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Law Firms Penalizing Departing Partners? – That Goes Straight to the Penalty Box!
On October 6, 2015
The Practical Lawyer recently published an article by Lynne Bernabei and Alan Kabat, “Law Firms Penalizing Departing Partners? – That Goes Straight to the Penalty Box!”. This article discusses the improper attempts by law firms to penalize departing partners who leave for a competing law firm. Lynne and Alan discuss how the Rules of Professional Conduct prohibit these penalties, because the ultimate loser is the client, who is harmed by the penalties on the client’s lawyer. In this three-way contest among lawyers, law firms, and clients, the majority of the courts and state bar opinions have consistently recognized that it is the clients’ interests—the clients’ free choice of counsel—that must come out on top, not the former law firm’s interests.
The article concludes that: “Law firms cannot impose covenants not to compete upon their lawyers. Many large law firms attempt to circumvent this clear ethical proscription through imposing financial penalties upon departing lawyers, particularly those who go to competing law firms. These financial penalties not only interfere with lawyer mobility but also interfere with the fundamental right of clients to their choice of counsel. Therefore, law firms that attempt to penalize departing partners will and should find themselves in the penalty box for interfering with the ability of clients to be represented by counsel of choice, and for their counsel to be able to work at a law firm of their own choosing.”
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