In-house attorneys often wear multiple hats when performing work for private companies. Some of their work clearly falls under the provision of legal services, while others can be less clear quasi-business roles. And when those in-house lawyers who perform non-legal work are asked to sign a non-compete agreement in connection with their employment, questions can arise both as to the enforceability of those agreements and whether an attorney violates the rules of professional conduct by signing such an agreement as we have previously discussed.
The Ohio Board of Professional Conduct recently opined that it is unethical for in-house attorneys to sign non-compete agreements that would restrict their right to perform legal services after their employment ends. And while attorneys could ethically agree to limit their non-legal work, placing restrictions on legal work violates the public interest by limiting the attorney’s professional autonomy and the ability of clients to choose their lawyer. The Ohio Board’s opinion, which is considered advisory, rather than binding, is in line with rulings from other state’s boards and decisions from various courts.
For example, Connecticut, Washington, DC, New Jersey, Pennsylvania, South Carolina, and Washington have all issued ethics opinions holding that lawyer non-competes are unenforceable. Most of these opinions arise out of ABA Model Rule of Professional Conduct 5.6, which provides that a lawyer shall not enter into a “partnership, shareholders, operating, employment, or similar type of agreements that restricts the right of a lawyer to practice after termination of the relationship.”
Then what is an attorney supposed to do when presented with a non-compete agreement by his or her law firm? Risk committing an ethical violation or risk losing their job for refusing to sign the agreement? As we reported previously, the Kentucky Supreme Court recently affirmed the dismissal of a claim brought by an attorney alleging wrongful discharge against her former law firm after she was fired for refusing to sign a non-solicitation agreement the prohibited her from soliciting the firm’s clients after her employment terminated. See Greissman v. Rawlings and Associates, PLLC, 2017-SC-518-DG (Ky. April 18, 2019). The attorney argued that her discharge was in violation of public policy because Rule 5.6 prohibits non-competition agreements between lawyers and law firms.
The court agreed with the attorney that, because Rule 5.6 is designed to protect society at large by allowing clients to freely choose counsel, the attorney’s discharge for refusing to sign a non-solicitation agreement could be contrary to a fundamental and well-defined public policy. However, the court affirmed dismissal of the attorney’s claim because the non-solicitation provision had a savings clause that only limited the attorney’s ability to solicit non-legal business, and therefore the provision did not violate Rule 5.6. The court noted that had the attorney signed an agreement without the savings clause, she (and her law firm) would have been subject to professional sanctions.
While the Ohio Board opinion and the Kentucky Supreme Court recognized that non-compete agreements can be enforceable against attorneys for non-legal work, oftentimes the distinction between legal and non-legal work is blurred. Before signing any non-competition or non-solicitation agreements, attorneys (both in-house and in private practice) should be mindful not only of whether the agreements are enforceable, but also whether they may be subjecting themselves to professional sanctions. And companies hoping to implement and/or enforce such agreements against in-house counsel should consider their enforceability and the position that they are placing in-house counsel in by requesting that they sign such agreements.