Standard IV(A) Loyalty

TWhen members and candidates are planning to leave their current employer, they must continue to act in the employer’s best interest until the employment relationship ends. A letter of resignation does not necessarily signify the end of the relationship, especially if there is still a period of employment to complete. Generally, the employment relationship ends once the employee is no longer being paid or no longer has responsibilities at the company. Members and candidates must not engage in any activities that could conflict with their duty of loyalty to their employer until their employment relationship ends. Activities that may constitute a violation of Standard IV(A) include the following:

• unauthorized use of trade secrets;
• misuse of confidential information, explicit or implicit solicitation of an employer’s clients, or promotion of a new employer prior to cessation of employment;
• self-dealing (appropriating for one’s own benefit property, a business opportunity, or information belonging to one’s employer);
• unauthorized use of any firm property, including clients or client lists; and
• discussing a change in employment in a manner that disparages or denigrates the current employer such that it could cause harm to the firm’s interests.

A departing employee is generally free to make arrangements or preparations to go into a competitive business before terminating the relationship with his or her employer as long as such preparations do not breach the employee’s duty of loyalty. Members and candidates who are contemplating seeking other employment must not contact existing clients or potential clients prior to leaving their employer to discuss a potential change in their employment status. After providing notice to their employer of their intent to resign, members and candidates may inform the clients with whom they work that they are leaving and going to a new firm but must not communicate information in a manner that could be seen as explicitly or implicitly soliciting clients or business for the new employer. For instance, while they may provide the name of their new employer, members and candidates must not provide their contact information at their new employer before their employment ends without permission of their current employer. They also must not describe to clients the services available at the new firm or in other ways implicitly or explicitly promote their new employer to their current firm’s clients without the permission of their current employer.

Members and candidates cannot promote the services of a new firm in the name of protecting the interests of clients until their employment with their current firm ends. Members and candidates who believe the conduct or business practices of their employer are so egregious that they harm client interests are free to resign their position and subsequently notify their former clients or other appropriate parties of their concerns.

Once notice is provided to the employer of the intent to resign, the member or candidate must follow the employer’s policies and procedures related to notifying clients of his or her planned departure. In addition, the member or candidate must not take records or files to a new employer without the written permission of the previous employer. Members and candidates also must comply with their employer’s policies regarding the use of social media during their employment, including the manner of disclosing their departure on firm social media platforms.

Once an employee has left the firm, the skills and experience that the employee obtained while employed are not “confidential” or “privileged” information. Similarly, simple knowledge of the names and existence of former clients is generally not confidential information unless deemed as such by an agreement or by law. Standard IV(A) does not prohibit experience or knowledge gained at one employer from being used at another employer. Work performed on behalf of the employer, client lists, or other firm records—whether stored as paper copies or electronically on personal devices, such as phones, tablets, or laptop computers, for the member’s or candidate’s convenience—must be returned to the employer or erased unless the firm gives permission to keep those records after employment ends.

Once employment with the former firm has ended, the standard does not prohibit members and candidates from contacting clients of their previous firm as long as the contact information does not come from the records of or as a result of work for their former employer or such outreach does not violate an applicable agreement with the former firm. Members and candidates are free to use public information after departing to contact former clients without violating Standard IV(A) as long as there is no specific agreement not to do so. However, employers may require employees to sign agreements that preclude departing employees from engaging in certain conduct after they have left the firm. Members and candidates should take care to review the terms of any such agreement when leaving their employer to determine what, if any, conduct those agreements may prohibit.