“Hotel California” Law Firm Charged With Ethics Violations for Making It Impossible for Lawyers to Leave

“Relax, ” said the night man

“We are programmed to receive”

“You can check-out any time you like”

“But you can never leave!”

–Hotel California, The Eagles

We’re all familiar with the song Hotel California, that fictitious resort where guests are trapped for eternity.  Well, what if the Hotel California wasn’t an imaginary destination but a real, operating law firm.

Turns out it is…at least based on a  Reuters article about Tully Rinckey, a New York based military and employment law firm with D.C. offices that went to all measures to keep attorneys tied to the Firm at least for the duration of their employment contracts.  As a result, the Firm is currently the subject of a disciplinary proceeding for interfering with the “the rights of lawyers to practice after termination of their relationship with the firm” and employing policies that “prevented or impeded clients from choosing to continue to work with lawyers who were familiar with their cases.”  

Law Firm Non-Competes Are Unethical

Among other things, the Firm’s employment contract with attorneys required liquidated payments of as high as $50,000 if an attorney departed before the conclusion of the contract term, and barred departing lawyers from soliciting the Firm’s attorneys for employment for a period of 18 months and imposed a forced “referral fee” of one-third of revenues generated by departing lawyers who took firm clients with them.  And the Firm also refused to notify clients of a lawyers’ departure, instead immediately reassigning the case to another Firm attorney.  And in fact, the complaint alleges that the Firm had sued lawyers who took clients with them, even if the clients chose to follow. All of these activities violate D.C. ethics rules which do not allow law firms to impose non-competes and forbid any practices that interfere with clients’ unfettered rights to counsel of their choosing.

Why Did This Law Firm Need Non-Competes

You might wonder why a firm would need such formidable non-competes.  Not surprisingly, the bar complaint found that the Firm experienced high turnover rates…and no wonder.  Among other things, Firm lawyers were subject to strict billable requirements, though they weren’t credited for hours spent on files where clients hadn’t paid- even if payment was later made. And the complaint notes that lawyers and staff were monitored on security cameras.

Do Lack of Non-Competes Put Lawyers At a Disadvantage?

Law firms argue that non-competes put them at a disadvantage to other businesses.  Maybe so.  But the best workaround is to avoid practices like security cameras and stringent employees that make it so lawyers want to check out.