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Does Your Partnership Agreement Violate the Rules of Professional Conduct?
In many industries, non-competition provisions are a typical feature of employment contracts and partnership agreements. Courts will usually enforce such provisions if they protect a legitimate interest of employer and are reasonable in scope, time and geographic area. Non-competition agreements among lawyers, however, have long been condemned as unethical. Such agreements were prohibited by DR 2-108 of the Model Code of Professional Responsibility adopted by the American Bar Association in 1969, and by Rule 5.6(a) of the ABA's Model Rules of Professional Conduct promulgated in 1983. In its current form, Rule 5.6(a) provides:
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.
Prohibitions similar to DR 2-108 and Rule 5.6(a) have been adopted in virtually every American jurisdiction.
In their core application, these rules are reasonably clear. They prohibit the typical non-compete provision that restricts a departing lawyer from practicing law in a particular area for a specified period of time. They also prohibit “anti-poaching” agreements that prevent a departed lawyer from soliciting business from clients of his former firm. See, e.g., Dwyer v. Jung, 133 N.J. Super. 343, 336 A.2d 498 (1975).
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