July 15, 2015 – You’ve just received a very favorable offer of settlement in a case, only it also requires you to refrain from representing anyone else against the defendant for three years. Do you accept the agreement?
Have an Ethical Dilemma?
Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by the State Bar’s ethics counsel Timothy Pierce and assistant ethics counsel Aviva Kaiser, are intended to provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.
As a State Bar member, you have access to informal guidance in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys. To informally discuss an ethics issue, contact Pierce or Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m. to 4 p.m.
Question
I represent employees suing their employer for back wages. We have a good case and have received a very favorable offer of settlement. The offer, however, is conditioned on my firm agreeing that we will not represent any new clients with wage claims against this defendant for three years. It’s a good deal for my clients, but something tells me I can’t take the deal. Am I correct?
Answer
This question is directly addressed in the Rules of Professional Conduct. SCR 20:5.6 provides as follows:
SCR 20:5.6 Restrictions on right to practice
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 concerning benefits upon retirement; or
(b) an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy.
Thus, SCR 20:5.6(b) explicitly prohibits a lawyer from accepting any restriction on the right to practice as part of a client settlement. This flatly prohibits a lawyer from agreeing not to represent certain persons in the future as part of the settlement of a client’s case. Note that it is not only misconduct to agree to such restrictions, it is also misconduct to offer or propose such an agreement.
ABA Formal Ethics Opinion 93-371 described the rationale for the Rule:
The rationale of Model Rule 5.6 is clear. First, permitting such agreements restricts the access of the public to lawyers who, by virtue of their background and experience, might be the very best available talent to represent these individuals. Second, the use of such agreements may provide clients with rewards that bear less relationship to the merits of their claims than they do to the desire of the defendant to "buy off" plaintiff's counsel. Third, the offering of such restrictive agreements places the plaintiff's lawyer in a situation where there is conflict between the interests of present clients and those of potential future clients. While the Model Rules generally require that the client's interests be put first, forcing a lawyer to give up future representations may be asking too much, particularly in light of the strong countervailing policy favoring the public's unfettered choice of counsel.
Tim Pierce is ethics counsel with the State Bar of Wisconsin. Reach him by email.
Another important point made is this opinion that the restrictions found in SCR 20:5.6 trump the requirements of SCR 20:1.2(a) that a lawyer abide a client’s decisions regarding settlement.
Therefore, the lawyer may not accept the settlement offer and opposing counsel violated the Rule by making such an offer.