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Opinion #218. Restrictions on Right to Practice After Termination of Employment
Vacating Opinion #126
Issued by the Professional Ethics Commission
Date Issued: May 18, 2018
The Commission has been asked to clarify what, if any, continuing vitality Opinion 126 has in view of subsequent adoptions of first former Maine Bar Rule 3.2(g) and Rule 5.6(a) of the Maine Rules of Professional Conduct. In order to clarify this issue, the Commission now makes clear that Opinion 126 is no longer valid and is vacated.
In Opinion 126, the Commission was asked whether it was a violation of the then existing Maine Bar Rules for a law firm to require that a lawyer execute a non-competition agreement as a condition of employment. The Commission found that the then existing Maine Bar Rules did not prohibit a non-competition agreement, although the Commission noted that Model Rule 5.6(a), substantially similar to what is now Maine Rule of Professional Conduct 5.6(a), prohibited such agreements. Further, Opinion 126 noted that covenants-not-to-compete in legal employment contracts have "almost universally been held to be "unethical"".
Since Opinion 126 was issued in 1992, the Maine Bar Rules were amended to include Maine Bar Rule 3.2(g), added in 1997, which was the precursor to current Rule 5.6(a) of the Maine Rules of Professional Conduct. That rule specifically states that a lawyer may not participate in offering or making:
(a) A partnership, shareholders, operating, employment or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement;
The commentary on this rule has uniformally held that covenants-not-to-compete are barred, except as part of a retirement program, or, in some cases, a valid sale of a practice. See Maine Rules of Professional Conduct, Rule 1.17(A) Sale of a Law Practice, Advisory Note.
Accordingly, the Commission now formally vacates Opinion No. 126, and specifically advises that a non-competition agreement or similar restriction on the right to practice as the result of the termination of a lawyer’s relationship with other lawyers or law firm is generally prohibited. The Commission also notes that when a lawyer terminates his or her relationship with a legal practice, both the firm and the lawyer continue to have obligations to individual clients which are more fully addressed in Rules 1.2, 1.4 and 1.16.
The Commission has been asked to clarify what, if any, continuing vitality Opinion 126 has in view of subsequent adoptions of first former Maine Bar Rule 3.2(g) and Rule 5.6(a) of the Maine Rules of Professional Conduct. In order to clarify this issue, the Commission now makes clear that Opinion 126 is no longer valid and is vacated.
In Opinion 126, the Commission was asked whether it was a violation of the then existing Maine Bar Rules for a law firm to require that a lawyer execute a non-competition agreement as a condition of employment. The Commission found that the then existing Maine Bar Rules did not prohibit a non-competition agreement, although the Commission noted that Model Rule 5.6(a), substantially similar to what is now Maine Rule of Professional Conduct 5.6(a), prohibited such agreements. Further, Opinion 126 noted that covenants-not-to-compete in legal employment contracts have "almost universally been held to be "unethical"".
Since Opinion 126 was issued in 1992, the Maine Bar Rules were amended to include Maine Bar Rule 3.2(g), added in 1997, which was the precursor to current Rule 5.6(a) of the Maine Rules of Professional Conduct. That rule specifically states that a lawyer may not participate in offering or making:
(a) A partnership, shareholders, operating, employment or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement;
The commentary on this rule has uniformally held that covenants-not-to-compete are barred, except as part of a retirement program, or, in some cases, a valid sale of a practice. See Maine Rules of Professional Conduct, Rule 17(a) Sale of a Law Practice, Advisory Note.
Accordingly, the Commission now formally vacates Opinion No. 126, and specifically advises that a non-competition agreement or similar restriction on the right to practice as the result of the termination of a lawyer’s relationship with other lawyers or law firm is generally prohibited. The Commission also notes that when a lawyer terminates his or her relationship with a legal practice, both the firm and the lawyer continue to have obligations to individual clients which are more fully addressed in Rules 1.2, 1.4 and 1.16.
