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Philadelphia ethics opinion states that former firm is permitted to review incoming e-mails of departed lawyer and must hold disputed funds in trust

Hello and welcome to this Ethics Alert blog which will discuss the recent Philadelphia Bar Association Ethics Opinion which states that a law firm can review incoming e-mails of former partner and is not required to program the e-mails to just be returned to senders and must also hold fee retainer funds which are disputed because of a separate agreement made by the departing lawyer and client to hold them for an expert.  The opinion is Philadelphia Bar Ass’n Prof. Guidance Comm., Op. 2013-4 (9/2013) and is here:

The managing partner of a law firm requested an ethics opinion after disputes arose between the firm and a partner who left to start his own practice and took firm clients with him.

The first issue involved the law firm’s handling of the former partner’s e-mail.  When the lawyer left, the firm set up his e-mail account to send a reply to incoming e-mails that the lawyer is no longer with the firm. The firm established a procedure to read the e-mails and forward them to the former partner if they relate to a matter he took with him.  The former partner asked that the firm not read the e-mails to his former e-mail address and to automatically forward incoming e-mails to the senders with a message that his e-mail account had been closed.  The managing partner of the firm asked for an opinion as to whether the firm’s procedures for handling the departed lawyer’s e-mail comply with the Pennsylvania Bar Rules and whether it is required to honor the former partner’s request to forward the e-mails to the former partner without reading them.

The opinion reviewed Penn. and Phila. Joint Ethics Op. 2007-300 (2007), which was based on ABA Formal Ethics Op. 99-414 (1999).  Both opinions state that when a lawyer leaves a firm, those with managerial authority in the firm have duties to insure that the interests of clients in active matters are competently, diligently and loyally represented during the transition under the Pennsylvania Bar Rules to keep clients informed about the change as required under Pennsylvania Bar Rule 1.4(b), to make clear that the clients may choose to be represented by the lawyer, the firm, or another lawyer, and to protect the clients’ interests upon withdrawal as set out in Rule 1.16(d).

According to the opinion, the firm’s practice of opening and reviewing e-mails addressed to the  former partner is permitted to the extent necessary to carry their duties and those same duties prohibit the firm from honoring the former partner’s request to return the incoming e-mails.  The opinions stated that some interaction with the substance of the messages is necessary so that the firm can determine its responsibilities to current clients, former clients, clients who have elected to follow the former partner, as well as third parties.  The opinion also states that reply messages to the senders should include the ex-partner’s contact information and that e-mails clearly intended for the departed attorney must be forwarded to him.

The opinion also cited Pennsylvania Bar Rule 4.4(b), which requires a lawyer who receives an inadvertently sent document to promptly notify the sender and stated that this rule applies to e-mail that the managing partner reads when the e-mail is clearly meant for the departed lawyer.  The analysis may also be affected by any partnership agreement, any agreement made with the departing lawyer upon his withdrawal, and the firm’s written and/or customary employment practices.

The second issue involved funds the law firm was holding which were paid by a client who decided to follow the lawyer to his new practice.  The fee agreement between the client and the firm provided that a $50,000.00 retainer would be used for services billed at hourly rates, with the firm handling the matter on a contingency fee basis after the retainer was exhausted; however, without the knowledge and authorization of the managing partner, the former lawyer had brought on an outside attorney as co-counsel and they agreed to reserve $30,000.00 of the client’s retainer for expert fees.

When the lawyer left the law firm, $30,000.00 of the client’s initial $50,000.00 fee retainer remained in the firm’s trust account and the question was whether it was permissible to apply it to the firm’s unbilled time on the matter, which far exceeded the balance of the retainer. The former partner claimed the funds were to pay the expert’s fees and requested that it be transferred to him.  The opinion stated that since the separate arrangement to use the remaining $30,000 for expert fees was contrary to the terms of the fee agreement and the firm has an interest in the funds under that agreement, Pennsylvania Bar Rule 1.15(f) requires that a lawyer who has funds in which two or more persons claim an interest to hold the funds separate until the dispute is resolved; therefore, the firm must keep the funds in trust until the dispute is resolved.

Bottom line: According to this Pennsylvania ethics opinion, when a lawyer leaves a law firm, the former firm is permitted to monitor the lawyer’s incoming e-mails to that e-mail account and was also required to hold disputed funds paid by the client for a fee retainer when they are disputed even though the funds were disputed because of a separate agreement apparently made between the former partner and the client without the law firm’s knowledge.  Lawyers in Florida and other states must consult review Bar Rules and ethics opinions to obtain guidance on these issues; however, it is likely that The Florida Bar would reach the same conclusions.

Let’s be careful out there!

Disclaimer:  this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

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