In a case against multiple opposing parties, can a plaintiff's attorney condition a settlement on the settling parties' lawyers agreeing not to represent the non-settling parties, or on the settling parties asserting a conflict claim against those lawyers?

Plain-English summary

In a complex case with multiple defendants represented by separate counsel who divided pre-trial and trial preparation among themselves, plaintiff P proposed settling with several defendants. P's attorney suggested that, as a condition of settlement, the settling defendants' attorneys agree not to render services to any non-settling defendants in the pending action; alternatively or in addition, that the settling defendants agree to assert and pursue a conflict-of-interest claim against their own attorneys if those attorneys tried to represent non-settling defendants.

On the first provision, the committee identified Rule 1-500(A), which bars a member from being a party to or participating in an agreement, whether in connection with a settlement or otherwise, that restricts the right of a member to practice law. It identified the rule's Discussion as stating that proposing, in connection with settlement agreements, that a member refrain from representing other clients in similar litigation is prohibited, and that neither counsel may demand or accede to such provisions. The committee identified that the agreement met both elements (an attorney participating in the making, and a restriction on the right to practice) and that California State Bar Opinion 1988-104 supported the conclusion by construing the predecessor Rule 2-109 to reach an agreement limiting attorney autonomy and clients' ability to choose counsel. It rejected the inquirer's arguments that the rule reaches only "similar" rather than same-action litigation, and that no client would be restricted because all parties were already represented; on the latter it distinguished Hoffman v. United Telecommunications on its peculiar facts, noting that remaining defendants might wish to employ the settling defendants' attorneys as co-counsel.

On the second provision, the committee found no opinion or case directly reviewing such a clause but relied on its Opinion 445 (a settlement may not be conditioned on a fee waiver where the effect indirectly restricts practice). It identified that the provision would effectively, albeit indirectly, prevent the settling defendants' attorneys from representing potential clients by requiring the settling defendants to claim a conflict regardless of whether the representation actually met Rule 3-310's criteria, and would preclude the settling defendants from giving informed written consent if an actual conflict arose. The committee concluded the provision was not an attempt to ensure ethical compliance but to ensure the attorneys did not represent the non-settling defendants, and that participating in such an agreement violates Rule 1-500(A).

Currency note

This opinion was issued in 1992, before California's November 1, 2018 adoption of the renumbered Rules of Professional Conduct. It interprets former Rule 1-500 (restrictions on the right to practice), its predecessor former Rule 2-109, and former Rule 3-310 (conflicts of interest); these correspond to current Rules 5.6 and 1.7. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

View original opinion

Common questions

Q: Can a settlement bar the settling parties' lawyers from representing the remaining parties in the same case?

A: Per the opinion, no. The committee concluded such a provision restricts the right to practice and violates Rule 1-500(A); neither side's counsel may demand, accede to, or be a party to it.

Q: What about requiring the settling parties to assert a conflict claim against their own lawyers?

A: Per the opinion, that too violates Rule 1-500(A). The committee identified the clause as an indirect restriction on practice that would force a conflict claim regardless of Rule 3-310's actual criteria and preclude informed written consent.

Q: Does it matter that everyone is already represented, so no client loses choice of counsel?

A: The committee rejected that argument and distinguished Hoffman v. United Telecommunications on its facts, noting that the remaining defendants might want to employ the settling defendants' attorneys as co-counsel.

Background and rules framework

The opinion interprets former California Rule 1-500 (agreements restricting the right to practice), corresponding to ABA Model Rule 5.6, including 5.6(b) on settlement-related restrictions, and former Rule 3-310 (conflicts of interest), corresponding to Model Rule 1.7. It relies on the predecessor former Rule 2-109 and on California State Bar Opinion 1988-104.

Citations and references

Rules of Professional Conduct (former):

• California Rule 1-500 (restrictions on the right to practice), predecessor Rule 2-109
• California Rule 3-310 (conflicts of interest)

Cases:

• Hoffman v. United Telecommunications, Inc., 687 F.Supp. 1512 (D. Kan. 1988), distinguished

Other opinions cited:

• California State Bar Formal Opinion 1988-104
• LACBA Formal Opinions 243 (1957), 445 (1987)
• Dallas Bar Association Opinion 1982-5 (noted as non-binding and distinguishable)

See also

• LACBA Ethics Op. 460: Retirement Payments Conditioned on Ceasing Practice
• LACBA Ethics Op. 480: Restriction on Lawyer Competition in a Partnership Agreement
• LACBA Ethics Op. 532: Lawyer Indemnity of Opposing Party as a Settlement Condition
• LACBA Ethics Op. 505: Fee Waiver Conditioned on Rejecting Settlement Confidentiality

Source

• Landing page: https://lacba.org/?pg=ethics-opinions
• Original PDF: https://lacba.org/docDownload/2010975