, they wish to analyze a prospective member's client list, and its revenue-generating potential, at the front end, under the guise of conducting a conflict check. As I mentioned above, the idea is presumably to find out whether it is financially worthwhile to go through potentially protracted discussions leading up to a lateral transfer."
- "That said, such a request at the outset is improper under Rule 1.6(b)(7), and the moving attorney should resist agreeing to the request. Instead, the attorney should wait until 'substantive discussions' have taken place. That determination is somewhat subjective, but if the parties believe in good faith that they have met the first condition, the moving attorney may reveal the identity of his or her clients as well as such other information as is required by the receiving firm's normal conflict-checking procedures."
- "Quantifying the potential economic benefit of a lateral transfer is obviously of critical importance to both the moving attorney and the receiving firm. One solution to overcoming the ethical proscription of Rule 1.6 could be to permit the moving attorney to aggregate his or her collections on an annual basis over the time period requested, without identifying which client paid how much."