After hard-fought proceedings, you’ve finally settled a contentious case on behalf of your client. The plaintiff’s lawyer has brought suit against your client before, and likely will again: the lawyer advertises and uses social media aggressively to locate claimants who have the same kind of issue with your client.
Your client asks, “Can’t we include terms in the settlement agreement that would rein in this lawyer? Maybe raise the settlement amount enough to get her to agree to stop taking these cases? Or at least, get some language that would stop the blog posts and the TV ads fishing for clients to sue us?”
The answers: “No — and no.” A new ethics opinion from Ohio’s Board of Professional Conduct underscores the point.
Restrictions on right to practice
Model Rule 5.6(b), adopted with only minor variations in almost every jurisdiction,* bars you from “participating in making or offering” a settlement agreement that includes a restriction on a lawyer’s right to practice. The new Ohio ethics opinion expressly extends that prohibition to settlement agreements conditioned on restricting a lawyer’s communication of information “contained in a court record.”
A settlement agreement can certainly bar both sides from disclosing non-public information (such as settlement terms, conditions and amount), and those are common clauses. But preventing counsel from making a public announcement, or communicating to the media, or advertising about the case using information contained in case documents, violates Rule 5.6, said the Ohio Board.
The Board reasoned that an agreement prohibiting a lawyer from using public information interferes with the ability to market legal services in a way otherwise consistent with the Rules of Professional Conduct. It also interferes with “the public’s unfettered ability to choose lawyers who have the requisite background and experience to assist in pursuing their claims.” Rule 5.6(b) “prevents settlement agreements from being used to ‘buy off’ plaintiff’s counsel … in exchange for the lawyer foregoing future litigation against the same defendant.” The Board also mentioned the conflict that such agreements create “between the interests of current clients and those of potential future clients.”
The ABA Ethics Committee, as well as ethics committees in New York and the District of Columbia, have reached similar expansive conclusions about the reach of Rule 5.6(b). The ABA Committee particularly disapproved in 2000 of settlement agreements conditioned on not “using” information in later representations against the same opposing party or related parties. And the D.C. ethics opinion notes that the fact of settlement is usually reflected in public documents, thus making it a rule violation to condition the agreement on non-disclosure of that fact.
Underlying these opinions, as the D.C. ethics committee said, “is the intent to preserve the public’s access to lawyers who, because of their background and experience, might be the best available talent to represent future litigants in similar cases, perhaps against the same opponent.”
Not a limit on duty of confidentiality
The Ohio opinion, and others, should not be read to alter your duty of confidentiality to your client. Under Rule 1.6, absent client consent and other narrow exceptions, you already have a duty to keep confidential all information relating to the representation — and that would include otherwise public information, as we’ve noted before. In contrast, the opinions centering on Rule 5.6(b) are about your ability to offer or accept settlement agreements restricting the right to practice.
Further, as Hofstra Professor Emeritus Roy Simon explains in his treatise on New York ethics law, you can get into ethics trouble even if a court might otherwise enforce the settlement agreement: “A lawyer who makes or agrees to [a settlement in which a lawyer promises not to represent a client in later disputes with your client] risks professional discipline even if a court later holds that the agreement is enforceable.”
Client ABC’s — and the nuclear option
The restriction against participating in a settlement agreement aimed at reining in opposing counsel is a part of the ethical landscape that clients may not understand — especially when you need to turn down a request to pursue something that would be to the client’s advantage.
This is an issue that certainly merits explanation under Rule 1.4 in order to “permit the client to make informed decisions regarding the representation.” And you also must “consult with the client about any relevant limitation on the lawyer’s conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law.”
The new Ohio opinion cautions that if worst comes to worst, and the client insists that you participate in accepting or offering settlement agreement with an impermissible condition, Rule 1.16(a)(1) requires you to withdraw from representation, in order to avoid violating Rule 5.6. Hopefully you won’t need to exercise that nuclear option.
* An exception to the nearly-nationwide approach is Virginia’s Rule 5.6(b), which carves out settlement agreement restrictions on a lawyer’s right to practice that are approved by “a tribunal (in such situations as the settlement of mass tort cases) or a governmental entity.”