What if a lawyer steals my idea and doesn't do the work?

Question

I'm working on a tech startup that involves a specific industry.

Because the industry is regulated, I decided to get a lawyer to sign off on my system and tell me whether I would need to change anything.

I contacted a law firm who specializes in this industry, and the main lawyer at the firm previously held a senior position in the relevant regulatory authority and still has friends in senior positions etc.

I met that main lawyer and I gave him a flowchart of the step-by-step process of the system and how it would work, and although it may or may not be patentable, in my opinion it is a new and original idea and could be very profitable within the specific industry.

We talked about the relevant legislation and how the system would work, and he told me how it can be done and what I would need to do to ensure there were no regulatory issues.

He said that a key part of making it work would be to have a clear contract with the companies that we connect to the system, to make it clear exactly what my system's responsibilities are, and that they are within the boundaries of what is permissible under the regulations.

He said I should pay for that consultation, but that he would talk to his friends who are still working in the regulatory authority and get their opinion, while drafting up the contract I would use when connecting companies to the system.

I paid for the consultation and then he emailed me a summary of what we had talked about, as I described above (how the system would operate, relevant legislation, what is permissible under the regulations, that the key would be a contract that makes it clear what my company's responsibilities would be to companies who connect to the system).

In the email he also said the work he was willing to do for me as described above (contacting friends in the regulatory agency, getting their opinion, and drafting up the contract that I would use). He said that his friends could have some political motivation and might disagree with his opinion that it can be done legally, but said that in that case we would proceed anyway because he is confident that it can be done lawfully.

In the email he asked me to confirm that he should start that work and draft the contract etc and he confirmed how much it would cost. I sent an email back confirming that he should proceed, and I paid for that first consultation.

He sent an email 2 weeks later saying that he needed more time to finish everything, but that he could finish soon.

Then he didn't contact me for a month, and since then I have not been able to contact him. He doesn't respond to my emails or calls, and when I call his office I am always told that he is "on the phone" and will call me back soon, but never calls me back.

I think his position is extremely valuable to me. He has expert knowledge of the regulations, has worked for the regulatory authority in a senior position, and has friends who still work there in senior positions. If there was any question of whether my system was operating lawfully, it is likely that he would be contacted by the regulatory authority for advice, as he is an expert.

So I think I can't do it without him because I would not be confident that I had drafted the contract correctly. Also, because of his relationship with the regulatory authority, I would consider my relationship with him as a kind of insurance that I am willing to pay for. Surely I would have no issues from the regulatory authority if their expert has signed off on my idea.

Because he seems to be avoiding me, I worry that he may have decided to take my idea and work on it by himself for his own profit, and that he has no plan to finish the work he agreed to do for me. He could easily take the flowchart I gave him and give it to a software company to have a system developed.

As I understand it, he offered to do certain work for me which included drafting the contract I would use, getting advice from his friends in the regulatory authority, and signing off on the project as within the boundaries of the legislation for a specific price, and I agreed to that and told him to proceed, so I believe he has some responsibility to me for that.

Whether he starts a copycat company might be a separate issue. He could copy my idea even if he did the work that he agreed to do for me.

Of course, if he doesn't help me it will be extremely difficult for me to start, and because of his relationships with people in the regulatory authority, it may be impossible. It's also possible that when he contacted his friend, his friend had the idea of copying the idea, in which case my situation would be much worse.

It's also possible that he is just extremely slow and busy and is working on it for me now. Regardless, I'd like to know what I can do if he does not complete the work and starts a company that does the same as what I had planned to do.

If he never contacts me and I find out next year that someone is doing exactly the same thing, can I sue him for the money I lost for not being able to complete this business?

Would it matter whether I could connect him to that copycat company?

Can I do anything else now? Does he have some responsibility to do the work that we agreed to, or can he somehow talk his way out of it? Can I get a court order requiring him to do the things he offered to do in the email that I agreed to, for the price we agreed to?

Answer 1

You identify basically two issues.

Non-Responsiveness and Failing To Meet Deadlines

One is that he's taking longer than planned to get your work done, and might have abandoned you.

The sad but true reality is that lawyers frequently do get busy and sometimes fail to meet the deadlines that they have set for themselves. In this respect, the legal industry is a lot like the construction industry. Lawyers try to meet deadlines on time, and usually they do, but it isn't unusual at all for a lawyer to fall behind schedule in some of his cases.

In part, this is because lawyers have little control over their own schedules because things can come up that suddenly require their total attention and get them off track on a regular basis. Sometimes, they have trouble getting back into the flow of work that they were before the interruption came up.

Can I do anything else now?

In that case, usually your best solution is to nag the lawyer regularly even to the extent that it is a little bit uncomfortable, but to demonstrate no hard feelings when he turns his attention back to your project. But, if he just totally abandons you, you need to find someone else to do the work and fire him.

If he never contacts me and I find out next year that someone is doing exactly the same thing, can I sue him for the money I lost for not being able to complete this business?

Realistically no. If he blows you off entirely you need to fire him and find someone else to do the work. You are very unlikely to be able to win compensation for him delaying the start of your business. These damages would usually be considered "too speculative" to allow for a recovery in a case like this one.

Does he have some responsibility to do the work that we agreed to, or can he somehow talk his way out of it?

He does have some responsibility to do the work. If he doesn't he has breached his contract with you and may owe you a refund of your fees.

Truly abandoning a client and neglecting his or her case is also a violation of professional ethics. This is a pretty minor offense compared to the offenses involving idea theft if it happens in isolation, which might result in a minor slap on the wrist like a private reprimand that would be held against him if incidents like this surfaced again in the future.

