Can a lawyer agree to a settlement term that bars the lawyer from disclosing or advertising information that is in the public court record?

Plain-English summary

The Board addressed whether a lawyer may participate in offering or accepting a settlement conditioned on restricting the lawyer's post-settlement communications about information contained in a court record. It started from Prof.Cond.R. 5.6(b), which prohibits a lawyer from participating in offering or making a settlement of a claim that contains a restriction on the lawyer's right to practice. A court record typically contains the allegations, defenses, party and lawyer names, filing date, and any voluntary dismissal, and potential clients can search those records for lawyers who brought similar suits against the same defendant.

The Board concluded that prohibiting a lawyer from using that court-record information interferes with the lawyer's ability to advertise and market services consistent with Prof.Cond.R. 7.1 through 7.3, and that the advertising of services and solicitation of clients is an integral part of practicing law that may not be restricted by private settlement (citing Bates v. State Bar of Arizona). It reasoned that such a provision is intended to limit the plaintiff's lawyer's ability to attract new clients based on prior experience against the defendant, gives the lawyer less discretion than lawyers not subject to the agreement, can be used to "buy off" plaintiff's counsel with a higher settlement, and creates conflicts between current and future clients (citing ABA Op. 93-371). The Board held that Prof.Cond.R. 5.6(b) prohibits a lawyer from participating in the offer or acceptance of a settlement that bars disclosing court-record information. The Board recommended that the holding be applied prospectively, recognizing the many factors involved in pre-existing agreements.

The Board then addressed the lawyer's duty to abide by a client's settlement decision (Prof.Cond.R. 1.2(a)). Where a larger settlement is conditioned on a restriction to practice, Prof.Cond.R. 5.6(b) makes it impossible for the lawyer to comply with the client's instruction; the lawyer should advise the client that participation is ethically prohibited, and if the client insists on accepting, the lawyer must withdraw under Prof.Cond.R. 1.16(a)(1) to avoid a violation.

In practice

The opinion holds that, under the Ohio Rules of Professional Conduct as they stood at the time, a lawyer may neither offer nor accept a settlement agreement that prohibits the lawyer from disclosing information contained in a court record, because that is an impermissible restriction on the lawyer's right to practice (Prof.Cond.R. 5.6(b)). Per the opinion, the prohibition applies even when the term originates with the opposing party and is part of a confidential agreement; the confidential nature of the settlement does not relieve the lawyer of the rule. The opinion concludes that, while a lawyer must ordinarily abide by a client's decision to settle (Prof.Cond.R. 1.2(a)), the lawyer cannot accept a settlement conditioned on a restriction to practice, and if the client insists, the lawyer must withdraw (Prof.Cond.R. 1.16(a)(1)). The Board recommended that this holding be applied prospectively.

Common questions

Q: Can a lawyer agree to a settlement that bars disclosing information in the court record?

A: The opinion concluded no; barring a lawyer from disclosing court-record information is an impermissible restriction on the right to practice under Prof.Cond.R. 5.6(b), so a lawyer may neither offer nor accept such a term.

Q: Why does a gag on court-record information violate Rule 5.6(b)?

A: The opinion reasoned that the restriction interferes with the lawyer's ability to advertise and market services based on prior experience against the defendant (Prof.Cond.R. 7.1-7.3), gives the lawyer less discretion than lawyers not subject to the agreement, and protects the public's ability to choose experienced counsel.

Q: Does it matter that the opposing party proposed the term in a confidential agreement?

A: The opinion concluded no; the confidential nature of the settlement does not relieve the lawyer of the obligations of Prof.Cond.R. 5.6, and a lawyer is not relieved of the rule simply because the other party offered the term.

Q: What must a lawyer do if the client insists on accepting such a settlement?

A: The opinion holds the lawyer should advise the client that participation is ethically prohibited, and if the client insists on accepting the restrictive term, the lawyer must withdraw from the representation under Prof.Cond.R. 1.16(a)(1).

