Can a North Carolina lawyer negotiate for a job at the law firm representing the opposing party in a matter the lawyer is handling?

Plain-English summary

The question is whether a lawyer may negotiate for employment with a law firm that represents the party on the opposite side of a matter the lawyer is handling. The committee answers yes, but only with client consent. A note limits the opinion to lawyers moving between private employment; Rule 1.11(d)(2)(B) governs a government lawyer's pursuit of private employment.

The analysis runs through Rule 1.7(b)(2): a lawyer may not represent a client if the representation may be materially limited by the lawyer's personal interest, unless the lawyer reasonably believes the representation will be competent and diligent and the client gives informed consent, confirmed in writing. Comment [10] to Rule 1.7 recognizes that discussions about possible employment with an opponent, or the opponent's firm, can materially limit the representation. The committee adopts the framework of ABA Formal Opinion 96-400, which weighs two factors: the nature of the lawyer's role in the representation, and whether the lawyer's interest in the firm is concrete, communicated, and reciprocated. The risk to the lawyer's judgment is greater when the lawyer has an active, material role, and lower when the case posture does not call on the lawyer's judgment during the job search or when interest is not mutual. The committee favors a rule requiring consultation and consent at the earliest point the client's interests could be prejudiced.

Drawing on ABA Formal Op. 96-400, the Restatement (Third) of the Law Governing Lawyers § 125, comment d, and Kentucky Ethics Opinion E-399, the committee concludes that a job-seeking lawyer who is representing a client or has confidential information about the matter may not engage in substantive negotiations with the opposing firm without the client's informed consent. To obtain that consent, the lawyer must explain the case's current posture, what additional work is required, and whether another firm lawyer can take over if the lawyer withdraws. If the client declines, the lawyer must either pause the negotiations until the matter is resolved or withdraw, and may withdraw only without material adverse effect on the client under Rule 1.16(b)(1); because personal-interest conflicts are not imputed (Rule 1.10(a)), another firm lawyer may continue the representation. The same consent requirement applies to the hiring firm: it must not engage in substantive employment negotiations with opposing counsel unless its own client consents.

In practice

Under the North Carolina rules as they stood at the time of the opinion, the committee holds that substantive employment negotiations between a lawyer and the opposing firm require the informed consent of the affected client, where the lawyer is representing a client in the matter or holds confidential information about it. The opinion defines the trigger by reference to "substantive discussions": per the end note and ABA Formal Op. 96-400, that means a discussion (sending a blind resume is not a discussion) that is substantive (general talk at a social event is not), covering the lawyer's skills, ability to bring clients, and terms of association.

The opinion states that if the client does not consent, the lawyer must either cease the negotiations until the client's matter is resolved or withdraw, and may withdraw only if it can be done without material adverse effect on the client under Rule 1.16(b)(1). Per the opinion, because personal-interest conflicts are not imputed to other firm lawyers under Rule 1.10(a), another lawyer in the firm may continue the representation; and the hiring firm is under the same constraint, needing its own client's consent before substantive negotiations.

Common questions

Q: Can a North Carolina lawyer interview with the firm on the other side of a case the lawyer is handling?

A: Only with the affected client's informed consent. The opinion holds a lawyer who is representing a client or has confidential information about the matter may not engage in substantive employment negotiations with the opposing firm without informed consent under Rule 1.7(b)(2).

Q: What counts as a "substantive discussion" that triggers the consent requirement?

A: Per the end note and ABA Formal Op. 96-400, it requires both a discussion and substance: a communication about the lawyer's skills, experience, ability to bring clients, and the terms of association. A blind resume is not a discussion; general talk at a social event is not substantive.

Q: What must the lawyer tell the client to get informed consent?

A: The lawyer must explain the current posture of the case, what additional legal work is required, and whether another firm lawyer can take over if the lawyer seeks to withdraw.

Q: If the client refuses consent, must the whole firm drop the case?

A: No. Because personal-interest conflicts are not imputed under Rule 1.10(a), another lawyer in the firm may continue the representation; the job-seeking lawyer must pause negotiations or withdraw, and may withdraw only without material adverse effect on the client.

Background and rules framework

The opinion interprets the personal-interest conflict rule. Rule 1.7(b)(2) (Model Rule 1.7) bars representation that may be materially limited by the lawyer's personal interest absent a reasonable belief in competent, diligent representation and the client's informed consent confirmed in writing; comment [10] addresses employment discussions with an opponent's firm. Rule 1.10(a) (Model Rule 1.10) provides that a lawyer's personal-interest conflict that does not present a significant risk of materially limiting other firm lawyers is not imputed. Rule 1.16(b)(1) (Model Rule 1.16) permits withdrawal that can be accomplished without material adverse effect on the client. A note flags Rule 1.11(d)(2)(B) (Model Rule 1.11) for government lawyers seeking private employment.

The committee adopts the analysis of ABA Formal Opinion 96-400, the Restatement (Third) of the Law Governing Lawyers § 125, comment d, and Kentucky Ethics Opinion E-399.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 / NC Rule 1.7(b)(2) and cmt. [10] (personal-interest conflict; employment discussions with an opponent)
• Model Rule 1.10 / NC Rule 1.10(a) (non-imputation of personal-interest conflicts)
• Model Rule 1.16 / NC Rule 1.16(b)(1) (permissive withdrawal without material adverse effect)
• Model Rule 1.11 / NC Rule 1.11(d)(2)(B) (government lawyer seeking private employment)

Other opinions cited:

• ABA Formal Op. 96-400 (1996): a lawyer must obtain client consent before substantive employment discussions with a firm representing the client's adversary, or withdraw.
• Kentucky Ethics Op. E-399 (1998): a lawyer may not negotiate employment with a firm on the adverse side without client consent where the lawyer is involved in the matter or has protected information.

