Client choice, communication are “paramount” when firm dissolves, says D.C. ethics opinion

March 23, 2017

By Karen Rubin

Dissolving a law firm is a process, not an event, the D.C. Bar Legal Ethics Committee said in a new opinion released earlier this month, and some ethical obligations continue even after dissolution.  “The paramount” principle, said the committee, is to “continue to competently, zealously and diligently represent and communicate with the clients during the dissolution process.”

Answering the three W’s

The opinion addresses the situation where the firm dissolves or will do so in the reasonably foreseeable future, and it answers many of the “who,” “what” and “when” questions that can arise.  Here are some of them:

  • Who should get notice of the upcoming dissolution?  All clients, even those with inactive matters and files that have  been closed less than five years.  If the firm is holding intrinsically valuable client property (wills, stock certificates), the client should be notified no matter how long the file has been closed.  Relevant third parties, such as opposing counsel and tribunals, should also get notice.
  • Who should give the notice?  Joint notice by all firm members is “preferred.”  But if the firm’s lawyers cannot agree on the form or the terms of that notice, the lawyer with the most significant contact should give notice.  Only if this is not practicable should lawyers give unilateral notice to the clients.
  • When should notice be issued?  There is no bright line.  Notice must be timely, and at least give time for the clients to make an informed decision about their future representation, to hire other counsel, and for papers and property to be returned (including any refunds owed).
  • What should be communicated?  The notice can’t contain false or misleading statements, and should provide the clients with options: to choose representation by any member of the dissolving firm; by any other lawyer; or by any other firm.  The notice may not restrict any lawyer’s right to practice, which is barred by D.C.’s adoption of Model Rule 5.6.
  • What if the client doesn’t respond?  The notice should provide that if the client fails to respond by choosing one of the options, the client is deemed to remain a client of the lawyer who has been primarily responsible for providing legal services to the client.  The D.C. Committee recognized that identifying that lawyer can be difficult; it did not deal with the issue of the potentially open-ended time-frame for the “responsible” lawyer’s duties to the unresponsive client, or what happens if the lawyer is headed to a firm where she would have a conflict in continuing to represent the unresponsive client.
  • What files must the firm return to the client?  D.C. law permits lawyers to assert and enforce retaining liens for unpaid fees against client property—but they are “strongly disfavored” under a 1994 ethics opinion.  Rather, even when asserting such a lien, the lawyer can retain only the lawyer’s own work that the client hasn’t paid for, and then only if the client can pay and if withholding that portion of the file will not irreparably harm the client’s interests.  For files in electronic form, the lawyer must comply with a client’s reasonable request to convert electronic records to paper form, absent some agreement to the contrary.  The client ordinarily must bear conversion costs.

Dissolving a firm that includes non-lawyers

Unique to D.C. practice is the issue of dissolving a firm that includes lawyers and non-lawyers in partnership—a form of practice permitted there under D.C. Rule 5.4(b).  The rule permits lawyers to practice in firms where non-lawyers hold a financial interest or managerial authority, and carry out “professional services which assist the organization in providing legal services to clients.”  Because the rule says that the non-lawyers in such a firm have the same ethical duties as the lawyers, the duties as to the dissolving firm would apply equally to the non-lawyer partners of such a firm, said the D.C. Committee.

Content courtesy of The Law for Lawyers Today: Ethics, Professional Responsibility and More blog. Ohio State Bar Association member Karen Rubin is an attorney for Thompson Hine.


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