Tip of the Month

Tip for May 2017

Be cautious when permitting your lawyers to moonlight

One way in which a law firm may reduce the risk of claims is to adopt a policy against its lawyers accepting legal employment outside the firm ("moonlighting"). Secret clients of firm attorneys may be adverse to former or existing firm clients, creating conflicts of interest. Potential firm clients may be adverse to clients of your lawyers' outside practices. In addition to allegations of conflicts of interest and possible disciplinary proceedings, such practices may result in disqualification, forfeiture of fees and malpractice claims. In addition, if there are claims against the firm by the clients of moonlighting attorneys, a delay in reporting the claim or even the circumstances when they become known to the moonlighting lawyer but not to the firm, may result in a defense to malpractice insurance coverage. If you do permit your lawyers to engage in moonlighting, the firm should have a written policy requiring that any such engagement outside the firm be disclosed to the firm so that the parties can be included in the firm's conflicts data base, and the firm should require that the moonlighting attorney include in any engagement letter the fact that the client is not retaining the firm, but only the lawyer, and that the client is not a client of the firm. The firm's policy should require that the moonlighting lawyer's client counter-sign the engagement letter acknowledging that fact. The firm might also consider requiring the moonlighting lawyer to indemnify the firm for any claims against the firm that arise out of the moonlighting lawyer's representation of clients outside the firm.