June 1, 2020
Any attorney who regularly represents plaintiffs has most likely been confronted at least once by a defense counsel who attempts to restrict the ability of plaintiff’s counsel to represent other plaintiffs against that defendant. (It is normally defendants who desire such a restriction. We have personally never heard of a plaintiff requesting this type of restriction. It is therefore assumed in this article, for ease of writing if nothing else, that it is the defendants who request the restrictive language. Other attorneys have apparently experienced this situation, however. The scenario of plaintiff’s counsel attempting to restrict defense counsel’s future representation of related, non-settling defendants is addressed in LACBA Ethics Opinion 468. )
An arrangement settlement provision which restricts the ability of Plaintiff’s counsel to represent other plaintiffs against a particular defendant, is clearly prohibited by California law. California Rules of Professional Conduct, Rule 5.6 provides:
1. Unless authorized by law, a lawyer shall not participate in offering or making:
a. a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement that concerns benefits upon retirement; or
b. an agreement that imposes a restriction on a lawyer’s right to practice in connection with a settlement of a client controversy, or otherwise.
2. A lawyer shall not participate in offering or making an agreement which precludes the reporting of a violation of these rules.
3. This rule does not prohibit an agreement that is authorized by Business and Professions Code sections 6092.5, subdivision (i) or 6093 . [These two sections relate to discipline by the State Bar of California.]
The ABA Model Rules of Professional Conduct, which have been adopted by most states (although not by California) are consistent with Rule 5.6. ABA Model Rules of Professional Conduct, Rule 5.6, provides: A lawyer shall not participate in offering or making . . . an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.”
Considering what appears to be fairly clearly and unambiguous language in these rules, you might think this would be the end of the problem. You would be wrong. Creative defense attorneys have developed indirect methods for attempting to bypass these rules.
A popular method for attempting to do an end-run around these ethics rules is to require, as a condition of settlement, that plaintiff’s counsel sign a retainer agreement, agreeing to serve as an attorney or consultant for the settling defendant in the future, so that conflict of interest rules will prevent plaintiff’s lawyer from representing future plaintiffs against the defendant . When such provisions are designed to “buy off” plaintiff’s counsel, and thereby restrict the right of plaintiff’s counsel to practice law, they are unethical. The Los Angeles County Bar Association (“LACBA”) Professional Responsibility and Ethics Committee has reviewed this question, and determined that such provisions are unethical, since they violate Rule 1-500 (now California Rules of Professional Conduct, Rule 5.6). [LACBA Professional Responsibility and Ethics Committee Formal Opinion No. 468, dated March 16, 1992. See also, ABA Section of Litigation Ethical Guidelines for Settlement Negotiations, August 2002, § 4.2.1.]
What about a settlement provision which would prohibit a plaintiff’s counsel from mentioning in his resume, on his website, or in his advertising materials that he worked on a particular case against a defendant? California Courts have not yet addressed this issue, but the State Bar of California Standing Committee on Professional Responsibility and Conduct (“COPRAC”) has opined that such a provision is unethical. [COPRAC Formal Opinion No. 1988-104.] This COPRAC opinion stated that such a settlement provision has the effect of giving the defendant the ability to control plaintiff’s counsel’s representation of future clients. (Since the COPRAC opinion was issued in 1988, it cited California Rules of Professional Conduct, Rule 1-109(A), which was the predecessor of Rule 1-500 and which is now Rule 5.6.)
What if the settlement provision does not affirmatively bar representation against the settling defendant, but merely prohibits the disclosure of public facts regarding the past representation? The Legal Ethics Committee of the Bar Association of San Francisco issued an opinion (Opinion 2012-1) in which it concluded that even this type of provision is unethical, since it still seeks to curtail an attorney’s autonomy and to impair future clients’ retention of the attorney by limiting disclosure of public information that might influence the retention decision. (Please note, however, that a settlement agreement that is otherwise agreeable to the parties may contain a confidentiality clause that prohibits a lawyer from disclosing the fact and amount of the settlement to the lawyer’s other current or future clients without violating the Rules of Professional Conduct, although the lawyer’s duties to multiple clients in the same matter may limit such a clause. [See, Los Angeles County Bar Association Professional Responsibilities and Ethics Committee Formal Opinion No. 512, February 23, 2004.])
How about a settlement provision which would prohibit a plaintiff’s counsel from advertising that he has expertise in a certain area of law? This also appears be unethical since, again, such a provision has the effect of giving the defendant the ability to control plaintiff’s counsel’s representation of future clients. A general prohibition against an attorney disclosing or advertising his area of expertise is a substantial restraint on the right to practice and the ability to provide adequate information to the public regarding the attorney’s qualification. [See, Legal Ethics Committee of the Bar Association of San Francisco, Opinion 2012-1.]
The District of Columbia and many other states either have specific laws or some type of ethics opinion which are consistent with the opinions cited above. [See, for example, District of Columbia Bar Legal Ethics Committee Opinion No. 335; New York Ethics Opinion 730 (2000); New Hampshire Bar Association Ethics Committee Opinion # 2009-10/6; and Professional Ethics of the Florida Bar Opinion 04-2, January 21, 2005.]
As can been seen, just about any creative attempt to execute an end run around California Rules of Professional Conduct, Rule 5.6 (or the ABA Model Rules of Professional Conduct, Rule 5.6 in states which have adopted it), could get you into serious trouble. The best practice is to follow not just the form of the rule, but also its substance.
This article expresses the opinions of Gayle L. Eskridge, Principal, Eskridge Law, and former member, LACBA Professional Responsibility and Ethics Committee.
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This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.