OHBPC June 13, 2019

Which settlement terms restricting a plaintiff's lawyer (no other clients, no solicitation, keep everything confidential, no disparagement) are allowed under Rule 5.6?

Short answer: The opinion concluded that a lawyer may not offer or agree to direct or indirect restrictions on the lawyer's right to practice. Settlement terms requiring the lawyer to affirm having no other clients with similar claims, barring solicitation of clients with similar claims, or requiring all litigation information be kept confidential are impermissible restrictions under Prof.Cond.R. 5.6(b). A narrowly drawn non-disparagement clause is permitted if it still allows filing new claims, advertising prior experience, and consulting with prospective clients.

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This page answers the general question as of 2019. Ezel answers yours: whether it's allowed on your facts, under the current Ohio Rules of Professional Conduct, with citations.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.

View original ethics opinion (PDF)

Plain-English summary

Building on Adv. Op. 2018-03, the Board examined four settlement provisions a defendant might propose to a plaintiff's lawyer. It restated the rule that a lawyer may not offer or make an agreement containing a restriction on the lawyer's right to practice (Prof.Cond.R. 5.6(b)), which reaches both outright restrictions and less obvious provisions that have the practical effect of limiting practice (citing ABA Op. 00-417). The Board's test for the less obvious provisions was whether the term gives the plaintiff's lawyer significantly less discretion in pursuing future claims than a lawyer not subject to the agreement.

The Board concluded three of the four provisions are impermissible. A term requiring the lawyer to affirm that he or she does not represent others with similar claims is an indirect, prohibited restriction: it can force disclosure of confidential client information (Prof.Cond.R. 1.6) and create a material-limitation conflict with undisclosed clients (Prof.Cond.R. 1.7(a)(2)), and it gives the lawyer less discretion than an unconstrained lawyer. A term barring solicitation of clients with similar claims has the practical effect of impermissibly restricting practice (Prof.Cond.R. 5.6; citing N.Y. St. Bar Op. 1006). A term requiring the lawyer to keep all information obtained during litigation confidential is impermissible because such information may be useful in future suits against the same defendant, and information in a court record cannot be restricted (citing Adv. Op. 2018-03); however, a narrower term keeping the settlement's terms, conditions, and existence confidential, except for facts available in a court record, is permissible.

On non-disparagement clauses, the Board concluded permissibility depends on breadth. A clause is prohibited if it prevents filing a new action against the defendant, prohibits advertising the lawyer's prior experience, or forbids sharing that experience with a prospective client. A clause that only prevents the lawyer and clients from making post-settlement malicious or disparaging statements about the defendant does not impermissibly restrict practice and may be agreed to. The Board closed by repeating the Adv. Op. 2018-03 point on the duty to abide by a client's settlement decision (Prof.Cond.R. 1.2(a)): a lawyer cannot accept an offer conditioned on a practice restriction, should advise the client, and must withdraw if the client insists (Prof.Cond.R. 1.16(a)(1)).

In practice

The opinion holds that, under the Ohio Rules of Professional Conduct as they stood at the time, a lawyer may not offer or agree to a settlement provision that directly or indirectly restricts the lawyer's right to practice (Prof.Cond.R. 5.6(b)), and that provisions are tested by whether they give the lawyer significantly less discretion than a lawyer not subject to the agreement. Per the opinion, requiring the lawyer to affirm having no other similar-claim clients, barring solicitation of clients with similar claims, and requiring all litigation information be kept confidential are impermissible, while keeping the settlement's terms and existence confidential (except court-record facts) is permitted. The opinion concludes that a non-disparagement clause is permissible only if narrowly drawn so that it still allows filing new claims, advertising prior experience, and consulting prospective clients; if a client insists on accepting an impermissible restriction, the lawyer must withdraw (Prof.Cond.R. 1.16(a)(1)).

Common questions

Q: Can a lawyer agree to affirm in a settlement that he or she has no other clients with similar claims?

A: The opinion concluded no; the affirmation is an indirect, prohibited practice restriction that can force disclosure of confidential client information (Prof.Cond.R. 1.6) and create a material-limitation conflict (Prof.Cond.R. 1.7(a)(2)), and is barred by Prof.Cond.R. 5.6(b).

Q: Can a settlement bar the lawyer from soliciting clients with similar claims against the defendant?

A: The opinion concluded no; such a term has the practical effect of substantially and impermissibly restricting the lawyer's ability to practice under Prof.Cond.R. 5.6.

Q: Can a settlement require the lawyer to keep all litigation information confidential?

