By Ed Poll
Daily Record Newswire
When speaking at a recent conference, I suggested that the successful law firm of the future will use technology to create and enhance its effort at knowledge management. The firm that is able to retrieve its pre-existing knowledge and use it again will be more efficient, reduce its costs and therefore provide excellent results for clients at a lower price. But this raises a question: Who owns the knowledge, who owns the forms, the precedent knowledge? Does the client who paid for it own it? Does the law firm own it? Or does the lawyer who created it own it? This becomes more important in an age of greater lateral movement.
Though the questions may be obvious, the answers are mixed. In some instances, even if the work product was personally created by the lawyer, the copyright protection may attach to the documents and reside with the law firm. The law firm may own the copyright to work product in the case where employees (associates) are creating content as part of their job; it may not in the case of partners. As part owners, partners may have a “piece of the action” when viewing work product as an asset of the firm, unless the partnership agreement provides otherwise. Another concept to review is whether the copyright belongs to the client. Here, one could use the “work for hire” concept in which the person for whom the work is created is the owner of the copyright. In this instance, files and their contents always belong to the client, not the firm or an individual lawyer. And it would be malpractice or confiscation of another’s property for the lawyer to use that work product for another client without the consent of the first client.
Some clients stipulate as a condition of engagement that the clients own the intellectual property and that the law firm must share it with other law firms who handle the client’s affairs (for example, product liability litigation) in other parts of the country. This is a fundamental principle of knowledge management for large clients engaging more than one law firm. Clients do not want their lawyers to reinvent the wheel, and do not want to pay for others in the firm or another firm to re-create it. They’ve already paid for the work product once; they are willing to pay only for new research or jurisdiction-specific work product or integration of the previous knowledge for the new application.
Best practices require every firm, whether one lawyer or one thousand, to create a standard classification system for each lawyer’s work. And the work product then can be stored within the firm’s system and recalled when appropriate to be used again. Some lawyers are not willing to share their work product, holding out in the belief that their retained knowledge provides an advantage at compensation time or leverage to be retained and protected against severance from the firm. Only a collective approach to compensation and client service can counteract these fears.
Another especially thorny issue arises when a lawyer leaves a firm. In years past, the photocopy machine was used extensively to copy documents to be used as forms in future matters in the new firm environment to which the lawyer will go. Today, there is a much simpler, faster and invisible way to copy documents than to use the photocopy machine and it can be done from off-site until security clearances are changed. If the departing lawyer continues a client relationship, there will be no issue. The client can request copies of their own files. Technically, the departing lawyer cannot do so with the explicit intent to use them for taking clients from the firm. Client permission is needed to move a file.
Law firms should develop appropriate policies to handle both the ownership issue (and permutations thereof) and the rights of lawyers upon their departure. The latter issue should also provide for the rights of lawyers to talk (or be prohibited from talking) with existing clients until after the termination announcement is made. In this example, both the law firm and the departing lawyer are on the same footing in approaching the client for continuing the business relationship.
Many lawyers believe they need to be silent on the subject of departure until the final trigger is pulled. This may be the better approach in some instances. Especially since the law firm has the right to dismiss the lawyer immediately and escort him out the door while changing passwords, etc. Compensation is a different issue that can be addressed after the freeze-out. But, the fundamental principle remains that the departing lawyer cannot take anything from the firm that belongs to the firm. This may include client lists and contact information, copies of “precedent” or form documents, and work product. Failure to honor this basic principle is cause for much litigation between departing lawyers and jilted law firms. Seeking counsel before making a move to depart is a good idea.
Ed Poll J.D., M.B.A., CMC is the principal of LawBiz® Management, a national law firm practice management consultancy based in Venice, California. For more information, visit his website www.LawBiz.com or email him at EdPoll@LawBiz.com.
