This is part of the Ethics Committee’s regular series of Ethics Minutes for federal litigators and others – what to watch out for, what to do and what not to do. Let us know what you think! Have an idea for a future Ethics Minute? Reach out to us!

The Curtain Rises

After hard-fought proceedings, you’ve settled a dispute on behalf of your client.  Part of opposing counsel’s practice consists of bringing similar actions against the same client on behalf of other plaintiffs.

Your client reasonably asks, “Can we include terms in our settlement agreement that would reduce the company’s chances of being targeted again?  How about a recital that opposing counsel will not use information from this dispute in representing future clients?  Or a provision saying that the lawyer will not solicit future clients to make claims against the company?”

The Answer

Participating in offering or accepting the terms your client suggests can violate your jurisdiction’s legal ethics rules related to restricting a lawyer’s right to practice law.

Rule 5.6(b) of the Model Rules of Professional Conduct provides that 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.”  (Check your local rules; exact language varies among jurisdictions.)

A settlement agreement may bar disclosure of non-public information (such as settlement terms, conditions and amount), and such confidentiality provisions are common.  But the ABA Ethics Committee in Formal Op. 00-417 (Apr. 7, 2000) and ethics committees in other jurisdictions (e.g., New York, the District of ColumbiaTexas) have reached expansive conclusions about the scope of Rule 5.6.  The ABA Committee particularly disapproved of settlement agreements conditioned on not “using” information in later representations against the same opposing party or related parties.  Ohio’s Board of Professional Conduct recently advised that any settlement agreement provision that “gives a lawyer significantly less discretion in the prosecution of future claims than a lawyer who is not subject to the agreement” violates Ohio’s Rule 5.6.

These and similar applications of Model Rule 5.6(b) and its state counterparts mean that in wrapping up a settlement you must consider carefully whether it restricts a lawyer’s right to practice.

 

Ethics Minutes” are for your general information and do not constitute legal advice.  The rules, ethics opinions and disciplinary cases in particular jurisdictions vary, and might result in an outcome different from the scenarios that are described here.

 


Karen E. Rubin  is counsel in the Cleveland office of Thompson Hine LLP, where her practice focuses on ethics, professional responsibility and business litigation.  She serves on the FBA’s Ethics Committee, and in addition is a past chair of the Cleveland Metropolitan Bar Association’s Certified Grievance Committee, which investigates allegations of attorney misconduct.  Karen is an adjunct professor of law at Cleveland-Marshall College of Law, teaching legal ethics.  She also is co-editor of Thompson Hine’s award-winning legal ethics blog, The Law for Lawyers Today.