New ABA Ruling on Lateral Hiring

The American Bar Association's House of Delegates voted on Feb. 16 to amend its Model Rule of Professional Conduct governing conflicts of interest stemming from lateral hiring.

At the ABA midyear meeting in Boston, the 555-member ABA House of Delegates voted 226 to 191 in favor of Recommendation 109. The new rule allows law firms to hire lawyers with conflicts of interest without a waiver from the client. Also, the conflicts wouldn't necessarily transfer to other lawyers in the hiring firm.

What's Involved

Amendments to the recommendation made at the meeting require the hiring firm to give the incoming lawyer's former client written notice of the screening procedures. The firm must also let client know that he or she may seek judicial review. The amended rule also bars screened lawyers from directly sharing compensation from matters they're disqualified from due to the conflict.

The 400,000-member bar association grappled with the issue at its annual meeting last summer in New York, where the ABA House of Delegates tabled a resolution similar to Recommendation 109.

The Floor Debate

Carolyn B. Lamm, ABA's president elect and a Washington, DC-based international arbitration and litigation partner at White & Case, noted during the floor debate that 11 states have passed “what is essentially 109,” joining 13 states with their own ethics screening resolution.

“Twenty-four states have acted without the ABA's leadership in an area where the ABA should be offering the model rule,” Lamm said. “We should be restoring historic leadership by putting forward a balanced screening proposal for our states to adopt.” Lamm also said the ABA “simply cannot ignore the mobility of lawyers.”

“Whether it's increased because of an evolution in the way we practice law or because of economic necessity, we also must recognize [that there's more] client mobility,” Lamm said. “On both sides of the equation, life is different. Report 109 appropriately balances the interests the moving lawyer, the receiving firm, the client that's left behind and the clients at the new firm.”

Client Confidences

Lamm echoed other speakers who noted that Recommendation 109 does not change a lawyer's duty to maintain clients' confidences.

The vote on Recommendation 109 followed a spirited debate and the body's rejection of a motion to substitute Recommendation 110, an alternate change to the model rule. Under Recommendation 110, the lawyer's involvement with the client could not have been substantial or have involved material client information. The rule also would have required client consent for the lawyer's move.

In advancing Recommendation 110, Lawrence Fox, a litigation partner at Drinker Biddle & Reath LLP in Philadelphia and the former chairman of the ABA's Standing Committee on Ethics and Professional Responsibility, called Recommendation 109 an “assault on the rules governing confidentially and loyalty.”

“Of course it's inconvenient,” Fox said. “All the rules of conflicts of interest are inconvenient. I turn down more matters than I accept.”

The ABA House of Delegates rejected the motion to substitute Recommendation 110 by a vote of 267 to 182.

Sheri Qualters is a staff reporter for the National Law Journal, an Incisve Media sister publication of this newsletter.

The American Bar Association's House of Delegates voted on Feb. 16 to amend its Model Rule of Professional Conduct governing conflicts of interest stemming from lateral hiring.

At the ABA midyear meeting in Boston, the 555-member ABA House of Delegates voted 226 to 191 in favor of Recommendation 109. The new rule allows law firms to hire lawyers with conflicts of interest without a waiver from the client. Also, the conflicts wouldn't necessarily transfer to other lawyers in the hiring firm.

What's Involved

Amendments to the recommendation made at the meeting require the hiring firm to give the incoming lawyer's former client written notice of the screening procedures. The firm must also let client know that he or she may seek judicial review. The amended rule also bars screened lawyers from directly sharing compensation from matters they're disqualified from due to the conflict.

The 400,000-member bar association grappled with the issue at its annual meeting last summer in New York, where the ABA House of Delegates tabled a resolution similar to Recommendation 109.

The Floor Debate

Carolyn B. Lamm, ABA's president elect and a Washington, DC-based international arbitration and litigation partner at White & Case, noted during the floor debate that 11 states have passed “what is essentially 109,” joining 13 states with their own ethics screening resolution.

“Twenty-four states have acted without the ABA's leadership in an area where the ABA should be offering the model rule,” Lamm said. “We should be restoring historic leadership by putting forward a balanced screening proposal for our states to adopt.” Lamm also said the ABA “simply cannot ignore the mobility of lawyers.”

“Whether it's increased because of an evolution in the way we practice law or because of economic necessity, we also must recognize [that there's more] client mobility,” Lamm said. “On both sides of the equation, life is different. Report 109 appropriately balances the interests the moving lawyer, the receiving firm, the client that's left behind and the clients at the new firm.”

Client Confidences

Lamm echoed other speakers who noted that Recommendation 109 does not change a lawyer's duty to maintain clients' confidences.

The vote on Recommendation 109 followed a spirited debate and the body's rejection of a motion to substitute Recommendation 110, an alternate change to the model rule. Under Recommendation 110, the lawyer's involvement with the client could not have been substantial or have involved material client information. The rule also would have required client consent for the lawyer's move.

In advancing Recommendation 110, Lawrence Fox, a litigation partner at Drinker Biddle & Reath LLP in Philadelphia and the former chairman of the ABA's Standing Committee on Ethics and Professional Responsibility, called Recommendation 109 an “assault on the rules governing confidentially and loyalty.”

“Of course it's inconvenient,” Fox said. “All the rules of conflicts of interest are inconvenient. I turn down more matters than I accept.”

The ABA House of Delegates rejected the motion to substitute Recommendation 110 by a vote of 267 to 182.

Sheri Qualters is a staff reporter for the National Law Journal, an Incisve Media sister publication of this newsletter.