A: The opinion concluded no; a broad requirement to keep all litigation information confidential is prohibited under Prof.Cond.R. 5.6(b), though a narrower term keeping the settlement's terms, conditions, and existence confidential (except facts in a court record) is permissible.

Q: Are non-disparagement clauses allowed in settlements?

A: The opinion concluded it depends on breadth; a clause that bars filing new claims, advertising prior experience, or consulting prospective clients is prohibited, but one that only bars post-settlement malicious or disparaging statements about the defendant is permissible.

Q: What if the client insists on accepting a settlement with an impermissible restriction?

A: The opinion holds the lawyer should advise the client that participation is ethically prohibited (Prof.Cond.R. 1.2(a), 1.4(a)(5)), and if the client insists, the lawyer must withdraw 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 confidentiality duty in Prof.Cond.R. 1.6 (Model Rule 1.6), the material-limitation conflict standard in Prof.Cond.R. 1.7(a)(2) (Model Rule 1.7), the duty to abide by a client's settlement decision in Prof.Cond.R. 1.2(a) and the related consultation duty in 1.4(a)(5) (Model Rules 1.2, 1.4), and the mandatory-withdrawal rule in Prof.Cond.R. 1.16(a)(1) (Model Rule 1.16). It applies and extends the court-record analysis of Ohio BPC Adv. Op. 2018-03.

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. 1.6 (confidentiality of information) (Model Rule 1.6)
Ohio Prof.Cond.R. 1.7(a)(2) (material-limitation conflicts) (Model Rule 1.7)
Ohio Prof.Cond.R. 1.2(a), 1.4(a)(5) (abiding by and consulting on settlement decisions) (Model Rules 1.2, 1.4)
Ohio Prof.Cond.R. 1.16(a)(1) (mandatory withdrawal) (Model Rule 1.16)
Ohio Prof.Cond.R. 7.1-7.3 (solicitation and advertising of services)

Other opinions cited:

Ohio BPC Adv. Op. 2018-03: settlement agreement prohibiting disclosure of court-record information
ABA Formal Op. 00-417: restrictions on a lawyer's right to practice in settlement
N.Y. St. Bar Ass'n Adv. Op. 1006 (2014): no-solicitation settlement terms
Ariz. Adv. Op. 1990-06; Colo. Bar Ethics Comm. Op. 92 (1993): practice-restriction settlement terms

Source

Landing page: https://ohioadvop.org/advisory-opinion-index/
Original PDF: https://www.ohioadvop.org/wp-content/uploads/2019/06/Adv-Op-2019-04-Final.pdf

Original opinion text

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

OPINION 2019-04
Issued June 13, 2019

           Practice Restrictions in Proposed Settlement Agreements

SYLLABUS: A lawyer may not offer or agree to a direct or indirect restriction on the
lawyer’s right to practice as part of a proposed settlement agreement. A settlement
provision that gives a lawyer significantly less discretion in the prosecution of future
claims than a lawyer who is not subject to the agreement is an impermissible restriction
on the lawyer’s right to practice law. A lawyer may not offer or agree to a settlement
agreement that requires a lawyer to affirm that that he or she does not represent any other
individuals with similar claims against the defendant, prohibits the lawyer from the
solicitation of clients with similar claims against the same defendant, or requires the
lawyer keep confidential all information obtained during litigation. A lawyer may offer
or agree to a narrowly drafted settlement provision to not publicly disparage the
defendant if it permits the filing of additional civil complaints against the defendant, the
advertising of the lawyer’s previous experience with the defendant, and the consultation
with prospective clients about the lawyer’s experience with the defendant.

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

HON. JOHN W. WISE RICHARD A. DOVE
CHAIR DIRECTOR
PATRICIA A. WISE D. ALLAN ASBURY
VICE- CHAIR SENIOR COUNSEL
KRISTI R. MCANAUL
COUNSEL

                                   OPINION 2019-04
                                  Issued June 13, 2019

              Practice Restrictions in Proposed Settlement Agreements

QUESTIONS PRESENTED:

(1) Whether a lawyer may affirm as part of a settlement agreement that he or she does
not represent any other individuals with similar claims against the defendant;
(2) Whether a lawyer may agree as part of a settlement agreement that he or she will
not solicit, nor seek, new clients with similar claims against the defendant;
(3) Whether a lawyer may agree as part of a settlement agreement to keep all
information obtained during litigation confidential;
Op. 2019-4 2

(4) Whether a lawyer may agree as part of a settlement agreement that he or she will
not “disparage” the defendant.

