As the population of the United States is aging, so are its lawyers. For law firms and other legal services organizations, this reality gives increasing importance to Ohio Rule of Professional Conduct 5.6(a), which narrowly permits retirement agreements placing future restrictions on the right to practice law. The Rule provides an exception to the prohibited use of restrictive covenants to limit the practice of law.1
As the American Bar Association (ABA) has recognized, to be considered an agreement concerning retirement benefits under Rule 5.6(a), the provision must impact benefits that are available only to a lawyer who is truly retiring from the practice of law.2 For example, according to the ABA, an acceptable provision might include a benefit that is payable to a lawyer who has attained an age at which it is common for employers to offer early retirement and who has worked for the firm or employer for a substantial period of time.3 Other indicia of a legitimate retirement agreement include:
- use of customary benefit calculation formulas by the law firm;
- increase in benefits tied to years of service to the law firm;
- payment of benefits by the law firm over the lifetime of the retired lawyer;
- A correlation between benefits paid by the law firm and receipt of other payments by the retired lawyer such as Social Security;
- The overall structure of the agreement, including separate provisions for retiring and otherwise withdrawing lawyers.4
Under Rule 5.6(a), the receipt of bona fide retirement benefits may properly mandate that the recipient lawyer cease practice permanently. Alternatively, the firm may structure the agreement's restrictions to certain types of law practice, or impose geographical of temporal limits. Thus, if the restrictive covenant relates solely to the receipt of retirement benefits within the meaning of Rule 5.6(a), the contracting lawyers are free to decide the degree of the restriction on the future practice of law by the retired lawyer.