LSB September 2021 LR

FROM THE CONDUCT COMMISSIONER
Poaching clients from
your former firm
GREG MAY, LEGAL PROFESSION CONDUCT COMMISSIONER
It is of course common for a lawyer to
move from one firm to another. The
question often arises as to whether it is
appropriate for a lawyer to attempt to
“poach” a client from his or her former
firm – that is, to get the client to terminate
the instructions of the former firm and
to instead instruct the lawyer’s new firm.
Indeed, that will often be a substantial
reason for the new firm employing the
lawyer – because of the likelihood that
at least some of the lawyer’s clients will
follow him or her to the new firm.
So, how proactive can the lawyer be in
attempting to induce a client to follow? I
think everyone would accept that a client
who finds out about the lawyer changing
firms from, for example, a promotional
advertisement in the paper, and who
unilaterally decides to change firms, is
entitled to do so and the lawyer cannot
be criticised. But what happens when
the lawyer starts contacting clients to
encourage them to change firms?
This issue was considered many years
ago in a Supreme Court decision by
Justice Perry 1 . While the case itself dealt
with disciplinary proceedings against a
chiropractor, Perry J made the following
observations in relation to the legal
profession (at [51] to [53]):
In the context, for example, of the legal
profession, it is unlikely that a charge of
unprofessional conduct would these days be
sustained simply on the basis that a practitioner
had endeavoured to induce customers to engage
him or her, rather than remain a client of
another practitioner.
There is much movement of practitioners in
and out of legal firms, and it is a common
occurrence for practitioners who leave a firm to
take up practice elsewhere, to draw with them
clients of the firm which they have left. This is
an unexceptional and everyday experience.
Even the regular monthly Bulletin published
by the Law Society of South Australia
makes public announcements of movements
of practitioners from one practice situation to
another. No doubt clients of a former practice
who may read such publications may be induced
to follow a practitioner to a new practice.
And that was 17-plus years ago – if
Perry J thought then that there was “much
movement of practitioners in and out of
legal firms”, there can be no doubt that
that is the case now!
Having said that, from a conduct
point of view there is still a right way and
a wrong way to go about attempting to
induce a client to move firms. Professor
Dal Pont says 2 that the following
requirements apply to any such contact:
• the departing lawyer should first
inform the firm of her or his proposed
departure, so that it may meet with
and/or write to clients informing
them of any new arrangements for the
conduct of their matters;
• any contact by the departing lawyer
should not deprecate the firm or its
members;
• the departing lawyer should in no way
suggest or indicate that clients are
obliged to instruct the new firm, nor
should the departing lawyer undermine
existing lawyer-client relationships
between the firm and its clients;
• if a client expresses a wish to transfer
instructions from the firm to the
departing lawyer, the departing lawyer
should inform the client of his or her
responsibility to negotiate the terms of
the transfer, including the requirement
either to pay all outstanding costs
and disbursements or to secure the
firm’s entitlements to costs and
disbursements.
He goes on to say that the firm should
then facilitate the transfer of files, subject
to the payment of any such firm’s fees and
disbursements.
In my view, particularly if the
departing lawyer is a partner at the old
firm, he or she should not contact any
clients in this way until after having left the
firm, unless his or her old firm consents
to that contact prior to departure. Until
the departing lawyer has left the firm,
he or she has certain duties to the firm
that in my view would be breached if the
departing lawyer is attempting to induce a
client to leave that firm while still at that
firm.
Importantly, Professor Dal Pont also
says that “any valid contractual restriction on
solicitation of a client contained in the departing
lawyer’s contract of employment or partnership
agreement with her or his former firm must be
adhered to”.
The UK Supreme Court has recently
ruled 3 that a type of non-compete
undertaking of a solicitor was not given
in the course of practice because it was a
business arrangement. The Court made
the following observations at [122]:
A business arrangement between two law
firms is not the sort of work which solicitors
undertake as part of their ordinary professional
practice. It is a business matter, even if the
business in question relates to the provision of
professional services.
It was therefore held that the inherent
supervisory jurisdiction of the Supreme
Court to regulate the conduct of solicitors
did not govern its enforceability. The
Court was of the view that the contractual
law doctrine of restraint of trade would
apply to such agreements so that only
reasonable restraints could be enforced.
Another interesting aspect of
the judgment is the finding that the
supervisory jurisdiction does not apply
directly to corporate law firms as they
are not officers of the court. This creates
difficulties in relation to undertakings
given on behalf of corporate firms, and
the Court expressed the hope that the UK
Parliament might address this lacuna. B
Endnotes
1 Judge v Chiropractors Board of South Australia [2004]
SASC 214.
2 Dal Pont, Lawyers Professional Responsibility,
7 th edition at [20.65]
3 Harcus Sinclair LLP v Your Lawyers Ltd [2021]
UKSC 32
September 2021 THE BULLETIN 9