Situation:
You are an agent leaving your firm to pursue an opportunity with another employer. One of your clients with whom you have an established relationship wants to continue working with you at your new firm.
Ethics Inquiry:
If an Agent is leaving Firm A for Firm B, can they bring their clients from Firm A with them to Firm B?
If a client has instructed Firm B to take over representation on their file, but Firm A has not provided the file to Firm B, what can be done?
Code of Professional Conduct: the Fundamental Canon
By way of introduction to the Code, we draw your attention to the Fundamental Canon. The Code is written in such a way as to provide Licensees at the outset with the fundamental principles of ethical practice, the root of which is integrity. The principle of integrity is stated as the Fundamental Canon, which provides that
the most important attribute of an agent is integrity. That principle is implicit in this Code and in each of the rules and commentaries set out in it.
Licensees are required under the Fundamental Canon of the Code to
at all times conduct themselves with integrity and competence in accordance with the highest standards of the profession in order to retain the trust, respect and confidence of members of the public.
Integrity is the overarching principle for the interpretation and application of the Code. The commentary to Rule 6 in the Code provides guidance for how an Agent should approach their client when they leave a firm, and the principle of integrity should underpin and inform the reading of that commentary. An Agent acting with integrity will put the interests of their clients ahead of their own desire to keep that client’s business and will respect their clients’ right to choose who they wish to represent their interests. An Agent lacking in integrity may not make it clear that it is ultimately the client’s choice whether they choose to stay with a firm or transfer to a new one and/or suggest that clients will be better served by staying with their firm.
What section of the Code of Professional Conduct Applies?
The Commentary to Rule 6 of the Code is instructive for questions about leaving a firm and file transfer, and it was reviewed in order to assist in providing the following guidance. Portions of the Commentary to Rule 6 are reproduced below.
Guidance provided:
The decision of representation rests with the client and the client’s interests are paramount. The Commentary to Rule 6 in the Code of Professional Conduct (the “Code”) sets out that
The final decision [of representation] rests with the client and the agents who are no longer retained by that client must act in accordance with the principles set out in this rule and, in particular, must try to minimize the expense and avoid prejudice to the client. The client’s interests are paramount and, accordingly, the decision as to whether the agent will continue to represent a given client must be made by the client in the absence of undue influence or harassment by either the agent or the agency firm.
This commentary specifically notes that the decision of representation by the client must be made in the absence of undue influence or harassment by either agent. An Agent acting with integrity will make it clear to the client that the choice is theirs.
The commentary goes on to state that in order to make it clear to the client that the decision of representation rests with them, the departing agent or the agency firm or both may be required “to notify the client in writing that the agent is leaving and advise them of the options available to have the departing agent continue to act for them, to have the agency firm continue to act for them or to retain a new agent or new agency firm to act for them.” It is preferrable and best practice that the departing agent and the agency firm draft the notice together.
If the client has provided written instructions that the file is to be transferred to Firm B and there are arrangements regarding any outstanding fees, Firm A must transfer them to Firm B. The choice of representation lies with the client and the Code requires that Firm A “cooperate with the successor agent [at Firm B] in the transfer of the file in a manner that minimizes expense and avoids prejudice to the client” (see commentary to Rule 6).
If you are a licensee with a question regarding professional conduct and your responsibilities under the Code, fill in our Ethics Inquiry Form.