Do non-compete, no-client-contact, and liquidated-damages clauses in a lawyer's employment agreement with a law firm violate RPC 5.6(a)?

Plain-English summary

A junior lawyer at a firm asked whether three provisions in his employment agreement violated RPC 5.6(a). Paragraph 9 required him to contact or communicate with firm clients only with the firm's approval, during or after the agreement. Paragraph 16 barred him, for two years after termination, from contacting or soliciting firm clients or potential clients or competing with the firm in any way, across a multi-state geographic area. Paragraph 29G imposed $25,000 in liquidated damages per breach of the non-compete, plus injunctive relief.

The committee found that the non-compete provisions in those paragraphs violate RPC 5.6(a), which prohibits a lawyer from participating in offering or making a partnership or employment agreement that restricts a lawyer's right to practice after the relationship ends, except an agreement concerning retirement benefits. It noted that a number of WSBA informal opinions, including some involving related liquidated-damages provisions, had reached the same general conclusion (citing WSBA Informal Ethics Opinions 2100, 1998, 1953, 1446, 1384, and 927), while declining to address enforceability as a matter of substantive law. The committee observed that RPC 5.6(a) tracks the ABA Model Rule and quoted Comment 1's rationale: such agreements limit both the lawyer's professional autonomy and clients' freedom to choose a lawyer. It concluded the provisions fall squarely within RPC 5.6(a)'s prohibition.

The committee limited its opinion in two ways: it does not address the enforceability of the provisions as a matter of substantive law beyond the RPCs, and it speaks only to the three provisions raised, not to any other terms of the employment agreement.

In practice

Under this opinion, and under RPC 5.6(a) as it stood in 2006, the committee treated all three provisions as restrictions on the lawyer's right to practice after leaving the firm. The opinion holds that the no-client-contact requirement, the two-year non-compete and non-solicitation term, and the liquidated-damages clause backing them violate RPC 5.6(a), consistent with a line of WSBA informal opinions and ABA Model Rule 5.6 Comment 1. The opinion is expressly confined to the RPC question: it does not decide whether the clauses are enforceable as a matter of contract or other substantive law, and it addresses only the three provisions the inquirer raised.

Common questions

Q: Does a two-year non-compete in a lawyer's employment agreement violate the ethics rules?

A: Per this opinion, yes. The committee concluded the non-compete provision violates RPC 5.6(a), which bars employment agreements that restrict a lawyer's right to practice after the relationship ends.

Q: What about a clause barring contact with firm clients after the lawyer leaves?

A: The committee found that provision, like the others, violates RPC 5.6(a), treating a post-employment no-client-contact requirement as a restriction on the right to practice.

Q: Does a liquidated-damages clause backing the non-compete change the analysis?

A: No. The committee included the $25,000-per-breach liquidated-damages provision among the paragraphs that violate RPC 5.6(a) and noted prior WSBA opinions reaching the same result on similar clauses.

Q: Did the committee decide whether the clauses are legally enforceable?

A: No. The opinion expressly does not address enforceability as a matter of substantive law beyond the RPCs, and it is limited to the three provisions raised.

Background and rules framework

The opinion interprets Washington RPC 5.6(a) (restrictions on the right to practice; the counterpart to Model Rule 5.6(a)), which prohibits offering or making a partnership or employment agreement that restricts a lawyer's right to practice after termination of the relationship, except an agreement concerning retirement benefits. The committee relied on its own line of informal opinions and on Comment 1 to ABA Model Rule 5.6, which grounds the rule in protecting both lawyer autonomy and client choice of counsel.

