Breaking Up [A Law Firm] Is Hard to Do

For a couple formerly in love, Breaking Up Is Hard to Do.  But for lawyers at a firm, who stuck together for the sake of money, breaking up is even more difficult as demonstrated by this article, Court Fight Pits Barnes Firm Versus Defecting Top Lawyer, Michael Beebe (8/28/05).  As the article reports, the split was apparently precipitated by ethics action against Cellino and Barnes, the two name attorneys (we blogged indirectly about it here, decisions are here):

Joseph E. Dietrich III, one of the top two money makers at The Barnes
Firm, has quit the personal injury law firm and is embroiled in a court
battle over the clients he took with him.  Dietrich, who in the past three years brought in $30 million worth of
settlements and verdicts to Cellino & Barnes and its successor, The
Barnes Firm, took 41 clients with him following his resignation July 16.  “The reason I left is I believe I can do a better job for my clients outside of that environment,” Dietrich said.  Dietrich left a little more than a month after Ross M. Cellino Jr. was
suspended from practice for six months and Stephen E. Barnes was
censured. The two were disciplined for advancing money to clients
through a company they owned and then through one they controlled.

According to the article, the firm claims it invested money in advertising that enabled Dietrich to attract his clients to begin with.  On the other hand, Dietrich’s contract provided that the firm would retain 80 percent of revenues generated from his cases, which means that the firm has presumably been compensated for a large part of the costs that it invested in marketing.  In addition, the reason that Dietrich is leaving is not merely to profit from the firm’s investment but also because the firm’s founders engaged in conduct that could potentially harm Dietrich’s clients.  And of course, clients always ultimately have the unfettered right to choose their own counsel; it’s not surprising they’d prefer a Dietrich to  ethically-challenged Cellino and Barnes.

In this post, we described some of the guidelines that govern lawyers departing firms, but don’t have any suggestions for resolving anything as messy as this, short of some kind of mediation.  Send your ideas on what you think the outcome here out to be.