Can a lawyer agree to a settlement that bars him from representing other potential plaintiffs against the same defendant, and can opposing counsel offer such a term?

Plain-English summary

Lawyers for several plaintiffs alleged civil-rights violations against a municipality and its employees. In settlement negotiations, defense counsel submitted a settlement and release requiring the plaintiffs' lawyers to agree not to represent any other potential claimants damaged by the municipality's alleged conduct, along with confidentiality provisions and the sealing of the agreement by court order under G.S. §132-1.3(b). The inquiry asked, across six questions, whether the plaintiffs' lawyer could enter the agreement, whether defense counsel could offer it, what the plaintiffs' lawyer should do if the client wanted to accept, whether withdrawal could let the client accept the money, and whether the plaintiffs' lawyer could agree not to be heard at the sealing proceeding.

The opinion concluded the plaintiffs' lawyer may not enter such an agreement, because Rule 2.7(b) prohibits a lawyer, in connection with settling a controversy, from agreeing to restrict his right to practice law; although public policy favors settlement, the policy favoring full access to legal assistance prevails. Defense counsel likewise may not offer a settlement that includes a restriction on a lawyer's right to practice as a condition, again under Rule 2.7(b). When the client wants to accept, the lawyer must advise the client that neither lawyer may ethically participate in an agreement restricting a lawyer's right to practice; the questions about withdrawal to let the client accept were treated as moot because both lawyers' participation is unethical. The opinion held that a confidentiality term is not unethical: the amount and terms of a settlement that is not a matter of public record are client secrets a lawyer may not disclose without consent, and the lawyer must honor a client's request for confidentiality, citing Rule 4. On the final question, the opinion concluded it is not unethical for the plaintiffs' lawyer to agree not to be heard when defense counsel asks the court to seal records under G.S. §132-1.3(b); it is defense counsel's responsibility under Rule 7.2(a)(2) not to advance claims unwarranted under existing law absent a good-faith argument for changing it.

Currency note

This opinion was issued in 1994, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. 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, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer agree, as part of a settlement, not to sue the defendant for other clients?

A: No. The opinion concluded a lawyer may not enter a settlement that restricts his right to practice law, including a promise not to represent other potential plaintiffs against the defendant, under Rule 2.7(b).

Q: Can opposing counsel even propose such a term?

A: No. The opinion held a lawyer may not offer a settlement agreement that contains a restriction on a lawyer's right to practice as a condition of the agreement.

Q: Is a confidentiality clause about the settlement terms allowed?

A: Yes. The opinion held a confidentiality term is not unethical, because the terms of a non-public settlement are client secrets the lawyer must keep at the client's request, citing Rule 4.

Q: Can the plaintiffs' lawyer agree not to contest sealing the record?

A: Yes. The opinion concluded it is not unethical to agree not to be heard at the sealing proceeding; the duty not to advance unwarranted claims under Rule 7.2(a)(2) falls on the lawyer seeking the seal.

Background and rules framework

The opinion applied North Carolina's then-current Rule 2.7(b), corresponding to Model Rule 5.6(b), which bars a lawyer from making, as part of settling a controversy, an agreement that restricts the lawyer's right to practice. It treated settlement confidentiality as governed by Rule 4, the confidentiality rule corresponding to Model Rule 1.6, and addressed the propriety of seeking to seal records through Rule 7.2(a)(2), the meritorious-claims provision corresponding to Model Rule 3.1, read against the public-records sealing statute G.S. §132-1.3(b).

Citations and references

Rules of Professional Conduct:

• MR 5.6 (restrictions on a lawyer's right to practice)
• MR 1.6 (confidentiality of information)
• MR 3.1 (meritorious claims and contentions)
• North Carolina Rule 2.7(b); Rule 4; Rule 7.2(a)(2)

Statutes:

• N.C. Gen. Stat. §132-1.3(b) (sealing of settlements involving public records)

See also

• NC Ethics Op. RPC 181: advising a client to conflict out opposing counsel
• NC Ethics Op. RPC 182: disclosure of a client's death in settlement negotiations

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-179/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry #1:

Attorney A and counsel represent several plaintiffs whose civil rights and constitutional rights were allegedly violated as a result of the conduct of defendant municipality and several of its employees. During the course of litigation and settlement negotiations, individual settlement offers are made by Attorney B and his counsel who represent the municipality and its employees.

Attorney B submits to Attorney A a settlement agreement and release that requires Attorney A and his counsel to join in the release and agree not to represent any potential claimants (other than those already represented by Attorney A and counsel) who may have also been damaged by the alleged conduct of the municipality. The settlement documents also contain provisions requiring confidentiality as to the terms and content of the settlement agreement and the sealing of the agreement by court order. Because the defendant is a municipality, in order to seal what would otherwise be public records, a court order will have to be entered pursuant to G.S. §132-1.3(b).

May Attorney A enter into such an agreement?

Opinion #1:

No. A lawyer may not be a party to a settlement agreement wherein he agrees to refrain from representing other potential plaintiffs in the future. To do so would be a violation of Rule 2.7(b) which prohibits a lawyer from entering into an agreement, in connection with the settlement of a controversy or suit, that restricts his right to practice law. Although public policy favors settlement, the policy that favors full access to legal assistance should prevail.

Nevertheless, participation in a settlement agreement conditioned upon maintaining the confidentiality of the terms of the settlement is not unethical. The amount and terms of any settlement which is not a matter of public record are the secrets of a client which may not be disclosed by a lawyer without the client's consent. If a client desires to enter into a settlement agreement requiring confidentiality, the lawyer must comply with the client's request that the information regarding the settlement be confidential. See Rule 4.

Inquiry #2:

May Attorney B offer such a settlement agreement?

Opinion #2:

No. A lawyer may not offer a settlement agreement that contains a restriction on a lawyer's right to practice law as a condition of the agreement. See Rule 2.7(b).

Inquiry #3:

What should Attorney A do when his client desires to accept the agreement?

Opinion #3:

Attorney A must advise his client that neither he nor Attorney B may ethically participate in an agreement restricting a lawyer's right to practice law.

Inquiry #4:

May Attorney A withdraw with the permission of the client so that the client may accept the monetary terms of the settlement?

Opinion #4:

Since the participation of both the plaintiff's attorney and the defendant's attorney in such an agreement is unethical, this inquiry is moot.

Inquiry #5:

May Attorney B settle with Attorney A's then former client after Attorney A withdraws?

Opinion #5:

See Opinion #4 above.

Inquiry #6:

May Attorney A and his client agree, as part of a settlement, not to be heard when Attorney B seeks, at an ex parte proceeding, to seal otherwise public records under G.S. §132-1.3(b), when Attorney A believes that there is no apparent basis in law for requesting the sealing other than preventing a class action or additional lawsuits?

Opinion #6:

It is not unethical for Attorney A to agree not to be heard when Attorney B attempts to show to the court that the requirements of the statute allowing the sealing of the record have been met. See G.S. §132-1.3(b). It is the responsibility of Attorney B to not advance claims that are unwarranted under existing law unless there is a good faith argument for an extension or modification of existing law. See Rule 7.2(a)(2).