The lawyer and the “[Law] Firm”

Problem Areas in Legal Ethics

2018-2019

Choice of a Firm name

Rule 3.02 of the Code of Professional Responsibility which states that “in the choice of a firm name,
no false, misleading or assumed name shall be used.”

No name not belonging to any of the partners or associates may be used in the firm name for any
purpose. - PP v. Gonzalez, Jr., G.R. No. 139542 June 10, 2003

Negligence of clerks in
a law firm
Time and again the Court has admonished law firms to adopt a system of distributing pleadings
and notices, whereby lawyers working therein receive promptly notices and pleadings intended for
them, so that they will always be informed of the status of their cases.
Their Court has also often repeated that the negligence of clerks which adversely affect the cases
handled by lawyers, is binding upon the latter. - B.R. Sebastian Enterprises, Inc. v. CA, G.R. No. L-
41862 [1992]

Law firm represents the client

Respondent judge should not have accommodated so many Motions for Postponement filed by the
then ailing Atty. Rosendo Castillo Sr. because a law firm (Castillo & Castillo), to which the latter
belonged, was really representing the defendants, there certainly were other competent lawyers
who could have handled the matter. – Sps. Reaport v. Judge Mariano, A.M. No. MTJ-00-1253. July 11,
2001

Main and branch office constitute one personality

Petitioner's counsel was and is the firm of Ledesma, Saludo and Associates (and not any particular
member or associate of that firm) which firm happens to have a main office in Makati and a branch
office in Cebu City. The Court notes that both the main and branch offices operate under one and
the same name, Saludo Ledesma and Associates. Having represented itself to the public as
comprising a single firm, LSA should not be allowed at this point to pretend that its main office
and its branch office in effect constitute separate law firms with separate and distinct personalities
and responsibilities. Ouano Arrastre Service Inc. v. Judge Aleonor, G.R. No. 97664 October 10, 1991

Death of a handling lawyer of the firm

Hence, the death of the latter did not extinguish the lawyer-client relationship between said firm
and petitioner. - B.R. Sebastian Enterprises, Inc. v. CA, G.R. No. L-41862 [1992]

Duties of Firms and Lawyers When Someone Leaves

A. Ethical Obligation to Communicate to Certain
clients
B. Trust Account Monies
C. Fee Divisions In General
D. Files
E. Phones

Partners and Associates Leaving Must Abide By Fiduciary Duties to Firm

Ethical Obligation to Communicate to Certain Clients
1) lawyers have a duty to tell “their” clients that they are leaving.
2) clients are not chattels – the firm and departing lawyer cannot decide which clients can stay and
which can go – the clients decide.
 Rule of confidentiality in a law firm
Rule 21.04 - A lawyer may disclose the affairs of a client of the firm to partners or associates thereof
unless prohibited by the client.
Duty to notify a client
“The departing lawyer and responsible members of the law firm who remain have an ethical
obligation to assure that prompt notice is given to clients on whose active matters she currently is
working.”

Rule 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond
within a reasonable time to the client's request for information.
Lawyer who has had “significant personal contacts”
A departing lawyer who has had “significant personal contacts” with the client, should inform the
client that the lawyer is leaving the firm.

Note: this does not mean that an associate who met a client once or twice and has prepared
discovery requests has had “significant personal contacts” – the standard is that if the client were
asked “which lawyer(s) at the firm represents you?” the lawyers mentioned would be those that
have had“significant personal contacts.”

Ethical obligations of
departing lawyers
In addition to the ethical obligations departing lawyers have, they also must avoid interfering with
the contracts the firm has with existing clients.

However, the caution to avoid stealing clients must be balanced against the departing lawyer’s
ethical obligation to notify clients that an attorney is departing.

How to tell clients

The preferred method of advising firm clients about the impending departure of an attorney is a
joint letter from the firm and departing lawyer to all clients with whom the lawyer had significant
personal contacts.