Citations and references

Rules of Professional Conduct:

• Model Rule 5.6 / Washington RPC 5.6, 5.6(a) (restrictions on a lawyer's right to practice after leaving a firm)

Other opinions cited:

• WSBA Informal Ethics Opinions 2100 (2005), 1998 (2002), 1953 (2001), 1446 (1991), 1384 (1990), 927 (1985) (non-compete restrictions in employment agreements)
• ABA Model Rule 5.6 Comment 1; ABA Formal Ethics Opinion 94-381 (1994) (rationale for the prohibition)

See also

• WA Ethics Op. 2100: Lawyer Non-Compete & RPC 5.6
• WA Ethics Op. 1998: No-Recruit Clause for Lawyers
• ABA Formal Op. 94-381: Restrictions on the Right to Practice

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1557

Original opinion text

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

Advisory Opinion: 2118
Year Issued: 2006
RPC(s): RPC 5.6
Subject: Non-compete clause in lawyer’s employment contract

QUESTION PRESENTED

The inquiring lawyer, a junior lawyer at a law firm, entered into an employment agreement with the firm that contains three non-compete provisions. He seeks the Committee’s opinion on whether the three provisions violate RPC 5.6(a), which generally prohibits such provisions.

The three provisions in the lawyer’s employment agreement read, in relevant part:

“9. Business of the Firm. It is understood and agreed that Attorney will refrain from taking any and all actions that may interfere with the business or client relations of the Firm. For that reason, Attorney shall contact and/or communicate with clients of the Firm only with the approval of the Firm, both during or after the term of this Agreement.”

“16. Non-Compete. After termination of the term of this Agreement, Attorney agrees to refrain from contacting any clients or potential clients of the Firm for a period of two years from the date on which termination is effective. Attorney shall not solicit clients or potential clients of the Firm, or attempt to compete with the Firm in any way, for a period of two years from the date on which termination is effective. It is understood that the geographic scope of this non-compete clause includes Arizona, New Mexico, the District of Columbia, Washington State, Wyoming, and all Indian reservations in which the Firm either represents client(s) or has represented client(s) within the past three years prior to the date of this Agreement. The parties agree that the scope and duration of this non-compete is reasonable.”

“29G. Liquidated Damages. * * * In the event that Attorney breaches the non-competition provisions of this Agreement, then Attorney shall pay the firm a liquidated damages amount of $25,000 per breach, and shall be subject to judicial injunctive relief to prevent further breach.”

RESPONSE

As you requested, the Committee reviewed Paragraphs 9, 16 and 29G of your employment agreement with your law firm. The Committee finds that the non-compete provisions in those paragraphs violate RPC 5.6(a).

RPC 5.6(a) reads:

“RESTRICTIONS ON RIGHT TO PRACTICE

“A lawyer shall not participate in offering or making:

“(a) A partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement;”

A number of WSBA informal ethics opinions have examined non-compete restrictions in employment agreements, including at least some that contained related liquidated damages provisions. See, e.g., WSBA Informal Ethics Opinions 2100 (2005), 1998 (2002), 1953 (2001), 1446 (1991), 1384 (1990) and 927 (1985). Although they have declined to comment on the enforceability of such provisions as a matter of substantive law beyond the RPCs, they generally conclude that such provisions in employment agreements violate RPC 5.6(a). See generally WSBA Legal Ethics Deskbook §6.3(4)(c) at 6-14 (2003).

RPC 5.6(a) is patterned on the analogous provision of the ABA Model Rules of Professional Conduct. Comment 1 to ABA Model Rule 5.6(a) outlines its rationale:

“An agreement restricting the right of lawyers to practice after leaving a firm not only limits their professional autonomy but also limits the freedom of clients to choose a lawyer. Paragraph (a) prohibits such agreements except for restrictions incident to provisions concerning retirement benefits for service with the firm.” Accord ABA Formal Ethics Opinion 94-381at 2-3 (1994) (discussing ABA Model Rule 5.6(a)).

The non-compete provisions here fall squarely within RPC 5.6(a)’s prohibition.

Under the Committee’s rules of procedure, it does not issue opinions on matters of substantive law beyond the RPCs. Therefore, this opinion does not extend to the enforceability of the provisions concerned as a matter of substantive law beyond the RPCs. Further, this opinion is limited to the three provisions you raised and does not express an opinion on any other provisions of your employment agreement with your law firm.