APPLICABLE RULES: Prof.Cond.R. 1.2, 1.4, 1.6, 1.7, 1.16, 5.6

OPINION: It is common for a lawyer to seek as part of a settlement agreement terms
and conditions that will limit a client’s exposure to future litigation. For example, a
lawyer might attempt to limit a client’s exposure by drafting a settlement agreement that
will prevent the plaintiff’s lawyer from bringing the same or similar claims against his or
her client in the future. However, a lawyer is prohibited from either “offering or making”
an agreement that includes a provision that places restrictions on a lawyer’s right to
practice. Prof.Cond.R. 5.6(b). Therefore, as a condition of settling a client’s case, a lawyer
may not agree to restrict his or her own practice of law or propose that opposing counsel
restrict the lawyer’s future practice. This prohibition equally applies to settlement
provisions that seek to restrict outright the future practice of a lawyer as well as less
obvious provisions that have the practical effect of limiting the lawyer’s right to practice.
ABA Op. 00-417.

   The requesting lawyer has asked for the Board’s consideration of four settlement

provisions routinely encountered when representing plaintiffs. In addition to analyzing
the provisions under various Rules of Professional Conduct, the Board considered
whether the proposed provisions give the plaintiff’s lawyer significantly less discretion
in the prosecution of claims on behalf of future clients than a lawyer not subject to the
agreement. If the provision provides significantly less discretion for the lawyer in the
pursuit of future claims, the Board concludes that the provision imposes an
impermissible restriction on the practice of that lawyer under Prof.Cond.R. 5.6. See Colo.
Bar Ethics. Comm. No. 92 (1993).

Restriction on representation of individuals with similar claims

   A proposed settlement agreement provision offered to avoid future exposure for

a client requires the plaintiff’s lawyer to affirm that he or she “does not represent any
other person who is contemplating filing the same or similar claims against defendant as
those asserted in the lawsuit.” While the provision does not directly prohibit the lawyer
from representing future clients, it could lead to a situation where the lawyer cannot
affirm the proposed statement and is eventually compelled to reveal the existence or
Op. 2019-4 3

identities of undisclosed current clients. Consequently, the settlement provision
implicates two Rules of Professional Conduct.

   A disclosure during settlement negotiations by a lawyer of the existence of other,

undisclosed clients invariably implicates the confidentiality provisions of Prof.Cond.R.
1.6. In some instances, an undisclosed client may not have directed the lawyer to proceed
with the filing of a claim, and the premature disclosure of the client’s existence or identity
to the defendant to effectuate the settlement of the claim of another client would be
improper as a breach of confidentiality. Id. Az. Adv. Op. 1990-06.

   In addition to confidentiality issues, if the lawyer presented with the settlement

provision has an undisclosed client with similar claims against the defendant, the
provision immediately raises the potential for a material limitation conflict for the lawyer
with respect to both clients. If the lawyer chooses to disclose the existence of other clients
even with their consent, then defense counsel may attempt to use the information as
leverage so that all claims on behalf of all clients may be resolved at the same time.
However, the bringing of all claims on behalf of multiple clients may have a detrimental
effect on the value of each individual client’s claim when not filed and settled
independently. By revealing the existence of other clients, there is a substantial risk that
the lawyer’s ability to consider, recommend or carryout an appropriate course of action
for the client who is the party to the agreement will be materially limited by the lawyer’s
responsibilities to the previously undisclosed clients. Prof.Cond.R. 1.7(a)(2). Absent the
consent of the current client and all undisclosed clients, the provision places the lawyer
in an unavoidable conflict.

   In the Board’s view, a settlement provision requiring a lawyer’s disclosure of all

clients with similar claims against the defendant is an indirect and prohibited restriction
on the practice of the lawyer and therefore prohibited by Prof.Cond.R. 5.6(b). The
provision may require the disclosure of confidential client information, give rise to a
material limitation conflict, and force the lawyer to relinquish his or her discretion and
independent professional judgment concerning when to bring forward the claims of the
other clients. Moreover, a lawyer agreeing to the provision has significantly less
discretion in pursuing future claims against the defendant than a lawyer who is not
subject to the same provision. While a lawyer without additional clients with similar
claims does not have the same ethical concerns, the Board advises against the use of the
provision in the settlement of any matter or case.
Op. 2019-4 4

Agreement not to solicit new clients with similar claims against the defendant

   The solicitation of clients is permissible when conducted pursuant to the

limitations set forth in the Rules of Professional Conduct. Prof.Cond.R. 7.1-7.3. While a
settlement provision prohibiting a lawyer from soliciting clients with similar claims
would not preclude the representation of clients obtained without direct solicitation, the
provision would have the practical effect of substantially and impermissibly restricting
the lawyer’s ability to practice law. Prof.Cond.R. 5.6. N.Y. St. Bar Ass’n Adv. Op. 1006
(2014). See also Adv. Op. 2018-03.