A letter should advisethe clients

When the lawyer is leaving

The client has the option of going with the lawyer, staying with the firm, or getting a new firm
How any advance fee deposit will be treated
A place for the client to sign and return the letter, with instructions on where their file should go.
Separate letters may be sent by the lawyer (or the firm) to clients with whom the departing lawyer
had substantial personal contact as long as:
1) the letters do not disparage the firm or the lawyer; and
2) the letters do not involve improper solicitation

Trust Account Monies

Clients that have given the firm an advance fee or advance cost deposit take the money with them
(less earned fees and costs), if they go with the departing lawyer. While simple in theory,
application sometimes can be problematic.
The“old” firm should write a check, consistent with the written instructions of the client, to either
the client or to the trust account for the departed lawyer’s new firm.

Fee Divisions In General

In contingent fee cases where some or much of the work was performed at the existing firm, but
the case is going with the departing lawyer, the firm and lawyer must agree how the contingent fee
 will be apportioned among them, based upon their respective contributions to the case (i.e.,
quantum meruit) or based upon terms in the partnership agreement.

But can a departing lawyer keep all of a contingent fee case that came into
the old firm but ultimately settled when the lawyer was at a new firm?
Probably not, according to several cases.
A lawyer may be entitled to only his partnership portion of the fees earned on a case, even if he
performed most of the work after the dissolution of the firm.
Nevertheless, some courts will find that when a lawyer leaves a firm and takes a case with him, he
may be entitled to the quantum meruit value of the work he performed.

Client’s interests not be prejudiced when the attorney/client relationship is terminated

Do not hold client files hostage, even if the client that is leaving with the lawyer owes the current
firm money.
Model Rule 1.16(d) requires that the client’s interests not be prejudiced when the attorney/client
relationship is terminated. Have the client or a runner from the departed lawyer’s new firm sign
for the file, if it is going to the new firm.
Also, it is appropriate to request in a litigation matter that the departed lawyer file a substitution
of counsel or at least notification of address change with the court, to assure that the old firm is
still not listed as counsel of record.

Client’s file = paper and electronic documents

When a client asks for their file, you must give them both the paper and the electronic documents
– including emails.
And remember that the client file is client property, so you cannot charge the client for the cost of
downloading everything to disks….

Phones
It is ethically inappropriate to have the receptionist tell callers who are looking for a lawyer who
recently left the firm “we don’t know where he is.” That game is not professional and not
acceptable.
Assure that all staff are instructed to provide the departed lawyer’s phone number and mailing
address.
Also, assign a partner to answer any client inquiries.
Moreover, mail should be forwarded to the departed lawyer.

Partners and Associates Leaving Must Abide By Fiduciary Duties toFirm

It is worth noting again that lawyers who are leaving a firm have certain fiduciary duties to the
firm to not interfere with the contracts that the firm has with existing clients, to not use firm
resources to set up their new firm, and to not attempt to steal away associates and staff while the
lawyers are still working for the firm. - Lynda C. Shely

A lawyer whose spouse is associated with a firm representing an opposing party

[T]he lawyer should advise the client of all circumstances that might cause one to question the
undivided loyalty of the law firm and let the client make the decision as to its employment. If the
client prefers not to employ a law firm containing a lawyer whose spouse is associated with a firm
representing an opposing party, that decision should be respected.

WON the firm of “Velasquez, Rodriguez, Respicio, Ramos, Nidea, and Prado”may call itself “A law
Firm Of St. Thomas More and Associate Members”.
It implies that St. Thomas More is a Law Firm when in fact it is not it would also convey to the
public the impression that the lawyers are members of the law firm which does not exist. To the
public, it would seem that the purpose or intention of adding “The Law Firm of St. Thomas More
 and Associates Members” is to bask in the name of a Saint, although that may not really, be the
purpose or intention of the lawyers. The appellation only tends to confuse the public and in a way
demean both the saints and the legal profession whose members must depend on their own name
and record and merit and not on the name/glory of other persons living or dead. - PP v. Gonzalez,
Jr., G.R. No. 139542 June 10, 2003