Other authority:

• Restatement (Third) of the Law Governing Lawyers § 125, cmt. d (2000).

See also

• ABA Formal Op. 96-400: Job Negotiations With an Adverse Firm or Party
• Kentucky Op. E-399: Negotiating Employment With an Adverse Firm
• NJ ACPE Op. 743: Imputing Personal-Interest Conflicts

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2016-formal-ethics-opinion-3/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Note: This opinion is limited to the explanation of the professional responsibilities of a lawyer moving from one place of private employment to another. Rule 1.11(d)(2)(B) governs the conduct of a government lawyer seeking private employment.

Inquiry:

May a lawyer negotiate for employment with a law firm that represents a party on the opposite side of a matter in which the lawyer is also representing a party?

Opinion:

Yes, with client consent.

A lawyer shall not represent a client if the representation of a client may be materially limited by a personal interest of the lawyer unless the lawyer reasonably believes that he can provide competent and diligent representation to the affected client and the client gives informed consent, confirmed in writing. Rule 1.7(b)(2). As observed in Rule 1.7, cmt. [10], when a lawyer has discussions concerning possible employment with an opponent of the lawyer’s client, or with a law firm representing the opponent, such discussions could materially limit the lawyer’s representation of the client.

On the same issue, ABA Formal Ethics Op. 96-400 (1996) advises that there are two overriding factors affecting the “likelihood that a conflict will eventuate” and “materially interfere with the lawyer’s independent professional judgment in considering alternatives or foreclosing courses of action”: the nature of the lawyer’s role in the representation of the client; and the extent to which the lawyer’s interest in the firm is concrete, and has been communicated and reciprocated. The ABA opinion states:

[t]he likelihood that a lawyer’s job search will adversely affect his “judgment in considering alternatives or foreclosing courses of action” is far greater when the lawyer has an active and material role in representing a client. Thus, if the posture of the case is such that there is no call on the lawyer’s judgment in representing a client during the period of his job search, it is not likely that his search and negotiations will adversely affect his judgment. Furthermore, if a lawyer’s interest in another firm, or its interest in him, is not reciprocated, it seems unlikely, in most cases, that such unreciprocated interest will have a material effect on a lawyer’s judgment in a matter between them.

While the exact point at which a lawyer’s own interest may materially limit his representation of a client may vary, the committee believes that clients, lawyers, and their firms are all best served by a rule that requires consultation and consent at the earliest point that a client’s interests could be prejudiced.

The ABA opinion concludes that a lawyer who is interested in negotiating employment with a firm representing a client’s adversary must obtain the client’s consent before engaging in substantive discussions1 with the firm or the lawyer must withdraw from the representation.

The Restatement (Third) of the Law Governing Lawyers advises that once the discussion of employment has become concrete and the interest is mutual, the lawyer must promptly inform the client; without effective client consent, the lawyer must terminate all discussions concerning the employment, or withdraw from representing the client. Restatement (Third) of the Law Governing Lawyers: A Lawyer’s Personal Interest Affecting the Representation of a Client, §125, cmt. d (2000). See also Kentucky Ethics Op. E-399 (1998) (lawyer may not negotiate for employment with another firm where firms represent adverse parties and lawyer is involved in the client’s matter or has actual knowledge of protected client information, unless the client consents to negotiation).

We agree: a job-seeking lawyer who is representing a client, or has confidential information2 about the client’s matter, may not engage in substantive negotiations for employment with the opposing law firm without the client’s informed consent.

To obtain the client’s informed consent, the job-seeking lawyer must explain to the client the current posture of the case, including what, if any, additional legal work is required, and whether another firm lawyer is available to take over the representation should the lawyer seek to withdraw. If the client declines to consent, the job-seeking lawyer must either cease the employment negotiations until the client’s matter is resolved or withdraw from the representation but only if the withdrawal can be accomplished without material adverse effect on the interests of the client. Rule 1.16(b)(1). Because personal conflicts of interests are not imputed to other lawyers in the firm, another lawyer in the firm may continue to represent the client. Rule 1.10(a).

Similarly, the hiring law firm must not engage in substantive employment negotiations with opposing counsel unless its own client consents. If the client does not consent, the firm must cease the employment negotiations or withdraw from the representation. The firm may only withdraw if the withdrawal can be accomplished without material adverse effect on the interests of the client. Rule 1.16(b) (1).

End Notes

• A substantive discussion entails a communication between the job-seeking lawyer and the hiring law firm about the job-seeking lawyer’s skills, experience, and the ability to bring clients to the firm; and the terms of association. ABA Formal Ethics Op. 96-400 (1996). Thus there is a two-prong test for “substantive discussions.” There must be (1) a discussion/negotiation that is (2) substantive. Sending a resume blind to a potential employer is not a “discussion.” Speaking generally with a colleague at a social event about employment opportunities is not “substantive.”