04iHOLD

Prohibited Provisions


Typically a defendant’s tool, this provision–known as a no-further-representation clause is popular in class action and mass product-liability settlements. But a little-known ethics rule prohibits lawyers from agreeing, or even offering to agree, to a restriction on an attorney’s right to practice law.

Despite the ethical prohibition, Lisa Bernt, a Boston-area employment lawyer, has personally seen these provisions in settlement offers. Opposing counsel attempt to include them, she explains, to con­strain a lawyer who has “done a tremendous amount of work reviewing documents” and “learned where the bodies are buried.”

The advantage, Bernt says, is clear: “The opponent doesn’t want to see this again, especially with this counsel, who already is miles ahead of any other lawyer.”

To Bernt, a provision restricting her right to handle future cases “smelled bad,” so she rejected it. Those two cases still settled, mean­ing the clause wasn’t a deal breaker, she says.

Bernt’s sense of smell served her well. Indeed, state ethics rules based on Rule 5.6 of the ABA Model Rules of Professional Conduct bar lawyers from participating in such agreements. The rule helps ensure that the best, most experienced counsel are available to clients, according to ABA Formal Opinion 93-371, issued in 1993.

Although public policy favors fair settlements, provisions restricting a lawyer’s right to handle future cases could provide settling parties with rewards that bear less relationship to the merits of claims than to the defendant’s desire to essentially “buy off” plaintiff’s counsel.

Practice-restriction provisions also create a potential conflict between the interests of present and future clients–or worse, between the lawyer who wants to handle sim­ilar cases, and the client, who is being offered a favorable settlement–the opinion continues.

“The rules are designed to preserve a client’s right to be represented by counsel of choice, including expert counsel who has experience bringing an industry to its knees,” says Pam Phillips, a San Francisco-based attorney specializing in legal ethics. “The rules also preserve the right of attorneys to practice their profession.”

Willful Ignorance

Still, there appears to be a certain willful ignorance of Rule 5.6. Phillips has advised clients against these clauses at least a half-dozen times in the last few years. If settlement provisions like this are discovered, the agreement would probably be deemed unenforceable and a court could report the settling lawyers to the state bar, she says.

Even including a restriction less onerous than a complete prohibition on a lawyer’s right to practice could run contrary to Rule 5.6 if it essentially limits a lawyer’s ability to practice. For example, requiring a lawyer to turn over work product or preventing a lawyer from using an expert witness in future cases is generally not allowed. But some nonmaterial restrictions may be permitted in settlement agreements, the rule’s commentary states, such as a provision requiring a lawyer to return documents obtained in discovery.

The Rule 5.6 nuances vary by state. In Colorado, for example, the test is whether the agreement would restrain the lawyer’s exercise of independent judgment on behalf of other clients to an extent greater than that of an independent attorney not sub­ject to such a limitation. And Rule 1-500 of the California Rules of Professional Conduct forbids even offering a practice restriction as part of a settlement.

Regardless of the restrictions, there’s always a chance opposing counsel may attempt to get these practice restrictions into a settlement agreement. It’s not that the lawyers are unethical, says Phillips. More likely, she says, is that they just don’t know about the rule.

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