Duties When Switching Firms

Duties of Lawyers Interviewing With Other Firms

Screening an “Infected” Lateral Hire
Death of a Lawyer

Associates can continue representing the law firm

The bare fact that Atty. Barrera was already under suspension when De los Santos received the
decision of the trial court did not relieve her of the duty to hand over the decision to any of the
associates in the law office. It bears stressing that the respondent was represented by the J.T.
Barrera & Associates, and not by Atty. Joelito Barrera alone. The attorney-client relationship
between J.T. Barrera & Associates and the respondent was not thereby severed upon the one-year
suspension of Atty. Barrera from the practice of law. The law firm continued to be the counsel of
record of the respondent. Any member of the law firm could appear for trial and sign pleadings for
the firm as the respondents counsel in the trial court. – Balgami, et. al. v. Court of Appeals, G.R. No.
131287. December 9, 2004

Even if partner or associate is suspended law firm can continue

As the Court ruled in one case, [w]hen a client employs the services of a law firm, he does not
employ the services of the lawyer who is assigned to personally handle the case. Rather, he
employs the entire law firm. In the event that the counsel appearing for the client resigns, the firm
is bound to provide a replacement. We see no reason why the same principle should not apply to a
case where a partner or associate is suspended from the practice of law, as in this case. – Balgami,
et. al. v. Court of Appeals, G.R. No. 131287. December 9, 2004

Associate is also liable for unauthorized practice of law

There is no question that Atty. Bragas has knowledge of Atty. Era's suspension from the practice of
law and yet, she allowed herself to participate in Atty. Era's unauthorized practice. Clearly, Atty.
Bragas violated the CPR, specifically:
CANON 9 - A lawyer shall not, directly or indirectly, assist in the unauthorized practice of law.
Being an associate in Atty. Era's law firm cannot be used to circumvent the suspension order. The
factual circumstances of the case clearly shows that Atty. Bragas did not act to replace Atty. Era as
counsel for his and/or the law firm's clients during the latter's suspension. Atty. Bragas merely
assisted Atty. Era, who admittedly was the one actively performing all acts pertaining to the labor
case he was handling. - Bonifacio v. Atty. Era & Atty Bragas, A.C. No. 11754, October 03, 2017

When a law firm represents

conflicting interest
In his complaint-affidavit, complainant alleged that he availed the services of the law firm
Valencia Ciocon Dabao Valencia De La Paz Dionela Pandan Rubica Law Office (law firm), of which
Attys. Valencia, Ciocon, Dabao, Uy-Valencia, De La Paz, Dionela, Pandan, Jr., and Rubica were
partners, for two (2) consolidated labor cases2 where he was impleaded as respondent. Atty.
Dionela, a partner of the law firm, was assigned to represent complainant. The labor cases were
terminated on June 5, 2008 upon the agreement of both parties.
 ……..
On September 18, 2009, a criminal case for qualified theft was filed against complainant and his
wife by FEVE Farms Agricultural Corporation (FEVE Farms) acting through a certain Michael
Villacorta (Villacorta). Villacorta, however, was represented by the law firm, the same law office
which handled complainant's labor cases. Aggrieved, complainant filed this disbarment case
against respondents, alleging that they violated Rule 15.03, Canon 15 and Canon 21 of the CPR.

It behooves the law firm to value coordination in deference to the conflict of interest rule
As the Court observes, the law firm's unethical acceptance of the criminal case arose from its
failure to organize and implement a system by which it would have been able to keep track of all
cases assigned to its handling lawyers to the end of, among others, ensuring that every
engagement it accepts stands clear of any potential conflict of interest. As an organization of
individual lawyers which, albeit engaged as a collective, assigns legal work to a corresponding
handling lawyer, it behooves the law firm to value coordination in deference to the conflict of
interest rule.
…….
This lack of coordination, as respondents' law firm exhibited in this case, intolerably renders its
clients' secrets vulnerable to undue and even adverse exposure, eroding in the balance the lawyer-
client relationship's primordial ideal of unimpaired trust and confidence.
Had such system been institutionalized, all of its members, Atty. Dionela included, would have
been wary of the above-mentioned conflict, thereby impelling the firm to decline FEVE Farms'
subsequent engagement. Thus, for this shortcoming, herein respondents, as the charged members
of the law firm, ought to be administratively sanctioned.