Requirement to keep all information from the lawsuit confidential

   During litigation a plaintiff’s lawyer learns a considerable amount of information

about a defendant through investigation and formal discovery. This information may be
useful in subsequent suits brought by future clients against the same defendant.
Information is also generated from plaintiff’s lawyer’s own clients in the context of the
attorney-client relationship or may be contained in an unsealed court record. A lawyer’s
use of information contained in a court record cannot be restricted by the terms of a
settlement agreement. Adv. Op. 2018-03.

   While a broad requirement to keep all information in a lawsuit confidential is not

necessarily an outright restriction on the practice of a lawyer, it may have the practical
effect of limiting the effective representation of future clients against the same
defendants. ABA Op. 00-417. For example, if the lawyer learns key information about
certain business practices of the defendant during discovery that is relevant to the claim
of one client, there is a strong likelihood that the information may be beneficial to the
claims of future clients. Because such a broad provision unduly restricts a lawyer’s
pursuit of future claims using the same information obtained during the regular course
of litigation, the Board concludes that it is prohibited by Prof.Cond.R. 5.6(b). However,
a requirement to keep the terms and conditions of the settlement agreement and its
existence confidential, with the exception of those facts that are available in a court
record, is permissible because it does not restrict the lawyer’s practice. See Adv. Op. 2018-
03.
Op. 2019-4 5

Non-disparagement clauses

   Parties who have settled a matter often to seek to protect their interests by

negotiating a non-disparagement clause that prevents the lawyers and parties from
making negative statements about either party based on the allegations made or
information gathered during the litigation. Whether the non-disparagement clause is
permissible under Prof.Cond.R. 5.6(b) depends on how broadly it is drafted. If the
provision prevents the filing of a new action against the defendant, prohibits the
advertising of the lawyer’s previous experience, or forbids the lawyer from sharing his
or her experience with a prospective client, the provision indirectly restricts the practice
of the lawyer and is prohibited by Prof.Cond.R. 5.6(b). However, a provision that only
prevents the lawyer and his or her clients from publicly making post-settlement
malicious or disparaging statements relative to the practices or acts of the defendant does
not impermissibly restrict the lawyer’s ability to prosecute future claims against the
defendant on behalf of other clients, and the lawyer would not be prohibited from
agreeing to it.

Other considerations

   As previously discussed, a party’s lawyer may never offer to settle a case

conditioned on a restriction of the right to practice that is prohibited by Prof.Cond.R.
5.6(b), but if the opposing lawyer is faced with an impermissible offer, the lawyer’s
obligation to abide by a client’s decisions concerning settlement is invariably implicated.
Prof.Cond.R. 1.2(a). While a lawyer is ordinarily 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 a client’s instructions to accept the offer. In such a situation, a lawyer should
advise the client that he or she is ethically prohibited from participating in the acceptance
of an offer that includes a provision that restricts his or her right to practice. Prof.Cond.R.
1.4(a)(5) (consult with client about limitation on lawyer’s conduct prohibited by the Rules
of Professional Conduct.) 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 Rules of Professional Conduct).

CONCLUSION: The Rules of Professional Conduct prohibit a lawyer from offering or
agreeing to a provision in a settlement agreement that restricts the lawyer’s right to
Op. 2019-4 6

practice law. While a provision in a settlement agreement may not directly bar the future
representation by the lawyer, it may have the practical effect of limiting the lawyer’s right
to practice. An analysis of less obvious restrictions under Prof.Cond.R. 5.6 requires a
determination of whether the lawyer is given significantly less discretion in pursuing
future claims than a lawyer not subject to the agreement. In those instances, the provision
constitutes an impermissible restriction on the practice of the lawyer. Applying this
analysis and considering the implication of other Rules of Professional Conduct leads to
the conclusion that provisions requiring the lawyer to affirm that he or she does not
represent individuals with similar claims, prohibiting solicitation of clients with similar
claims, and requiring a lawyer to keep all information obtained during litigation
confidential are impermissible restrictions on the right to practice law. A settlement
provision prohibiting the disparagement of the defendant is generally permissible, but
cannot be drafted to prevent the filing of a new cause of action against the defendant,
prohibit the advertisement of the lawyer’s prior experience, or prevent the lawyer’s
consultation with a prospective client regarding the lawyer’s experience with the
defendant. 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 insists on accepting a settlement agreement with an impermissible
restrictive provision, the lawyer is obligated to withdraw from the representation.

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