January 2008
Forfeiture-for-Competition AgreementsBy Wayne N. Outten and Mark R. Humowiecki
Law firms are constrained by professional ethics in how they address the issues of lawyer mobility. Rule 5.6 of the ABA Model Code of Professional Responsibility expressly prohibits lawyers from entering into agreements that restrict their right to practice, including covenants not to compete. The overwhelming majority of jurisdictions interpret the rule to preclude less direct restrictions on competition, including financial penalties known as “forfeiture-for-competition” agreements.
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