When a lawyer moves to a new firm and clients follow, do the old firm's fee agreements still work or must new ones be signed?

Plain-English summary

A lawyer who joined a new firm asked whether the fee agreements her clients signed with the old firm would suffice or whether new ones were needed. The opinion distinguishes hourly from contingent matters. For hourly clients, Rule 1.5(b) requires that the basis or rate of the fee be communicated in writing; the committee concludes that when the entity providing services changes, a new agreement in the name of the new firm should be entered even if scope and fees are unchanged, and ties the lawyer's communication and consent duties to Rules 1.4(a)(1) and 1.4(b).

For contingent clients, the opinion concludes a new contingent fee agreement meeting Rule 1.5(c) is mandatory, not merely written notice, because the agreement must name the lawyer or lawyers to be retained. If the old firm is owed a share of an eventual recovery, the opinion says that share should be resolved between the lawyer and the old firm without affecting or delaying the client's share, consistent with Form A, Paragraph 7 attached to Rule 1.5 and the Supreme Judicial Court's instruction in Malonis v. Harrington that a client should never be made to pay twice.

The opinion also addresses fairness and the old firm's obligations. Unless the new firm bills at the same rate and the contingent terms stay the same, the lawyer bears the burden of proving any change was fair and reasonable, with the size of the increase and the client's option to stay at the old firm as relevant factors. For clients who want the old firm to keep representing them, the opinion applies In re Kiley: a firm that contracted with the client may not abandon the client merely because the responsible attorney left, absent grounds for withdrawal under Rule 1.16.

In practice

The opinion holds that, under the Massachusetts rules as they stood in 2017, a lawyer whose clients follow her to a new firm should execute new hourly engagement letters and must execute new contingent fee agreements with the new firm, even where no material term changes. Per the opinion, a contingent fee agreement satisfying Rule 1.5(c), rather than written notice alone, is required because the agreement must name the retained lawyers.

The opinion places the burden on the lawyer to justify any material post-engagement change in terms as fair and reasonable, identifying the amount of any fee increase and whether the client could have stayed with the old firm as the operative factors. It also holds that the old firm cannot drop clients who wish to remain merely because the responsible lawyer departed, absent a Rule 1.16 ground for withdrawal.

Common questions

Q: If nothing about the fee changes, do clients still need to sign new agreements?

A: For hourly matters the opinion says a new agreement should be entered in the new firm's name even if terms are unchanged; for contingent matters it concludes a new Rule 1.5(c) agreement must be executed because the agreement must name the lawyers retained.

Q: How is the old firm's share of a contingent recovery handled?

A: The opinion says the old firm's share should be worked out between the lawyer and that firm without reducing or delaying the client's share, consistent with Form A, Paragraph 7 and the rule that a client should never pay twice.

Q: Can the old firm drop clients who want to stay after the lawyer leaves?

A: No. Applying In re Kiley, the opinion concludes a firm that signed the client may not withdraw simply because the responsible attorney left, unless a Rule 1.16 ground for withdrawal is present.

Background and rules framework

The opinion interprets Massachusetts Rule of Professional Conduct 1.5 (fees), specifically 1.5(b) for hourly matters and 1.5(c) and its attached Contingent Fee Agreement forms for contingent matters, together with Rule 1.4 (communication), Rule 1.16 (declining or terminating representation), and Rule 1.17 (sale of law practice, cited by analogy on what is fair and reasonable). These correspond to the like-numbered ABA Model Rules.

Citations and references

Rules of Professional Conduct:

• MR 1.5 / Mass. R. Prof. C. 1.5(b), 1.5(c) (fees; contingent fee agreements)
• MR 1.4 / Mass. R. Prof. C. 1.4 (communication)
• MR 1.16 / Mass. R. Prof. C. 1.16 (terminating representation)
• MR 1.17 / Mass. R. Prof. C. 1.17 (sale of law practice; fairness factor by analogy)

Cases:

• Malonis v. Harrington, 442 Mass. 692 (2004), a client should never be made to pay twice
• Eisenstein v. Conlin, 444 Mass. 258 (2005), old firm cannot claim a share of the lawyer's hourly billings at the new firm
• Saggese v. Kelley, 445 Mass. 434 (2005), burden to show post-engagement fee changes are fair and reasonable
• In re Kiley, 459 Mass. 645 (2011), firm may not abandon a client merely because the responsible attorney left

See also

• ABA Ethics Op. 489: notice obligations when lawyers change firms
• ABA Ethics Op. 99-414: ethical obligations when a lawyer changes firms
• ABA Ethics Op. 487: fee division with a client's prior counsel

Source

• Landing page: https://www.massbar.org/publications/ethics-opinions/ethics-opinion-article/ethics-opinions-2017-opinion-17-1/opinion-17-1