Facts Carl Adle and Louise Bart formed a law firm as partners, and Anne Lily, Ma
ID: 427448 • Letter: F
Question
Facts Carl Adle and Louise Bart formed a law firm as partners, and Anne Lily, Marvin Thomas, and Tim Jones joined the newly formed firm of Adle & Bart as associates (nonpartner employees). After about five years, Lily, Thomas, and Jones became disenchanted with the law firm and decided to form their own, to be called Lily, Thomas & Jones. Lily and Thomas suggested to Jones that they contact approximately five hundred of Adle & Bart’s current clients. Lily and Thomas had prepared a model letter to inform clients about the new law firm (Lily, Thomas & Jones) and to encourage them to leave Adle & Bart and to become clients of the new firm. The letter also indicated that Lily, Thomas & Jones would offer legal services far better than those of Adle & Bart: billing rates would be more reasonable, service more prompt, and legal representation more effective and successful. The reference to success was aimed, in part, at three large clients who recently lost lawsuits under Adle & Bart representation. Although the losses had not resulted from malpractice or mishandling by Adle & Bart, Lily and Thomas knew that significant amounts of money had been at issue and that the clients were sensitive about the results of the lengthy litigation. The letter included two postage-paid form letters for the prospective client to sign and mail. One form letter was addressed to Adle & Bart, informing them of the client’s desire to discontinue the client-attorney relationship and requesting the firm to forward all files to Lily, Thomas & Jones. The other form letter, addressed to Lily, Thomas & Jones, requested representation. Jones is reluctant about the proposed mailing. Lily and Thomas, in turn, argue that their new firm is not doing as well as they expected. They essentially give Jones an ultimatum: join in the letter or leave the firm. Jones, who has thoroughly alienated Adle & Bart, does not believe he has any immediate alternative job opportunities. Social, Policy, and Ethical Considerations
1. Should Jones agree to the proposed mailing? Is it ethical for those forming the new firm to use a client list of their former employer when seeking clients?
5. In what manner,if at all, should the law protect existing businesses from competition? Under what circumstances might competition become unfair, and how should laws be tailored to deter unfair practices?
Explanation / Answer
1. In my opinion Jones should not agree to the proposed mailing as it is both unethical and illegal. Lily and Thomas were using confidential information obtained from their previous employer for expanding their business. In their letters, they clearly mentioned that they would provide more prompt, effective and successful service than Adle & Bart at reasonable billing rates. Besides, in the letters they gave reference of the three large clients who recently lost lawsuits under the representation of Adle & Bart. It is considered to be illegal as Lily and Thomas were trying to breach their fiduciary duties to the former employers using the confidential information.
No, it is not ethical for an individual starting new firm to use the client list of his/her previous employer while seeking for clients as they have ethical obligation for not using the confidential information of the employer for their own profit.
5. Although competition should be promoted in business for the development of economy and society, but law should protect the existing business from any kind of unfair competition. Competition might become unfair when a new firm would use deceptive, fraudulent, and misleading acts to attract their clients. Besides, if a firm would participate in acts that would be determined to damage the reputation or goodwill of an existing firm, it would also constitute unfair competition.
Laws should be tailored to deter such unfair practices by establishing more clear guidelines and practices for the acts that are deemed to be dishonest and unfair.
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