ETHICS COMMITTEE OPINION NO. 16-05
THIS OPINION IS ADVISORY ONLY
QUESTION PRESENTED
Do the Rules of Professional Conduct bar attorneys
from agreeing to employment terms which restrict
competition with employers after termination when the
terms expressly exclude the practice of law from the
restriction on competition?
OPINION
The Rules of Professional Conduct do not bar attorneys from
agreeing to employment terms which restrict competition with
employers after termination when the terms expressly exclude the
practice of law from the restriction on competition. 1
APPLICABLE NORTH DAKOTA RULES OF
PROFESSIONAL CONDUCT
Rule 5.6, N.D.R. Prof. Conduct: Restrictions on Right to Practice
FACTS PRESENTED
Attorney is being considered for an attorney position with a tax
preparation company. The position involves reviewing and assisting
with resolution of Internal Revenue Service letters received by the
company’s clients which allege violations. The written employment
agreement offered to Attorney includes non-compete terms that
restrict Attorney from competing with the company for two years
after termination. Specifically, Attorney is not to provide “any
product or service that the company offers” or solicit or accept
the company’s clients in order to provide any product or service
the company offers. Attorney is proposing to add the following
language to the noncompete terms:
Pursuant to Rule 5.6(a) of the Rules of Professional Conduct,
upon Associate’s termination, this agreement will not restrict the
Associate’s right as a lawyer to practice law as a lawyer.
For the purposes of this opinion, it is assumed at least some of the
service offered by the company could arguably be encompassed
within Attorney’s practice of law after employment is terminated.
to an exception concerning benefits, the clients’ freedom to choose
an attorney cannot be fettered by attorneys entering into covenants
not to compete in the practice of law.
To the extent the activities listed in the non-compete terms
proposed by the employer in the case at hand do not constitute
the practice of law, the Rules of Professional Conduct are not
triggered and Attorney is free to contract without concern of
ethical violation. However, to the extent the restricted activities
include the practice of law, the non-compete terms run afoul
of Rule 5.6(a). The additional language offered by Attorney,
commonly referred to as a “savings clause,” alters the non-compete
terms significantly by expressly removing the practice of law
from the post termination activities that are restricted. As such,
Attorney is free to practice law upon termination and client access
would remain unfettered. Therefore, Attorney is not prohibited
from agreeing to the non-compete terms with the inclusion of the
proposed savings clause. See Wash. Bar Advisory Op. 2100 (2005);
Conn. Bar Assn. Informal Op. 02-05 (2002).
This opinion was drafted by Robin Wade Forward and was
unanimously approved by the Ethics Committee on the 7th day of
April, 2017.
This opinion is provided under Rule l .2(B), North Dakota Rules
for Lawyer Discipline, which states:
A lawyer who acts with good faith and reasonable reliance on a
written opinion or advisory letter of the ethics committee of the
association is not subject to sanction for violation of the North
Dakota Rules of Professional Conduct as to the conduct that is the
subject of the opinion or advisory letter.
1. This opinion does not consider the effect of North Dakota
Century Code § 9-08-06, which codifies North Dakota’s public
policy limitations on non-compete agreements.
DI SCUSSION
Rule 5.6(a) provides that a “lawyer shall not participate in offering
or making ... 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 such termination.” The basis
for Rule 5.6(a) is enunciated in the current comments to the rule:
“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.” Thus, subject only
SPRING 2017
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