Can a law firm agree, as part of settling a case, not to solicit other clients or share fees in the future on claims against the same opposing party?

Plain-English summary

The question (PEC No. 93-6) was whether the Disciplinary Rules are violated when a law firm agrees, as part of settling a lawsuit, (1) not to solicit third parties in the future to prosecute claims against the opposing party, and (2) not to share fees with anyone in the future on claims brought against the opposing party. The Committee analyzed both clauses under Rule 5.06(b), Restrictions on the Right to Practice, noting that Comment 2 prohibits a lawyer from agreeing not to represent other persons in connection with settling a client's claim.

The Committee found the key issue to be whether the settlement would in any way prevent the lawyer from representing another person, and concluded the intent of both clauses was exactly that: to limit the attorney from representing a similarly situated client against the opposing party. Treating solicitation as part of the practice of law (to the extent permitted by the rules and applicable law), it concluded solicitation cannot be more severely restricted in a settlement than it is in the rules and law. It treated fee sharing the same way, noting fee sharing is itself regulated (citing Rule 7.01(i) on sharing with a layperson), and concluded that fee sharing not otherwise prohibited cannot be further limited by a settlement.

The Committee concluded that a settlement clause exceeding the current limits on solicitation would be a limitation on the practice of law violating Rule 5.06(b), and that an agreement not to share fees in the future on claims against the opposing party would likewise violate Rule 5.06(b).

Currency note

This opinion was issued in 1994, under the Texas Disciplinary Rules of Professional Conduct that took effect January 1, 1990. Texas did not adopt the ABA's Ethics 2000 revisions; its rules have been amended only piecemeal since, including the comprehensive 2021 revisions adopted by Texas Supreme Court order. 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 Treat this page as historical context, not current guidance.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 settlement require a lawyer not to bring future cases against the opposing party?

A: The Committee concluded a clause restricting future solicitation against the opposing party beyond the rules' existing limits is a restriction on the right to practice and violates Rule 5.06(b).

Q: Can a settlement bar a lawyer from sharing fees in future cases against the opposing party?

A: The Committee concluded that clause also violates Rule 5.06(b); fee sharing that is not otherwise prohibited cannot be further limited by a settlement agreement.

Q: What rule governs settlement terms that limit a lawyer's future practice?

A: The Committee applied Rule 5.06(b), Restrictions on the Right to Practice, and its Comment 2, which bars agreeing not to represent other persons as part of settling a client's claim.

Background and rules framework

The opinion interprets Texas Disciplinary Rule 5.06(b) (restrictions on the right to practice; ABA Model Rule 5.6(b)), which bars a lawyer from offering or making an agreement restricting the right to practice as part of settling a client's claim, and its Comment 2. It treats solicitation and fee sharing as parts of the practice of law that cannot be limited by settlement beyond their existing regulation, referencing Rule 7.01(i) on sharing fees with a layperson.

Citations and references

Rules of Professional Conduct:

• MR 5.6 (restrictions on the right to practice)
• Texas Disciplinary Rules 5.06(b) (incl. Comment 2), 7.01(i)

See also

• TX Ethics Op. 656: An Of-Counsel Agreement Restricting Practice After Departure
• TX Ethics Op. 551: A Former City Lawyer's Two-Year Representation Bar
• TX Ethics Op. 515: Contracting With a Contract-Lawyer Placement Agency

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-505/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_505.pdf

Original opinion text

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

QUESTION PRESENTED

[PEC No. 93-6]
Would a violation of Texas Disciplinary Rules of Professional Conduct occur if a law firm agreed, as part of the settlement of a lawsuit, not to solicit third parties in the future to prosecute claims against the opposing party?
Would a violation of Texas Disciplinary Rules of Professional Conduct occur if a law firm agreed, as part of the settlement of a lawsuit, not to share fees with anyone in the future with respect to lawsuits or claims brought against the opposing party?

DISCUSSION

The applicable rule of the Texas Disciplinary Rules of Professional Conduct which governs this situation is Rule 5.06(b), Restrictions On the Rights To Practice. Comment No. 2 of this rule states a lawyer is prohibited (emphasis added) from agreeing not to represent other persons in connection with settling a claim on behalf of a client.

Under Rule 5.06(b), the key issue is whether or not a settlement agreement such as this would in any way prevent a lawyer from representing another person. Generally, it seems that the intent of both of these clauses would be exactly that: to limit an attorney from representing a client similarly situated in a matter against the opposing party.

Solicitation
Is "solicitation" protected under the umbrella of "a lawyer's right to practice law?" Solicitation generally describes conduct by an attorney or a third person acting for an attorney, which specifically targets potential clients, with the intent of pecuniary gain. To the extent that such is permitted under the State Bar Rules, and other applicable state and federal statutes, solicitation is part of the practice of law and therefore cannot be more severely restricted in a settlement agreement that it is restricted in the Rules and applicable law.

Fee Sharing
Fee sharing is also a part of practicing law. This also is somewhat regulated, (see Rule 7.01(I), sharing fees with a lay person). To the extent that fee sharing is not in violation of the applicable laws and rules, such cannot be further limited by settlement agreements.

A settlement agreement which exceeds current limitations placed on solicitation would be a limitation on the practice of law and therefore a violation of Rule 5.06(b) of the Texas Disciplinary Rules of Professional Conduct.
An agreement in which an attorney agrees not to share fees with anyone in the future with respect to lawsuits or claims brought against the opposing party would be a limitation on the practice of law and would be in violation of Rule 5.06(b).

CONCLUSION

A settlement agreement which exceeds current limitations placed on solicitation would be a limitation on the practice of law and therefore a violation of Rule 5.06(b) of the Texas Disciplinary Rules of Professional Conduct.
An agreement in which an attorney agrees not to share fees with anyone in the future with respect to lawsuits or claims brought against the opposing party would be a limitation on the practice of law and would be in violation of Rule 5.06(b).

Tex. Comm. On Professional Ethics, Op. 505 (1994)