Firms May Force Lawyers to Sign Non-solicitation Contracts

• Author: Onika K. Williams
• Pages: 6-6

Published in Litigation News Volume 45, Number 3, Winte r 2020. © 2020 by the Ame rican Bar Associati on. Reproduced with p ermission. All rights r eserved. This in formation or any por tion thereof may no t be copied or disseminate d in any

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6 | S ECTION OF LITIGATION

ETHICS STR UGGLES IN THE LEGAL WOR LD

firm can fire a lawye r who is

an at-will employee and who

refuses to sign an ag ree-

ment for non-s olicitation

of the firm’s customer s.

According to the Supre me Court of

Kentucky, a non-so licitation agreement

that makes an exception fo r legal work

does not violate Kent ucky Supreme

Court Rule 3 .130 (ABA Model Rule

of Professional C onduct 5.6), which

prohibits a lawye r from agreeing to

restrict his or he r practice following

cessation of empl oyment.

The conflict in G reissman v. Rawlings

and Associates , PLLC, began when

Rawlings and Ass ociates, a law firm

that practices h ealth care subroga-

tion, terminate d one of its licensed at-

torneys. Before di smissing the attor-

ney, the firm presented an agreement

that included a p rovision not to “solic-

it, contact, inte rfere with, or attempt to

divert” any of th e firm’s current or po-

tential clients fo r three years after ceas-

ing employment . The firm typically pre-

sented a similar ag reement to attorneys

and non-attor neys at termination. The

attorney and non-attorney versions

of the agreemen t used the same lan-

guage, except the attorney agreement

included a savin gs clause that said “ex-

cept to the extent neces sary to comply

with the rules of profes sional responsi-

bility applicable to attorneys.”

After consultin g with her person-

al lawyer, the attorney ref used to

sign the attorney ver sion because

she believed the no n-solicitation pro-

vision violated Rule of Professional

Conduct 5 .6. That rule states that “a

lawyer shall not p articipate in oer-

ing or making a pa rtnership, share-

holders, operating, employment, or

other similar t ype of agreement that

restricts the ri ght of a lawyer to prac-

tice after termin ation of the relation-

ship, except an agreement concerning

benefits upon retirement.” After the

attorney refuse d to sign, the firm ter-

minated her.

Firms May Force Lawyers to Sign

Non-solicitation Contracts

Under Kentuck y law, an employer

can fire an at-will employee “ for good

cause, for no c ause, or for a cause that

some may view as mora lly indefensi-

ble” as long as the e mployee is not ter-

minated for an unl awful reason that

violates statutory or constitutional pro-

visions. However, an emp loyee can es-

tablish a wrongf ul termination claim if

the employee can s how that the firing

was contrary to pub lic policy or that

the termination wa s a direct result of

the employee’s refus al to violate the

law while employed .

After her dism issal, the attorney filed

suit alleging sh e had been wrongfully

terminated in viol ation of public policy.

The firm filed a moti on to dismiss on the

grounds that Rul e 5.6 was not a pub-

lic policy and th at, therefore, the com-

plaint failed to st ate a claim upon which

relief could be gra nted. The circuit

court denie d the firm’s motion to dis-

miss and conclu ded that the attorney’s

case could proce ed because a rule of

professional conduct falls within the

public policy exception. Subsequently,

the parties fil ed cross-summary judg-

ment motions. T he circuit court ruled

that the attorney ’s claim was cognizable

but now dismisse d her complaint, con-

cluding that the a greement did not vio-

late the Rules of Profes sional Conduct

because the savings clause would have

protected the attor ney from any viola-

tion if she had sign ed it.

The attorney app ealed. The

Kentucky Cour t of Appeals upheld the

circuit court ’s decision to dismiss the

attorney’s compl aint but concluded

that the circuit cour t should have grant-

ed the firm’s motion to dis miss because

Rule 5.6 did n ot provide the public pol-

icy to support th e attorney’s wrong-

ful termination claim. The attorney peti-

tioned the Supre me Court of Kentucky.

Kentucky’s high est court held that

the court of app eals erred in holding

that the attorney ’s complaint should

have been dismiss ed but armed the

dismissal on oth er grounds. The court

By Onika K. Willia ms, Litigation New s Associate Editor

explained that se ction 116 of the Kentucky

Constitution vests the Kentucky Supreme

Court with the exclus ive rulemaking power

over attorney discipl ine and that the Rules

of Professional C onduct qualify as pub -

lic policy for pu rposes of a wrongful dis-

charge claim . However, the court conclud-

ed that the attorney h ad failed to establish

a genuine issu e of material fact about her

reasonable be lief that signing the agree-

ment would result i n a violation because

the plain langu age of the savings clause

was unambiguous and excluded any inter-

pretation conflic ting with ethics rules.

ABA Section of Liti gation leaders cau-

tion that the Greissman opinion high-

lights the importance of understanding

the implications of non-solicitation agree-

ments. The purpose of these agreements

is to protect “confidential information

about clients, trade secrets, and other

proprietary information,” explains Janice

V. Arellano, Bridgewate r, NJ, cochair of

the Section of Litig ation’s Minority Trial

Lawyer Commit tee. However, “it is gen-

erally understood that noncompete pro-

visions for attorn eys in private law firms

conflict with Rule of Professional Conduct

5.6 and many st ate corollaries,” states

David Gever tz, Atlanta, GA , cochair of the

Section’s Employm ent & Labor Relations

Committee.

Practitioner s who are “presented with

such provisions sh ould be extremely

cautious abo ut signing them, as doing

so may expose all lawyer s ignatories to

charges that they h ave violated their

state’s ethics rule s,” advises Gevertz.

RESOURCES

Comment on A m. Bar Ass’n Model Ru le of

Prof’l Conduct 5.6.

N.Y. State Bar Ass’n Com m. on Prof’l Ethics

Op. 1006 (A pr. 2, 2014).

Terri L. M ascherin & Michael L . Cebula,

“Settlement Agreements, Restrictions on

Right to Practi ce Law,” Commercial & Bus .

Litig. (Nov. 12, 2012) .