F  E  A  T  U  R  E  D     D  E  C  I  S  I  O  N  :

Lampert, Hausler & Rodman, P.C. v. Gallant, 19 Mass. L. Rep. 283, 2005
Mass. Super. LEXIS 118  (April 4, 2005) (van Gestel, J.).

The lawyers of a small law firm found themselves at odds, and one of the shareholders and one of the associates (the “Departing Attorneys”) decided to break away and form a new firm. Within days of deciding to start the new firm, the Departing Attorneys purchased advertising space in a local newspaper and had stationery prepared.

On November 22, 2000, the day before the Thanksgiving holiday, the Attorneys mailed 180 letters on their new letterhead, addressed to 194 clients, dated November 24, 2000. The letters informed the clients of their departure and invited them to transfer their business to the new firm. The new firm used the same address as the original firm on its letterhead. Significantly, the letters offered each client three choices: (1) transfer to the new firm; (2) remain with the original firm; or (3) go elsewhere.

Early on November 24, 2000, the Departing Attorneys delivered resignation letters to the other shareholders by leaving them on their desks. They also sent a facsimile to one and telephoned the other. The lawyers met late that day. By Sunday, November 26, 2000, the remaining shareholders of the original firm had secured the firm’s

offices, including changing the locks and hiring a police detail.

By November 27, 2000, 35 clients with 72 different matters had responded with requests to transfer their business to the new firm. Ultimately, 85 clients with 337 different matters transferred their business, including one contingent fee client for whom the new firm secured a substantial verdict and earned a substantial fee.

The court was plainly troubled by the Departing Attorneys’ conduct, but found “albeit reluctantly” that they had complied with their legal obligations in departing the firm. The court emphasized, however, that the scope of their duties was unclear under existing precedent:

“There is a serious conflict in the law as established in Meehan between what lawyers may do when preparing for and planning to leave a law firm and the fiduciary duties that both Meehan and Donahue impose on partners in the law firm or shareholders in a closely held corporation. This conflict, however, must be resolved by higher courts than this.”

Accordingly, the court anticipated a possible appeal and, in order to avoid any need for a retrial, stated the damages it would have assessed if it had found a breach of fiduciary duty.