## Facts

- Dowd & Dowd, Ltd. was a Chicago litigation firm whose principal client was Allstate Insurance Company, generating a large share of the firm’s revenue.
- Nancy J. Gleason worked at Dowd for many years and served as the primary lawyer handling Allstate’s asbestos and environmental coverage matters.
- By late 1990, Gleason and Douglas G. Shreffler planned to leave Dowd and form a new firm, Gleason, McGuire & Shreffler (GMS), and made logistical arrangements to begin competing.
- Gleason and Shreffler resigned effective December 31, 1990, and immediately began practicing at GMS.
- When GMS opened, Allstate moved its legal work from Dowd to GMS.
- At a bench trial, evidence supported that Gleason solicited and secured Allstate’s commitment to move its work to GMS before she resigned from Dowd.
- Dowd sued for breach of fiduciary duty and tortious interference with prospective economic advantage (among other theories) and obtained a substantial damages award that included lost profits and forfeiture of compensation paid during the period of disloyalty.

## Issues

1. Whether departing attorneys may be held liable to their former firm for actions affecting client retention despite the client’s right to choose counsel.
2. Whether the evidence supported findings that defendants breached fiduciary duties and intentionally interfered with the firm’s prospective business expectancy.
3. Whether the trial court should have granted a mistrial based on alleged consideration of inadmissible “bad acts” evidence, judicial bias, and delay in issuing the decision.
4. Whether the trial court’s damages determinations, including lost profits and forfeiture of compensation, were erroneous.

## Decision

- The appellate court affirmed liability for breach of fiduciary duty, holding that defendants crossed the line from permissible pre-departure preparation to impermissible pre-resignation solicitation and diversion of firm business.
- The appellate court affirmed liability for tortious interference with prospective economic advantage, finding Dowd had a reasonable expectancy of continued Allstate work and defendants intentionally and unjustifiably disrupted that expectancy.
- The appellate court affirmed denial of a mistrial, concluding the bench-trial record did not show improper reliance on inadmissible material or bias sufficient to invalidate the judgment.
- The appellate court largely upheld the damages award, including lost profits and forfeiture of compensation during the breach period, with only limited modifications to the calculations.

## Legal Principles

- Lawyers who are members or shareholders of a law firm owe fiduciary duties of loyalty to the firm and to each other while they remain affiliated with the firm.
- A lawyer may prepare to compete before departure, but may not, while still owing fiduciary duties, secretly solicit firm clients or divert firm business opportunities for a new competing firm.
- A client’s freedom to choose counsel does not bar fiduciary-duty liability where the lawyer’s pre-resignation conduct wrongfully induces the client to move its business.
- Tortious interference with prospective economic advantage may be established where the plaintiff shows a reasonable expectancy of continued business, intentional and unjustified interference, and resulting damages.
- In fiduciary-duty cases, a disloyal fiduciary may be required to disgorge benefits obtained during the period of disloyalty, including forfeiture of compensation, and the injured party may recover lost profits proved with reasonable certainty.

## Conclusion

The appellate court held that departing lawyers may compete and clients may choose new counsel, but lawyers remain fiduciaries until resignation and may not secretly secure a firm client’s commitment for a new firm before leaving; the court therefore affirmed liability and largely sustained a substantial award of lost profits and compensation forfeiture.


Dowd & Dowd, Ltd. v. Gleason, 816 N.E.2d 754 (Ill. App. Ct. 2004)