Practitioners need to be able to handle regular staff departures. Best practice is to sort out the details around staff departure at the time employment commences; sorting these issues out after receiving a resignation letter invites difficulties. In addition, having a formal and approved procedure around departures will not only make departures smoother, it will also refute any suggestion that action taken by the firm is vindictive or specific to the departing employee. The majority of these measures could also apply to circumstances where a practice has dissolved and solicitors have decided to go their separate ways.
Adopting the following measures should help to avoid negative outcomes:
- Employment agreements should expressly cover the eventuality of an employee leaving, including:
- post-employment confidentiality and intellectual property obligations;
- notice periods; and
- provisions for gardening leave, change of duties during the notice period and the potential for payment in lieu of notice.
- In addition, if you want to be able to stop departing solicitors from contacting, poaching or soliciting your clients or other staff, you need to include an express clause to this effect in the employment agreement (eg a reasonable restraint or non-solicitation clause). Such clauses are notoriously difficult to enforce and you should seek advice on how best to draft such a clause.
- If a new employee brings their existing client base to the firm, the employment agreement should specify whether those clients are excluded from any restraint of trade/non-solicitation obligation that may apply in relation to clients of the firm more generally. Failing to deal with this issue up front may be expensive and damaging to client and professional relationships down the track.
- You should notify affected clients of the solicitor’s departure and let them know who will be handling their matter going forward. You should also reassure the client that the details of their matter will be appropriately handed over to the new solicitor and that the client will not incur any additional cost due to the change in solicitor. This communication is essential in order to maintain a strong relationship with the client and reduce the likelihood of them wanting to move their business elsewhere.
- If a client requests the new contact details of a departing solicitor (eg new firm name and work phone number), you should provide those details or otherwise refer the client to the Law Society for such information.
- You may wish to develop a staff departures policy covering off issues such as:
- Messaging to clients regarding a solicitor’s departure.
- The handover of matters from one solicitor to another.
- The return or deletion of client documents or other confidential information upon termination (including information stored on laptops, smart phones, personal email accounts and other electronic devices).
- You should ensure that the departing solicitor understands that:
- Whilst they may have had day to day responsibility for a client, the client is a client of the firm and there is an obligation to respect the confidentiality of the information gained at work.
- They are not entitled to take the contents of a client’s file (whether historical or existing), nor copies of them, without the agreement of the firm and the express authorisation of the client or client lists etc. without the consent of the legal practice.
- They must not mislead clients into believing they have an obligation to leave with the solicitor or instruct that solicitor in the future.
Again, it might be helpful to cover these matters off in a staff departures policy that is communicated to the employee at the commencement of employment.
- The practice should not impede a request by a client to transfer a client matter to the departing solicitor (subject to the exercise of an effective lien). Naturally, the client has a right to terminate the firm’s engagement without the need to give a reason.
- If files are to be transferred, and if you are insured by Lexon, reference should be had to the Lexon checklist.1
- Neither the departing solicitor nor the legal practice should make any disparaging remarks of the other to any client nor should the departing solicitor improperly undermine any existing solicitor/client relationship.2
- No member, officer or employee of the practice should give misleading information about the future practice details of the departing solicitor, nor reasons/circumstances surrounding the departure. The firm’s website, and any advertising/promotional materials, should be updated on departure to ensure that clients/potential clients are not misled into believing that the departed solicitor works at the firm.
Most of these requirements can easily be incorporated into an employment agreement or appropriate policy, and should at the very least be discussed at commencement. Best practice is that an agreement between the employee and firm is reached on these issues and recorded in an easily accessible format.
Naturally, not every departure will be expected or occur in the best of circumstances. Firms should therefore have an action list for departures, and that list needs to be handy to the person receiving the resignation, as some actions might need to be taken quickly. The list should cover at least the following:
- An end date should be established at the time the resignation is given (this includes consideration of whether or not the employee will work through their notice period, be put on “gardening leave” or be paid in lieu of all or part of the notice period).
- Obtain all passwords for work devices/systems from the employee at the time the resignation is given.
- Arrange handover of work phones and other devices – the timing of this will reflect when the end date is (and the circumstances of the departure).
- Go over the requirements (as spelled out in the employment agreement or applicable policy) around communication with clients/stakeholders and any restraint of trade clauses.
- If the departure is taking place in difficult or disputed circumstances (or employment has been terminated) the employment agreement should be reviewed by the firm prior to termination to ensure it is current and that the termination complies with what was agreed and any applicable statutory requirements regarding termination of employment.
Above all, staff departures should be handled with dignity, professionalism and courtesy; neither party profits from acrimony and lengthy disputes, and both are always at risk of reputational damage if such departures are not dealt with appropriately. Done properly, all involved can at least remain cordial and may be able to sustain a positive and possibly profitable relationship through referrals and mutual respect. That outcome is far more likely if issues around departure are dealt with at the commencement of employment.
QLS gratefully acknowledges the assistance of Kristin Ramsey, Chair of the Industrial Law Committee, in the preparation of this note.
1 Lexon Insurance, ‘General – File Transfer’ (Web Page, 2 July 2021) <http://www.lexoninsurance.com.au/Managing_your_Risk/Lexon_LastChecks/General_-_File_Transfers>.
2 Law Society of New South Wales, Best Practice Protocol for the Conduct of Legal Practices and Solicitors Leaving Legal Practices (18 June 2015).