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Saturday, August 25, 2012

Suits Gaffe - Lawyer Noncompetes Are A Big No-No

If you're like me, you've been waiting for the Suits season finale where the battle between the contenders for managing partner of Pearson Hardman comes to a head. I won't spoil the result (although you find out in the first five minutes of the show), but I will say that the losers start muttering about taking as many lawyers with them and forming their own firm. But the one who keeps their calm says they can't. They have noncompetes.

At that point, they've lost me. I can't believe it! In Florida, lawyers can't have noncompetes, so I run to the computer and look up New York's code of professional conduct. Sure enough, I run across references to Karas v Katten Muchin Zavis Rosenman, a case saying that New York lawyers aren't allowed to restrict their ability to compete. In that case, a lawyer would be paid beau coup bucks in severance, if only he would refrain from working from a competing firm. The court found that “restrictions on the practice of law that include ‘financial disincentives’ against competition. . .are objectionable primarily because they interfere with the client’s choice of counsel.” When I find the actual rule, it says, “A lawyer shall not participate in offering or making: (a) a partnership, shareholder, 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. . . .” In case you're interested, it's Rule 5.6.

Most states follow the same rule. The idea is that, because the attorney-client relationship is so personal and so important, clients must not have any restrictions on their ability to choose which lawyer they use. This reasoning is bizarre to me in light of the fact that my gynecologist, your proctologist, and your psychiatrist can all be forced to sign noncompetes, at least in my home state. You may not be able to use your favorite doctor for a year or two, but god forbid you not be able to choose your lawyer. I can't think of a relationship more personal than the one I have with the person who checks out my hoo-ha every year and who delivered my kids.

Why are lawyers so special? Is it because we write the rules and pass the laws? You betcha.

The better question is, why can employers make most employees sign these agreements and force them into indentured servitude? Maybe it's time to revisit the whole concept of noncompete agreements in this country. In the meantime, when you're writing about lawyers, don't make the mistake of having them sign noncompete agreements.