CHAPTER 5 - 5-4 RESTRICTIONS ON THE RIGHT TO PRACTICE

• Jurisdiction: United States

5-4 Restrictions on the Right to Practice

Lawyers may not agree to any restrictions on their right to practice law as part of any employment relationship⁴⁷ or as a term or condition of a settlement of a client controversy.⁴⁸ Rule 5.6 does allow, however, a restriction on a lawyer's post-employment practice related to the lawyer's right to receive pension or retirement benefits from his former firm.⁴⁹ The prohibition in the rule attempts to balance the law firm's "legitimate interest in its own survival and economic well-being and in maintaining its clients" while protecting lawyers, especially young lawyers, from "bargaining away their right to open their own offices after they end an association with a firm or other legal employer." "It also protects future clients against having only a restricted pool of attorneys from which to choose."⁵⁰ Restrictions on the practice of law most commonly are dealt within the context of employment plans that contain an anti-competition provision or in suits brought to disqualify lawyers who have left one employment relationship. The signal case on the enforceability of a restriction on a lawyer's practice once they retire is Schoonmaker v. Cummings and Lockwood.⁵¹ In Schoonmaker a lawyer retired from his firm and then opened a competing office in violation of a restriction in his employment agreement. The firm brought an arbitration proceeding seeking to terminate its obligations to pay him his retirement. On appeal of an arbitration awarded in favor of the firm, the attorney argued that the provision in his retirement agreement restricting his right to practice in Fairfield County was unenforceable and violated public policy as embodied in Rule 5.6.

The Connecticut Supreme Court held that by "exempting 'retirement benefits' from the category of postemployment payments that cannot properly be forfeited upon competition, the rule enables law firms to provide members with post-departure compensation without compromising their own financial stability."⁵² In a lengthy decision examining the law of many other jurisdictions, the court, with two concurrences, found no public policy preventing enforcement of the contract. In doing so, it contrasted retirement benefits, which could be restricted, with payments for work already earned prior to departure, which could not. Similar results have been reached in other cases.⁵³

At least one court has commented on the "irony that, generally, covenants not to compete are prohibited in the legal professional but permitted, and widely used, in the medical profession."⁵⁴...