Partners are equally liable

Note that the Court finds no sufficient reason as to why Atty. Dionela should suffer the greater
penalty of suspension. As the Court sees it, all respondents stand in equal fault for the law firm's
deficient organization for which Rule 15.03, Canon 15 and Canon 21 of the CPR had been violated. As
such, all of them are meted with the same penalty of reprimand, with a stern warning that a
repetition of the same or similar infraction would be dealt with more severely. – Anglo v. Atty.
Valencia, et. al., A.C. No. 10567, February 25, 2015

Only a partner is liable

Complainants alleged that a certain Mary Jane Gentugao, the secretary of the Jarder Bancolo Law
Office, forged the signature of Atty. Bancolo.

The complainants did not present any evidence that Atty. Jarder was directly involved, had
knowledge of, or even participated in the wrongful practice of Atty. Bancolo in allowing or
tolerating his secretary to sign pleadings for him. Thus, we agree with the finding of the IBP Board
that Atty. Jarder is not administratively liable. - Rodrigo E. Tapay and Anthony J. Rustia v. Atty.
Charlie L. Bancolo and Atty. Janus T. Jarder, A.C. No. 9604, March 20, 2013

A disbarred lawyer's name cannot be part of a firm's name

A lawyer who appears under a firm name that contains a disbarred lawyer's name commits indirect
contempt of court. - David Yu Kimteng, et. al. v. Atty. Young, et. al., G.R. No. 210554, August 05, 2015

Departing solicits a client of the firm

Where contingent fees are not an issue, but the partner prior to departing solicits a client of the
firm, he or she may have violated a fiduciary duty to the firm even if the departing partner brought
the client into the firm and has represented the client for years.-Joseph M. Perillo,The Law of
Lawyers' Contracts Is Different, 67 Fordham L. Rev. 443 (1998).
 “Unfinished business” doctrine
The “unfinished business” doctrine reflects established partnership law. In the law firm world, the
unfinished business doctrine is frequently referred to as the Jewel doctrine, or then Jewel rule,
after the seminal California case on the subject, Jewel v. Boxer.
Regardless of how it is described, the unfinished business doctrine essentially holds that absent
contrary agreement, partners in a dissolved law firm must account to the firm and its former
partners either for all fees generated from work in progress at the time of the firm’s dissolution, or
for the profits made on that work (depending on the state’s partnership law) in accordance with
their percentage interests in the firm. Pending client matters are uncompleted transactions that
require winding up after dissolution, and are therefore partnership assets subject to post-
dissolution distribution.
……
Pending client matters are uncompleted transactions that require winding up after dissolution,
and are therefore partnership assets subject to post-dissolution distribution. As the court in Gull v.
Van Epps explained, “all partners of the dissolved firm are generally entitled to share in fees for
pre-dissolution work in progress earned after dissolution, even if the client has exercised [its]
right to discharge the attorney or attorneys who are sharing in the fees.”
This entitlement exists because dissolution does not terminate the firm’s pre-existing contracts
with its clients, so that partners who perform those contracts do so as fiduciaries for the benefit of
the dissolved partnership.
…….
If partners of a dissolving law partnership stayed together during the wind up of the firm’s
business, the unfinished business doctrine would be of no moment.
But they do not—they scatter to new law firms, taking open client matters with them. The work
they or their colleagues perform on those matters at their new firms produces fees that their new
firms wish to collect and retain, and which they do not want to share with, or surrender to, the
dissolved firm. -Douglas R. Richmond,Whither (Wither?) the Unfinished Business Doctrine, 20 Chap.
L. Rev. 283 (2017)

Thanks for your listening!