For some time Texas has been a hot market for lawyers. Big firms from other parts of the country who want to shop here not surprisingly will hire lawyers from other big firms that are already here. Many of the partners in these firms have notice provisions in their partnership agreements that require them to provide notice to their firm of their departure. A recent Texas Lawyer article highlighted the issue:
Shearman & Sterling, which moved into Texas in March in Austin, didn’t open its new Houston office as fast as the firm wanted to this spring because Baker Botts held a group of oil and gas lawyers for 90 days. Another group of six energy partners from Baker Botts lawyers faced the same issue in 2017 as they were held for 84 days after they resigned and before they could move to Gibson, Dunn & Crutcher‘s new Houston office.
So before the lawyer can move to their new firm they have to provide contractually required notice – not two weeks. It’s unclear whether the partners are paid/work during the notice provision. That seems like a recipe for disaster when you have folks that want to leave but can’t for months.
The notice provisions are very similar to garden leave provisions. In the garden leave scenario the employee is paid not to work. They provide notice then stay at home (while still an employee) until the notice runs. A Texas court has never addressed the enforceability of one of these provision and the question remains whether it falls within the scope of the Texas non-compete statute. Regardless, these can be very effective at preventing a departing employee from taking their business with them.
Will keep tabs on the migrating lawyer situations. Maybe we’ll see a court of appeals provisions on one of these clauses.