But, this routinely leads to an attorney being disbarred (often on an uncontested basis) if an attorney one day just stops working for almost all of his clients and walks away from his practice (often due to a psychological breakdown, despondency after a divorce or an affair, dementia, untreated mental health conditions, a personal tragedy in life such as the death of a spouse or a child, or substance abuse). There is a small but persistent trickle of cases with that fact pattern.

It is hard to know from the perspective of an individual client if he just got busy and overlooked a case or two including yours, or if he totally shut down or walked away from most of his practice.

Can I get a court order requiring him to do the things he offered to do in the email that I agreed to, for the price we agreed to?

No.

You can sue for the money damages you suffer from his breach of contract (but probably not speculative lost profits), but you can't get a court order forcing him to do what he promised to do (among other things, it would violate the 13th Amendment to the U.S. Constitution for a court to do that).

Idea Theft

The second issue is what happens if your lawyer steals your ideas.

Regardless, I'd like to know what I can do if he does not complete the work and starts a company that does the same as what I had planned to do.

This is very unlikely and a very unwise choice for the lawyer.

An Analogy

In terms of likelihood and severity of consequences if a lawyer does so, this would be on a par with a lawyer beating up his client severely with a baseball bat.

Beating up a client physically is a type of lawyer misconduct that is very infrequent, but isn't entirely non-existent (for what it is worth, most of the rare cases of physical assaults by lawyers on their clients seem to take place in Kentucky or Texas; physical assaults by clients on their lawyers, in contrast, are thousands of times more frequent and happen all over the United States).

But, it is punished very severely when it happens (even though there isn't a rule of professional conduct for lawyers that prohibits this kind of misconduct by lawyers with great specificity).

Civil Liability

He would have legal liability to you for breach of fiduciary duty probably requiring him, among other things, to disgorge all of his profits to you and pay you for any lost profits you could demonstrate (which might be less speculative if his business didn't fail). He could also face civil liability including statutory damages or punitive damages for theft of trade secrets.

Suspension or Loss Of A Law License

He would probably also face a very high risk of being suspended from the practice of law for a prolonged period, or being disbarred if you complained to attorney regulatory authorities.

Attorneys have ethical rules related to confidentiality and related to business ventures or making profits that involve clients or client information that are very strict and are taken seriously by lawyers. If he were caught breaching these obligations the consequences would be harsh for him.

Criminal Law Consequences

He could even face a criminal prosecution for theft of trade secrets under either state or federal law. I wouldn't be very surprised at all if criminal charges would be brought in a case like the one that you are worried about.

The closest analogy (which is much more common) is when an attorney pockets money from the sale of client property instead of turning it over to a client. Those cases routinely result in significant prison sentences for the perpetrator.

For example, I have a client whose former attorney was convicted and sentenced to about eight years in federal prison for stealing about $600,000 of proceeds from the sale of client property.

These cases are much more common because a lawyer under extreme financial pressure can have a one time impulsive lapse and temporarily solve the problem created by the financial pressure. But, in this case, the lawyer needs to engage in years of sustained, publicly visible activity based upon the misconduct that is unlikely to produce huge sums of money right away and might even require an additional investment on his part, not a single, quick, lapse of judgment after which the wrongdoing is over and the impulsive need is met.

This Almost Never Happens

A busy lawyer with a successful specialized practice would very rarely risk those kinds of consequences when he already has a successful enterprise practicing law.

A "typical" case where that might happen would involve someone whose family members were kidnapped and facing imminent death if he didn't comply by a foreign government trying to steal military secrets or a drug cartel. This isn't something that a lawyer would do out of mere greed.

Lawyers with the kind of sophisticated tech industry legal practice that you describe often invest in their clients' businesses in ways that strictly comply with the relevant ethical rules (which the scenario that you are worried about would not).

Sometimes lawyers get in trouble when they substantially comply with the rules but don't do so strictly (e.g. providing fully disclosure and consent but not getting it in writing).

But, I can only think of a single case in twenty years or so of practicing law where I've ever seen even an accusation of something like what you are worried about happen, and I've never seen a case like that in case law reports, or news coverage in either the popular press, or trade journals. The case where I did see that accusation wasn't entirely implausible, but it wasn't an entirely clear case of misappropriation either, and the client making the accusation, realistically would have been hard pressed to have made the business idea allegedly stolen work himself.

Theft of business plans isn't all that uncommon in and of itself, but an attorney for the person whose plans are stolen is very uncommon as a perpetrator. Far more often it is another business person who had some minor or major involvement with the tech venture, or someone to whom the venture was pitched. This is the sort of thing that venture capital guys and start up company executives with little money of their own in the venture usually do, not the tech firm's own lawyers, in most cases.

The kind of betrayal that you are worried about would be extremely unusual conduct for a lawyer in this situation. It would be almost as uncommon as a criminal defense lawyer engaging in sustained leaking of incriminating privileged evidence to prosecutors in a death penalty murder case.

Either kind of betrayal isn't impossible, but it just almost never happens that way, even though lawyers commit all sorts of other kinds of misconduct now and then, and that sometimes hurts clients badly. Clients are much more often harmed by neglect and incompetence than by such a direct betrayal from their lawyers.

Proving Misconduct

Would it matter whether I could connect him to that copycat company?

Yes, it would matter.

You wouldn't necessarily have to show that he was being compensated by the company, but you would have to show that he was, at a minimum, helping another client with information obtained from you, either in his capacity as their lawyer or as someone involved in their business in some other way.

If a copycat business appears that you can't demonstrate has any connection to him of any kind, then you have no way to prove that he did anything wrong. Not infrequently, great minds think alike and someone comes up with a very similar idea to yours, independently, at about the same time that you do.