Employment Agreements - Including Post-Departure Restrictions - Charged As Ethics Violations

The District of Columbia Disciplinary Counsel has filed a cutting-edge Specification of Charges alleging a number of abusive/improper/unethical employment practices by two attorneys, in particular  D.C. Rule 5.6

Respondents refer to themselves as the “Founding Partners” or “Managing Partners” of Tully Rinckey. Until 2020 and at all relevant times, they were the only lawyers with an equity interest in the Firm. Respondents actively managed the Firm. All other lawyers reported to them either directly or indirectly. Respondents established, delegated, approved, and enforced Firm policies, practices, and procedures, many of which were set forth in the Firm’s Standard Operating Procedures (SOPs). Respondents also approved and enforced the provisions of certain document templates, including engagement agreements (aka retainer agreements), employment agreements, confidentiality agreements, and separation agreements.

Working conditions

The work environment in the D.C. office sought to maximize billable hours and revenues, to the detriment of client interests.

Editor's note: If that is a freestanding ethical violation, then we will need a much larger ODC.

Surveillance

Respondents and Firm managers monitored lawyers’ activities on security cameras and the use of Firm telephones and computers (both internet use and emails). Respondent Tully occasionally called or emailed lawyers in the D.C. office from Albany based on what he had observed on security cameras or based on information from the IT staff about internet conduct.

Notably (and to my knowledge never before charged in D.C.) are alleged violations of post-employment restrictions on practice Rule

Respondent Tully filed lawsuits against lawyers who left the Firm if the lawyers took clients to their new employment, regardless of the clients’ choice.

Agreements employees were required to sign

These agreements included restrictive, anticompetitive provisions. In addition to confidentiality provisions to prohibit a departing attorney from taking client files or contact information, the employment agreements included a three-to-five-year term of employment, enforced by liquidated damages provisions as high as $50,000 for lawyers who left before their terms were completed.

And

Respondents included similar anti-competitive provisions in the Firm’s employment contracts with non-lawyer paraprofessionals.

When lawyers left clients were allegedly advised

If the Firm provided any advance notification, it would frequently be one-sided, not including the place where the departing lawyer would be working and withholding contact information. The Firm provided such one-sided notifications of departures including for the October 2013 departure of Joanna Friedman, and the August 2016 departure of Isabel Casteleiro. Firm attorneys, including Respondent Rinckey, notified clients by email in late September 2013 that Ms. Friedman would shortly be departing from the Firm, that the notifying attorney would be handling the client’s case, and that the Firm did not know where Ms. Friedman would be practicing. Likewise, in August 2016, Cheri Cannon, the Managing Partner of the D.C. Office, notified clients by letter that Isabel Casteleiro had left the Firm (although her last day was four days later) and that the client’s case was being reassigned. In violation of Rule 1.16(d) and Rule 1.4(b), clients were deprived of the opportunity and information needed to make informed decisions as to whether they wanted the departing lawyer to continue to represent them.

Here's an employment provision I've not seen before

The Attorney agrees not to assist or otherwise participate willingly or voluntarily in any claim, . . . investigation or other proceeding of any kind that relates to any matter that involves the Firm in any way, shape or form, the Firm owners, Firm Employees, to include prior, current or applicants, Affiliates of the firm’s owners . . ., Firm clients, and/or Firm vendors unless required to do so by Court order, subpoena, or other compulsory lawful means.

And "non-disparagement" provisions

Respondents considered any criticisms to be “disparagement” and required lawyers to refrain from such criticisms “whether truthful or not.”

It is contended that

These non-cooperation and non-disparagement provisions were enforced by liquidated damages clauses in the event of violations. Based on these contract provisions, Respondents’ threats and efforts to enforce the various contract provisions and Respondents’ claims to be entitled to attorney’s fees if contract enforcement was required or challenged lawyers who formerly were employed at the Firm reasonably believed they were obliged to and did inform the Managing Partner before speaking to Disciplinary Counsel. Respondents did not inform these lawyers that Disciplinary Counsel’s investigation was not within the ambit of these provisions or that they could voluntarily cooperate in the investigation without providing Respondents notice or risking the filing of a contract enforcement action.

(Mike Frisch)