Background and rules framework

The opinion interprets Ohio Prof.Cond.R. 5.6(b) (a lawyer shall not participate in offering or making a settlement that restricts the lawyer's right to practice; Model Rule 5.6), read with the advertising rules Prof.Cond.R. 7.1 through 7.3 (Model Rules 7.1-7.3), the duty to abide by a client's settlement decision in Prof.Cond.R. 1.2(a) (Model Rule 1.2), and the mandatory-withdrawal rule in Prof.Cond.R. 1.16(a)(1) (Model Rule 1.16). It defines "court record" by reference to "case documents" under Sup.R. 44(B)-(C)(2).

Citations and references

Rules of Professional Conduct:

• Ohio Prof.Cond.R. 5.6(b) (restriction on the right to practice in a settlement) (Model Rule 5.6)
• Ohio Prof.Cond.R. 7.1-7.3 (communications, advertising, and solicitation) (Model Rules 7.1-7.3)
• Ohio Prof.Cond.R. 1.2(a) (abiding by a client's settlement decision) (Model Rule 1.2)
• Ohio Prof.Cond.R. 1.16(a)(1) (mandatory withdrawal) (Model Rule 1.16)
• Ohio Prof.Cond.R. 1.6, 1.9 (confidentiality of settlement terms)

Cases:

• Bates v. State Bar of Arizona, 433 U.S. 350, 383-84 (1977), advertising of legal services

Other opinions cited:

• ABA Formal Op. 93-371: restrictions on a lawyer's right to practice in settlement
• Ariz. Ethics Op. 90-06 (1990); Tex. Ethics Op. 505 (1994); Colo. Bar Ethics Op. 92 (1993): practice-restriction settlement terms

See also

• Ohio BPC Op. 2019-004: Practice Restrictions in Proposed Settlement Agreements
• TX Ethics Op. 708: Settlement Non-Disparagement and Non-Disclosure
• Ohio BPC Op. 1990-014: Restrictive Covenant / Non-Competition Among Lawyers
• Ohio BPC Op. 1991-003: Separation Provision and Fee Payback by a Departing Associate

Source

• Landing page: https://ohioadvop.org/advisory-opinion-index/
• Original PDF: https://www.ohioadvop.org/wp-content/uploads/2018/06/Adv.Op_.2018-03-1.pdf

Original opinion text

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

OPINION 2018-3
Issued June 8, 2018

Settlement Agreement Prohibiting a Lawyer’s Disclosure of Information Contained
in a Court Record

SYLLABUS: A settlement agreement that prohibits a lawyer’s disclosure of information
contained in a court record is an impermissible restriction on the lawyer’s right to
practice. A lawyer may not participate in either the offer or acceptance of a settlement
agreement that includes a prohibition on a lawyer’s disclosure of information contained
in a court record. A lawyer is not required to abide by a client’s decision to settle a matter
if the settlement is conditioned on a restriction to practice and must withdraw from the
representation.

   The Board recommends that the holding in this opinion be applied prospectively.

This nonbinding advisory opinion is issued by the Ohio Board of Professional Conduct
in response to a prospective or hypothetical question regarding the application of
ethics rules applicable to Ohio judges and lawyers. The Ohio Board of Professional
Conduct is solely responsible for the content of this advisory opinion, and the advice
contained in this opinion does not reflect and should not be construed as reflecting the
opinion of the Supreme Court of Ohio. Questions regarding this advisory opinion
should be directed to the staff of the Ohio Board of Professional Conduct.
 65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
Telephone: 614.387.9370 Fax: 614.387.9379
www.bpc.ohio.gov

DAVID L. DINGWELL RICHARD A. DOVE
CHAIR DIRECTOR
SANFORD E. WATSON D. ALLAN ASBURY
VICE- CHAIR SENIOR COUNSEL
KRISTI R. MCANAUL
COUNSEL

                                   OPINION 2018-3
                                  Issued June 8, 2018

Settlement Agreement Prohibiting a Lawyer’s Disclosure of Information Contained
in a Court Record

SYLLABUS: A settlement agreement that prohibits a lawyer’s disclosure of information
contained in a court record is an impermissible restriction on the lawyer’s right to
practice. A lawyer may not participate in either the offer or acceptance of a settlement
agreement that includes a prohibition on a lawyer’s disclosure of information contained
in a court record. A lawyer is not required to abide by a client’s decision to settle a matter
if the settlement is conditioned on a restriction to practice and must withdraw from the
representation.

