A legal filing by LPL Financial in a long-running dispute with Ameriprise illustrates why advisors should consider hiring their own legal counsel when changing firms.
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At the heart of the matter is legal advice the law firm Shumaker Kendrick & Loop gave to three advisors when they left Raymond James in 2023 to join Ameriprise. Shumaker was recommended to the advisors by Ameriprise. Yet after they left to join LPL Financial, it turned around and filed arbitration claims against them.
That shift — from legal representative to antagonist — reveals a clear conflict of interest, LPL and advisors Jared B. Roskelley, Kyle L. Robertson and Matthew J. Tinyo contend in a complaint filed in federal court in Florida on Monday.
“Shumaker took the engagement without addressing the evident conflict,”
Why advisors should hire their own counsel
Industry lawyers and recruiters say the case shows why advisors should:
- Consider retaining their own legal counsel when changing firms;
- Get legal details in writing when being recruited, including who is paying for their legal representation and who owes them attorney-client privilege; and
- Consider working with recruiters or other experts who can recommend lawyers with expertise in the wealth management industry
Max Schatzow, a founder and partner of RIA Lawyers in Parsippany, New Jersey, said advisors should always question whose interests lawyers are working in when they’re recommended by a firm that’s looking to recruit. He said advisors can easily share information with legal counsel they believe is working in their interest and then see it come back to bite them.
Schatzow said advisors will tell lawyers everything from their strategies for moving clients and assets to a new firm to factual information about client accounts. They may even express willingness to push legal boundaries limiting exactly what types of client data they can move.
“Those communications are intended to be privileged and not used against you later,” Schatzow said. “That’s the whole point of attorney-client privilege.”
Danny Sarch, the president of the recruiting firm Leitner Sarch Consultants, recommended advisors get in writing details about who is paying for their legal counsel and who is owed attorney-client privilege. If advisors find their ostensible lawyers are really loyal to the firm that’s recruiting them, they should consider securing outside representation.
Recruiters and other experts can help advisors find legal counsel that not only is free of entangling conflicts but also has expertise in wealth management.
“The challenge when they get their own counsel is they don’t get the right one — they get somebody who’s an employment attorney but doesn’t understand the nuances of this industry,” Sarch said. “The lawyer may say, ‘What do you mean, you’re not giving two weeks’ notice?’ But you don’t give two weeks’ notice in the same way in this business.”
LPL, advisors’ attempts to learn of Shumaker’s possible conflicts
The complaint against Shumaker Loop & Kendrick arises from Ameriprise’s accusations that LPL and its advisors improperly retained Ameriprise clients’ personal and confidential data when the advisors changed firms in early 2025. As part of the proceedings, a Financial Industry Regulatory Authority arbitration panel issued a subpoena ordering Shumaker to turn over certain documents that could shed light on possible conflicts of interest.
LPL and the advisors’ latest complaint contends Shumaker has refused to comply. The plaintiffs cited various reasons why the communications they’re trying to obtain are pertinent.
“Among other things, they bear directly on the advisors’ understanding of how they were permitted to transition between firms; on whether Ameriprise knowingly hired conflicted counsel to prosecute claims against the advisors; and on whether Ameriprise leveraged confidential information from Shumaker’s prior representation of the Advisors to frame its claims,” according to the filing submitted Monday by LPL and the advisors.
The complaint asks the federal court in Florida to order a Shumaker representative to appear, along with the subpoenaed documents, at an arbitration hearing in the dispute scheduled for Nov. 6. Both LPL and Ameriprise declined to comment on the complaint. Shumaker Loop & Kendrick and its lead lawyer in the case, Michael Taaffe, did not respond to requests for comment.
The Broker Protocol and allegedly improper data transfers
The complaint specifies various types of advice Shumaker lawyers provided when helping Roskelley, Robertson and Tinyo move from Raymond James to Ameriprise in October 2023. Specifically, they instructed them on how to not violate the Broker Protocol, a voluntary industry pact that shields advisors from lawsuits as long as they limit themselves to taking client names, addresses, phone numbers, e-mail addresses and account titles when changing firms. Shumaker lawyers also explained to the advisors how they could store client data on third-party databases affiliated with neither Raymond James nor Ameriprise.
Allegations about the Broker Protocol and allegedly improper transfers of clients’ private information are at the heart of a lawsuit Ameriprise filed against LPL in July 2024. LPL and Ameriprise later agreed to drop the suit so the dispute could be resolved in arbitration.
Shumaker previously accused of conflicts
This isn’t the first time Shumaker Loop & Kendrick has faced accusations that its loyalties were divided between advisors it helped recruit and the firm doing the recruiting. In 2021, the firm’s lawyers were sued by a pair of advisors, Christopher Armstrong and Randall Kiefner, who had been recruited by Morgan Stanley from Charles Schwab in 2019. Similar to the recent case involving LPL and Ameriprise, the advisors were represented by Shumaker during the recruitment process. After Morgan Stanley fired them about a month after their hiring, they alleged that Shumaker had provided them with conflicted and negligent advice.
A Financial Industry Regulatory Authority arbitration panel ordered Morgan Stanley and the two brokers in February 2023 to pay Schwab a little more than $4.2 million in compensatory damages and attorneys fees and costs over their hiring from Schwab. Morgan Stanley was further ordered to pay $3.03 million in punitive damages. In a twist, Morgan Stanley was also found at fault in its handling of the recruitment of Armstrong and Kiefner. The firm was separately ordered to pay them $2.85 million and $1.17 million in compensatory damages, respectively, as well as attorney’s fees and costs.
