Can a New York settlement require the claimant's lawyer not to solicit or refer other people with similar claims against the settling party?
NY State Bar Ethics Opinion 1006: No-Solicit, No-Refer Terms in a Settlement
Short answer: A lawyer may not settle or offer to settle a claim on the understanding that the claimant's lawyer will afterward refrain from soliciting new clients with similar claims against the settling party, or from referring such claimants to other counsel.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
A lawyer represents an organization being sued by one of its employees, and the matter is settling. Fearing similar claims from other employees, the organization's lawyer proposes settlement assurances that the claimant's lawyers will not solicit or refer additional clients from among similarly situated employees, while accepting that the claimant's lawyer could still represent an employee who approaches unsolicited. The questions are whether either a no-solicit or a no-refer term is permissible.
The opinion applies Rule 5.6(a)(2), which bars a lawyer from participating in offering or making an agreement that restricts a lawyer's right to practice as part of settling a client controversy. The committee notes the rule reaches any lawyer's right to practice, so it binds both the lawyer who proposes such a term and the lawyer who would accept it. It draws on N.Y. State 730, which construed the predecessor rule and held that a settlement term violates the rule if its practical effect is to restrict the lawyer from future representations through conditions the client could not itself impose, while ordinary agreements to keep settlement terms confidential remain permissible.
On the no-solicit question, the opinion reasons that solicitation conducted in compliance with Rule 7.3 is now a permitted and potentially crucial aspect of practice. While an agreement not to solicit would not directly bar representing clients who find the lawyer on their own, it could have the practical effect of substantially restricting future representations, so it is impermissible. The committee addresses contrary language in Feldman v. Minars and gives it limited weight, noting that case predated the acceptance of solicitation and was strongly criticized.
On the no-refer question, the opinion reasons that referring prospective clients to other lawyers is, like solicitation, integral to practice and serves the profession's function of helping people find appropriate counsel. A settlement term barring future referrals would therefore impermissibly restrict the lawyer's right to practice. The committee answers both questions in the negative.
In practice
Under this opinion, and under the New York rule as it stood at the time, a settling party's lawyer may not condition a settlement on the claimant's lawyer giving up the right to solicit or refer others with similar claims against the settling party. Per the opinion, the prohibition reaches both the lawyer proposing and the lawyer accepting such a term, because Rule 5.6(a)(2) protects any lawyer's right to practice. The opinion notes that ordinary confidentiality terms protecting settlement information remain permissible, distinguishing them from terms whose practical effect is to restrict future representation.
Common questions
Q: Can a settlement bar the claimant's lawyer from soliciting other people with similar claims?
A: No, under this opinion. The committee concludes (paragraph 8) that because lawful solicitation is part of practice, a no-solicit term could substantially restrict future representations and is impermissible under Rule 5.6(a)(2).
Q: Can a settlement bar the lawyer from referring similar claimants to other counsel?
A: No. The opinion holds (paragraphs 11 to 12) that referral of prospective clients to other lawyers is integral to practice, so a no-referral term impermissibly restricts the lawyer's right to practice.
Q: Does the rule apply to the lawyer who proposes the term, or only the one who accepts it?
A: Both. The opinion explains (paragraph 5) that Rule 5.6 bars any lawyer from participating in offering or making such an agreement, citing N.Y. State 730 that the rule applies equally to proposing and accepting lawyers.
Q: Are ordinary settlement confidentiality terms still allowed?
A: Yes. The opinion notes (paragraph 7) that standard agreements not to disclose settlement terms are permissible and bolster the client's own confidentiality rights, unlike sweeping terms that effectively restrict future practice.
Background and rules framework
The opinion interprets Rule 5.6(a)(2) (Model Rule 5.6), which prohibits offering or making a settlement that restricts a lawyer's right to practice, and Rules 1.6 and 1.9(c) (Model Rules 1.6 and 1.9), which define the confidential information that permissible nondisclosure terms may reach. It reads Rule 5.6 in light of its predecessor, DR 2-108, whose essential terms were carried forward.
The committee frames the analysis around the practical-effect test from N.Y. State 730: a term is impermissible if it effectively restricts future representation, even if it does not directly bar representing particular clients, while ordinary confidentiality terms tied to Rule 1.6 information remain allowed.
Citations and references
Rules of Professional Conduct:
- New York RPC 5.6(a)(2) (restrictions on right to practice in settlements) / Model Rule 5.6
- New York RPC 1.6 (confidentiality) / Model Rule 1.6
- New York RPC 1.9(c) (confidentiality duty to former clients) / Model Rule 1.9
Other opinions cited:
- N.Y. State 730 (2000): a settlement term is barred if its practical effect restricts future representation
- ABA 93-371 (1993); ABA 00-417: rationale of Model Rule 5.6 and the use-versus-disclosure distinction
- Colorado Op. 92 (1993); D.C. Op. 35 (1977); Texas Op. 505 (1994); South Carolina Op. 10-04: similar conclusions barring no-refer or no-solicit settlement terms
Cases:
- Feldman v. Minars, 230 A.D.2d 356 (1st Dep't 1997): contrary view on no-solicit terms, given limited weight
See also
- NY State Bar Op. 1151: Restrictive Covenants on Lawyers
- NY State Bar Op. 1014: Contacting a Prospective Client on a Client's Recommendation
- NY State Bar Op. 1018: Good-Faith Referral After Withdrawing for a Conflict
Source
- Landing page: https://nysba.org/ethics-opinion-1006/