{"id":7313,"date":"2025-08-08T22:16:07","date_gmt":"2025-08-08T22:16:07","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/suspension-recommended-for-law-firm-founders-over-liquidated-damages-contracts-justia-news-august-8-2025\/"},"modified":"2025-08-08T22:16:07","modified_gmt":"2025-08-08T22:16:07","slug":"suspension-recommended-for-law-firm-founders-over-liquidated-damages-contracts-justia-news-august-8-2025","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/suspension-recommended-for-law-firm-founders-over-liquidated-damages-contracts-justia-news-august-8-2025\/","title":{"rendered":"Suspension Recommended for Law Firm Founders Over Liquidated Damages Contracts \u2014 Justia News \u2014 August 8, 2025"},"content":{"rendered":"\n<div itemprop=\"articleBody\">\n<p><span style=\"font-weight: 400;\">The District of Columbia Court of Appeals\u2019 Board on Professional Responsibility has recommended a 90-day suspension for the founding partners of the law firm Tully Rinckey PLLC, Mathew B. Tully and Gregory T. Rinckey, citing ethical misconduct. The board\u2019s recommendation comes after a review of the firm\u2019s employment and separation agreements, which included provisions for liquidated damages for attorneys who left the firm early.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The board\u2019s opinion detailed several contract terms that have since been discontinued. These provisions, which applied to lawyers in the firm\u2019s Washington, D.C., office, imposed significant penalties on departing attorneys. Specifically, the contracts included:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Liquidated Damages: Attorneys who left before their employment agreement ended could be required to pay up to $50,000 in liquidated damages. In some instances, the firm sought hundreds of thousands of dollars. The board stated that these amounts were \u201cuntethered to actual damages\u201d the firm incurred from a lawyer\u2019s departure.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">\u201cReferral Fees\u201d: Some agreements stipulated that if a departing lawyer took a Tully Rinckey client, they had to pay \u201creferral fees\u201d to the firm, amounting to a portion of the billings at their new practice.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Attorney Fees: Certain agreements also required departing lawyers to pay the firm\u2019s legal fees and costs for enforcing the employment contracts, even if the firm wasn\u2019t successful.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cooperation Ban: The agreements also banned departing lawyers from voluntarily participating in any investigations or other proceedings related to firm matters.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The board concluded that Tully and Rinckey violated several rules of professional conduct, including:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rule 5.6(a): This rule prohibits agreements that restrict a lawyer\u2019s right to practice after leaving a firm. The board found that the contract\u2019s liquidated damages provisions and other clauses effectively restricted lawyers\u2019 professional autonomy and clients\u2019 freedom to choose their counsel.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rule 8.4(a) and 8.4(d): These rules prohibit attempts to violate the rules of professional conduct and engaging in conduct that seriously interferes with the administration of justice. The board cited the \u201cexpansive language\u201d in the separation agreements that seemed to discourage employees from cooperating with investigations by disciplinary authorities.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The board\u2019s opinion described a highly controlled work environment in the firm\u2019s D.C. office. One former lawyer called the oversight \u201coverwhelming and oppressive.\u201d This included video surveillance of public areas and monitoring of attorneys\u2019 use of office computers. In one instance, Mr. Tully reportedly called a lawyer to tell him to tuck in his shirt.<\/span><\/p>\n<p><b>Additional Reading<\/b><\/p>\n<p><a href=\"https:\/\/www.abajournal.com\/web\/article\/firm-founders-who-sought-liquidated-damages-for-early-attorney-exits-should-be-suspended-conduct-board-says\" target=\"_blank\" rel=\"noopener nofollow\"><span style=\"font-weight: 400;\">Firm founders who sought liquidated damages for early attorney exits should be suspended, conduct board says<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><i><span style=\"font-weight: 400;\">ABA Journal<\/span><\/i><span style=\"font-weight: 400;\"> (August 4, 2025)<\/span><\/p>\n<p><b>Image Credit: <\/b><span style=\"font-weight: 400;\">Merch Hub \/ Shutterstock.com<\/span><\/p>\n<\/div>\n<p><script>(function(d, s, id) {\n            var js, fjs = d.getElementsByTagName(s)[0];\n            if (d.getElementById(id)) return;\n            js = d.createElement(s); js.id = id;\n            js.src=\"https:\/\/connect.facebook.net\/en_US\/sdk.js#xfbml=1&version=v2.11&appId=1639788792774312&autoLogAppEvents=1\";\n            fjs.parentNode.insertBefore(js, fjs);\n        }(document, 'script', 'facebook-jssdk'));<\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The District of Columbia Court of Appeals\u2019 Board on Professional Responsibility has recommended a 90-day suspension for the founding partners of the law firm Tully Rinckey PLLC, Mathew [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7314,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[2869,158,532,184,4625,309,153,6620,310,6619,1391],"class_list":["post-7313","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lawyers","tag-august","tag-contracts","tag-damages","tag-firm","tag-founders","tag-justia","tag-law","tag-liquidated","tag-news","tag-recommended","tag-suspension"],"_links":{"self":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/7313","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=7313"}],"version-history":[{"count":0,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/7313\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media\/7314"}],"wp:attachment":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=7313"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=7313"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=7313"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}