Moonlighting is the practice of working for more than one employer or working for yourself while working for an employer. Professionals who moonlight may be asking for trouble. Many employers have policies forbidding the practice, some going so far as to deem it grounds for immediate termination. A recent case provides an extreme example of moonlighting at its worst.
The debacle arose when a client brought a malpractice suit against two attorneys employed by a law firm. The plaintiff claimed that she was directed to pay retainer fees to an entity set up by her attorneys, thereby diverting fees from the law firm. In the wake of the suit, the attorneys resigned. The case is a severe example of moonlighting gone wrong; indeed, the attorneys were in a sense stealing from their employer.
However, other cases may present trickier situations. What if you practice law and develop real estate on the side and want to refer firm clients to the real estate gig? Can you draft a will for your great-aunt, without involving your firm? Can you collect referral fees without involving your employer? These may be examples of moonlighting, and the above case demonstrates such “side jobs” may become a dangerous business. Here are some things to keep in mind if you are asked to do legal work outside of your firm’s purview.
Colossal Conflicts. Firms expend significant resources to identify and deal with any potential conflict quickly and in accordance with ethical and statutory mandates. Moonlighting is done off the firm’s radar and outside their control, which may lead to you retaining your own “client” who may have several and/or significant conflicts with existing or potential firm clients. Imagine your firm’s reaction if it loses a major client when that client finds out it was adverse to the client you took on your own.
Rogue and Responsible. You likely will not escape personal liability if the moonlighting sours. In fact, if it does, your firm may claim its insurance is not on the hook, leaving you to fend for yourself financially. Further, your firm can pursue you for any damages it sustains.
Slippery Side Shops. Watch out when referring clients from your firm to any law-related business in which you have an interest. Rule 5.7 requires that you advise this client that the law-related services are not legal and do not entail attorney-client protections, and further requires that you disclose your interest in the law-related business to the client and obtain written consent. When the situation is reversed, and you seek to solicit legal business from the clients of the ancillary business, the ethical rules regarding direct solicitation of prospective clients may apply. The key to remember here is that, when referring clients from the business to the law firm, you, as the attorney, are always subject to your state’s Rules of Professional Conduct in his or her law practice. Conflicts come into play here, too – when soliciting a person as a prospective client for the law practice, your ownership interest in or employment with an ancillary business creates the potential for numerous, possibly unwaivable, conflicts.