   The Board recommends that the holding in this opinion be applied prospectively.

QUESTION PRESENTED: Whether a lawyer may participate in the offer or acceptance
of a settlement agreement that is conditioned on the restriction of a lawyer’s post-
settlement communications about information contained in a court record.

APPLICABLE RULES: Prof.Cond.R. 1.2, 1.6, 1.9, 1.16, 5.6, 7.1-7.3.

OPINION:

Background

   Agreements to settle pending litigation may include confidentiality provisions

that prevent each party from disclosing the existence of the settlement agreement, the
Op. 2018-3 2

terms and conditions of the agreement, any monies paid to the plaintiffs, and other
confidential or non-public information. In turn, the lawyers in the case are obligated to
their clients to maintain the confidentiality of the settlement agreement. See Prof.Cond.R.
1.6 and 1.9. Some parties may seek additional confidentiality provisions that prevent
opposing counsel, most often the plaintiff’s lawyer, from making any public
announcement, comment, or communications to the media or through lawyer
advertising concerning the case, including information that may be contained in a court
record.1

Restriction on the Right to Practice

    A lawyer is prohibited from participating in the offering or making of a settlement

of a claim or controversy through the use of a written agreement that contains a
restriction on the lawyer’s right to practice. Prof.Cond.R. 5.6(b). This rule has been
interpreted in at least one jurisdiction to prohibit a lawyer from participating in a
settlement agreement that restricts the lawyer’s representation of future clients in similar
matters against the opposing party. Az. Ethics Op. 90-06 (July, 1990).

    Turning to the question presented, a court record will typically include

information concerning allegations and defenses raised, the names of the parties and
lawyers, the date the case was filed, and the date of any voluntary dismissal in the case.
Potential clients have the ability to search court records for lawyers who have brought
similar lawsuits against the same defendants. However, prohibiting the lawyer from
using the same information directly interferes with the lawyer’s ability to advertise and
market his or her services in a manner consistent with the Rules of Professional Conduct.2
Prof.Cond.R. 7.1 - 7.3. The advertising of a lawyer’s services and the solicitation of clients
is an integral part of the practice of law and may not be restricted through a private
settlement agreement. Tex. Ethics Op. 505 (August, 1994). See also Bates v. State Bar of
Arizona, 433 U.S. 350, 383-84 (1977).

    The apparent intent of a settlement agreement provision                               prohibiting

communication of information contained in a court record is to limit the plaintiff’s

1
For purposes of this advisory opinion “court record” has the same meaning as “case documents” filed
with a clerk of court or submitted with a court as those terms are defined in Sup.R. 44(B)-(C)(2).
2 A lawyer must obtain the consent of a client whose name appears in the style of a case before it is used

in the lawyer’s marketing or advertising. Prof.Cond.R. 1.6., Prof.Cond.R. 7.2, cmt.[2].
Op. 2018-3 3

lawyer’s ability to attract new clients based on the lawyer’s prior experience against a
particular defendant. This type of settlement provision also gives the lawyer less
discretion in pursuing claims on behalf of clients than a lawyer who is not subject to a
similar agreement. Colo. Bar Ethics Op. 92 (1993). More importantly, the prohibition
contained in the rule serves to protect the public’s unfettered ability to choose lawyers
who have the requisite background and experience to assist in pursuing their claims.
Prof.Cond.R. 5.6(b). It also prevents settlement agreements from being used to “buy off”
plaintiff’s counsel through an offer of a higher settlement amount in exchange for the
lawyer foregoing future litigation against the same defendant. Lastly, the rule prevents
the creation of conflicts between the interests of current clients and those of potential
future clients. ABA Op. 93-371.

