Lawyers Taking Documents from Prior Firm Face Treble Damages

• Pages: 8-8
• Date: 01 January 2024
• Author: Rachel A. Harris
• Subject Matter: Civil Law

awyers leaving their law f‌irm may

want to think twice before taking f‌irm

documents with them upon depar-

ture. One state supreme court

has held that attorneys who did just

that are subject to the state’s unfair and

deceptive trade practices statute. The

ruling is a cautionary tale for lawyers

looking to transition f‌irms, according to

ABA Litigation Section leaders.

In Governo Law Firm, LLC v.

Bergeron, Governo, an asbestos

defense f‌irm, sued six former non-

equity partners who downloaded a

substantial amount of f‌irm materials

before leaving. The materials consisted

of more than 100,000 documents and

included (i) a research library with wit-

ness interviews as well as expert and

investigative reports, (ii) databases

that organized the research library, and

(iii) administrative f‌iles including an

employee handbook, marketing materi-

als, and client lists.

The partners later approached

Governo’s owner with a proposal that

they would either purchase the f‌irm or

resign in 30 days. The owner rejected

the oer the same day. Within three

days, the lawyers opened their new

f‌irm, which they had incorporated prior

to their departure. Computer analyt-

ics suggested the former partners had

used “tens of thousands of the f‌iles”

from Governo at their new f‌irm.

Governo sued the former partners

and the new f‌irm in the Massachusetts

Superior Court. A jury awarded

Governo $915,937.23 in damages on

claims for conversion, breach of the

duty of loyalty, and conspiracy. But the

jury did not f‌ind the lawyers liable for

unfair or deceptive trade practices. The

judge then issued a permanent injunc-

tion enjoining the defendants from

using the library and databases, but not

the administrative f‌iles.

Governo appealed, arguing the

trial judge gave the wrong instruc-

Lawyers Taking Documents from

Prior Firm Face Treble Damages

tion regarding Massachusetts’s unfair

and deceptive trade practices statute,

which authorizes treble damages, as

well as costs and attorney fees. The

judge instructed the jury that “by

law[,] an employee and employer are

[not] in trade or commerce with each

other,” the statute did not apply to

“anything” the lawyers did “while they

were still employed” at Governo, and

the copying of the materials, because it

occurred while the lawyers still worked

at Governo, was irrelevant.

The Massachusetts Supreme Judicial

Court, on direct appellate review, dis-

agreed and distinguished what the law-

yers did from an intracompany dispute.

It reasoned that the lawyers’ pre-sep-

aration conduct was relevant: “Where

an employee misappropriates his or

her employer’s proprietary materials

during the course of employment and

then uses the purloined materials in the

marketplace, that conduct is not purely

an internal matter; rather, it comprises a

marketplace transaction that may give

rise to a claim.”

The supreme court remanded the

case for a new trial and instructed the

trial judge to modify the permanent

injunction to include the administrative

f‌iles, because the record supported the

jury’s f‌indings that Governo owned, and

the lawyers converted, the administra-

tive f‌iles.

Litigation Section leaders say it is

too soon to tell whether, and how far,

this ruling may be expanded. In some

respects, “the decision just seemed to

f‌ix a bad jury instruction, which told

the jury to look at the misconduct in

an extreme vacuum,” opines Paula

M. Bagger, Boston, MA, cochair of

the Section’s Commercial & Business

Litigation Committee.

However, because Massachusetts

is “a fairly employee-friendly jurisdic-

tion, for this decision to come from

Massachusetts might be persuasive in

By Rachel A. Ha rris, Litigation N ews Contributing Editor

other jurisdictions,” suggests Michael

P. Avila, Philadelphia, PA, cochair of the

Restrictive Covenants Subcommittee

of the Section’s Business Torts & Unfair

Competition Committee. “We might see

this theory expanded into other indus-

tries as well where large collections of

otherwise non-proprietary, or poten-

tially non-proprietary, information are

at issue, particularly as an alternative

argument where the information’s trade

secret status is subject to challenge,”

Avila adds.

In the legal community, where “his-

torically, there has not been a great

deal of contractual restraints in lawyer

employment agreements,” the deci-

sion could “represent a sea change” in

the way f‌irms look at departures, oers

Avila. It could “give law f‌irms some

insulation” regarding information that is

neither trade secret nor privileged but

nonetheless meaningful to the f‌irm, he

explains.

While lawyers may have traditionally

taken public items, such as pleadings,

when they transitioned f‌irms, this deci-

sion suggests “taking compilations of

such data may be seriously problem-

atic,” Avila notes. This is because the

compiled data can signif‌icantly benef‌it

the f‌irm, especially in “high-volume

practices where eciency and experi-

ence are really important for securing

work,” he elaborates.

The ruling “closes a logic loop” by

giving employers a way to protect

information from employees who are

preparing to compete, notes Avila. To

hold otherwise, he explains, “may have

the unintended consequence of moti-

vating people to do all of this bad stu

before they quit.” The decision “makes

preparing to compete a little more

fraught with risk,” especially for lawyers,

“who also have to stay in compliance

with ethical rules,” Bagger agrees.

WINTER 2024 • VO L. 49 NO. 2

8 | A BA LITIGATION SECTION

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ETHICS STRU GGLES IN THE LEGAL WORL D