   For the foregoing reasons, the Board concludes that Prof.Cond.R. 5.6(b) prohibits

a lawyer from participating in the offer or acceptance of a settlement agreement that
includes a prohibition on the disclosure by a lawyer of information contained in a court
record. A settlement agreement under which a lawyer is prohibited from disclosing
information contained in a court record via the media or otherwise permissible
advertising constitutes an impermissible restriction on the lawyer’s right to practice.

   When engaging in settlement negotiations lawyers should be particularly mindful

of the prohibition against both making and accepting a settlement on a condition restricting
the practice of lawyers or law firms in the case. Prof.Cond.R. 5.6. Simply because the
terms were offered by the other party or opposing lawyer and are intended for inclusion
in a confidential agreement, a lawyer is not relieved from his or her ethical obligations
under the rules. Lawyers should not be lured by the confidential nature of the settlement
agreement to include provisions that violate Prof.Cond.R. 5.6. The integrity and self-
regulatory nature of the profession requires lawyers to voluntarily comply with the rules
of professional conduct even when their conduct is not subject to public review or
scrutiny. See Prof.Cond.R., Preamble, cmt. [16].

   There may be instances where a lawyer, prior to issuance of this opinion,

participated in the making or acceptance of a settlement agreement that contains a
provision restricting the practice of a lawyer. Recognizing the myriad of factors that are
Op. 2018-3 4

involved in the negotiation and acceptance of pre-existing settlement agreements, the
Board recommends that the holding of this opinion be applied prospectively.

Abiding by a client’s decision to settle a matter

   The offer by a party to settle a case conditioned on a restriction of the right to

practice necessarily involves the lawyer’s obligation to abide by a client’s decisions
concerning settlement. Prof.Cond.R. 1.2(a). A lawyer may be faced with a situation
where a client’s willingness to settle may be heightened when a larger settlement is
conditioned on inclusion of a restriction on the lawyer’s right to practice. While a lawyer
is required to abide by the client’s decision to settle, the prohibition in Prof.Cond.R. 5.6(b)
makes it impossible for the lawyer to comply with the client’s instructions. A lawyer
should advise the client that he or she is ethically prohibited from participating in the
acceptance of an offer that includes a condition that restricts his or her right to practice.
If the client insists upon accepting the settlement with the condition, the lawyer must
withdraw from the representation in order to avoid a violation of Prof.Cond.R. 5.6(b).
Prof.Cond.R. 1.16(a)(1) (a lawyer shall withdraw from the representation if it will result
in violation of the Ohio Rules of Professional Conduct.)

CONCLUSION: Parties routinely enter into settlement agreements that contain
confidentially provisions that prevent the disclosure of the settlement, the terms and
conditions, and any amounts paid in exchange for the dismissal of a case. Lawyers for
the parties are ethically obligated to their clients to maintain the confidentiality of the
agreement. However, certain facts about the case – the names of parties, allegations,
defenses, and the lawyers involved are information contained in court records. Requiring
lawyers in the litigation to limit their future communication of information contained in
court records, including their participation in a case, serves as a restriction on their right
to practice law and advertise their services prohibited by Prof.Cond.R. 5.6(b). A lawyer
is ethically obligated to refuse to participate in the finalization of the written settlement
agreement when his or her client is presented with an offer to settle that includes a
provision that will operate as a restriction on the lawyer’s right to practice. While lawyers
are required to follow their client’s direction whether to accept a settlement offer, the
lawyer may not violate other Rules of Professional Conduct when doing so. If the client
Op. 2018-3 5

insists on accepting the agreement with the restrictive provision, the lawyer is obligated
to withdraw from the representation.