Ethics Opinion 291
Contracts with Temporary Lawyers: Restrictions on Subsequent Employment
A lawyer seeking temporary employment or a lawyer seeking the temporary services of another lawyer may not enter into a contract with a lawyer placement agency that requires the temporary lawyer to agree not to apply for or to accept subsequent employment with a firm to which he was assigned or with a client of the firm. Such restriction would violate Rule 5.6. A lawyer seeking temporary employment may agree to notify the placement agency if within a stated period the lawyer accepts subsequent employment at the firm to which he was assigned on a temporary basis.
- Rule 5.6(a) (Restrictions on Right to Practice)
The committee received an inquiry from a lawyer who had been working as a temporary lawyer under contract with various temporary agencies in the DC area. The inquirer asked whether the following provision in one placement agency contract would violate DC Rule 5.6:
Except as provided by this Agreement, or as may be consented to by the [placement agency] in writing, Attorney agrees as a condition of this Agreement and [of] assignments of Attorney to Firm that Attorney will not solicit or accept an offer of employment, or otherwise directly or indirectly, on a full-time, part-time or temporary basis, provide services to Firm, its clients or their respective affiliates until the expiration of one year after termination of this agreement. Attorney shall immediately notify the [placement agency] if Firm or any affiliate solicits Attorney with an offer of employment or other services.
The inquirer also asked whether the following provision in another contract between a placement agency and a temporary lawyer would violate Rule 5.6:
The Employee shall not accept employment from or offer him/herself to be employed by the Client, for a period beginning with the date the Company first contacts the Client regarding the Employee and concluding ninety (90) days following completion of any assignment, unless the Client first agrees to pay [the agency] a fee in an amount determined by [the agency]. . . .
In the case of a permanent placement, the Employee shall not accept a position which has been offered to the Employee as a result of a referral by the Company directly from the Client for a period of one year, commencing with the date the Company first contacts the Client regarding the Employee, it being understood and agreed to by the Employee that the Company is entitled to a placement fee to be paid by the Client as consideration for the Company’s efforts on behalf of the Employee and the Client.
The Committee reviewed some other contracts between temporary lawyer placement agencies and temporary lawyers and noted that they impose similar restrictions on subsequent employment.
1This inquiry presents several questions:
- Would a lawyer violate Rule 5.6 by signing an agreement with a temporary lawyer placement agency that:
- Flatly prohibited the temporary lawyer from accepting an offer of subsequent employment2 from a firm where the lawyer had been placed or from a client of the firm for a designated period of time
- prohibited the lawyer from accepting subsequent employment unless the firm agreed to pay a fee to the agency?
- Would a lawyer violate Rule 5.6 by agreeing to notify the temporary agency of any offer of employment by a firm subsequent to a temporary placement, to allow the agency to collect an agreed placement fee from the firm?
- Would a lawyer violate Rule 5.6 by signing an agreement with a temporary lawyer placement agency that prohibited the lawyer for a specified period of time from applying for subsequent employment:
- at a firm where the lawyer had been placed as a temporary lawyer or
- with a client of the firm in question, or that
- prohibited the lawyer from applying for subsequent employment unless the firm agreed to pay a fee to the agency?
- Would a lawyer seeking to employ a temporary attorney violate Rule 5.6 by agreeing that if the firm offered subsequent employment to the temporary attorney, the firm would pay a placement fee to the agency?
Rule 5.6 prohibits a lawyer from entering into a contract that restricts a lawyer’s right to practice. The rule states, in pertinent part:
A lawyer shall not participate in offering or making:
(a) a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement.
The comment following the rule explains that “An agreement restricting the right of partners or associates3 to practice after leaving a firm not only limits their professional autonomy but also limits the freedom of clients to choose a lawyer.”
The DC Court of Appeals recently explained the purpose of Rule 5.6, quoting a leading treatise:
Rule 5.6(a) is designed, in part, to protect lawyers, particularly young lawyers, from bargaining away their right to open their own offices after they end an association with a firm or other legal employer. It also protects future clients against having only a restricted pool of attorneys from which to choose.4
Prohibition from Accepting Subsequent Employment
The purposes of Rule 5.6(a) are thwarted by a clause in the contract between the placement agency and the temporary lawyer restricting the lawyer’s subsequent employment. If a contract between a placement agency prohibited the temporary lawyer from accepting employment with a firm where the lawyer had been placed or with a client of that firm for a specified period, the clause would violate rule 5.6. In Opinion 181, this Committee held that: “A law firm may not require a lawyer employed by it to sign an agreement that unduly restricts the lawyer’s right to practice law after he or she disassociates from the firm.” In that matter, a confidentiality agreement, less restrictive than a flat ban on certain subsequent employment, was found to violate DR 2-108(A) (predecessor of Rule 5.6).
The policy against contracts restricting a lawyer’s right to practice is reflected very strongly in court decisions, which find most such provisions in partnership agreements and other legal employment contracts to be unenforceable as against public policy. See, e.g., Cohen v. Graham, 722 P. 2d 1388, 44 Wash. App. 712 (1986) (arbitrator did not err in finding a contract for the sale of a law practice that prohibited the seller from agreeing to continue to represent firm clients to violate DR 2-108(B) and to be unenforceable on public policy grounds); Dwyer v. Jung, 336 A. 2d 498 (N.J. Super. Ct. Ch. Div. 1975) (declaring unenforceable a partnership agreement that designated particular clients with whom each partner could do business in the event of termination; provision found to violate public policy because it would restrict lawyer’s autonomy and client’s choice of counsel). Cf. Newman v. Akman, supra note 4 (finding permissible a restriction of benefits payable on retirement).
The interpretations of Model Rule 5.6 by the American Bar Association’s Committee on Ethics and Professional Responsibility also reflect the view that contractual provisions that restrict a lawyer’s autonomy or a client’s choice of counsel are unethical. E.g., ABA Formal Opinion 94-381 (May 9, 1994) (finding a contract prohibiting lawyers employed by a corporation from subsequent representation of any client against the corporation to violate Model Rule 5.6); ABA Informal Op. 1417 (1978) (law partnership agreement found to violate DR 2-108(A) because it prohibited departing partners from hiring or associating with any associates of the firm for a specified period following departure from the firm); ABA Formal Op. 300 (1961) (unethical for an employing lawyer to propose or for an employed lawyer to agree to a contractual covenant restricting the employed lawyer, after leaving employment, from practice in a specified geographic area for a period of time); see ABA Formal Op. 88-356 (contracts between temporary lawyers and their agencies should avoid any interference or control by the agency in "the exercise of professional judgment by the lawyer, including limiting or extending the amount of time the lawyer spends on work for the clients of the employing firms.")
A lawyer who signed a contract prohibiting a temporary lawyer from accepting employment at a firm where the lawyer had been temporarily assigned would violate Rule 5.6(a). Similarly, it would not be proper for a temporary lawyer to agree to decline an offer of permanent employment absent the employer’s payment of a placement fee to a temporary agency. While it is permissible for a temporary agency to charge a reasonable fee to a client organization that hires a temporary lawyer, the lawyer should not be asked to decline employment to facilitate enforcement of the contract between the temporary agency and the client organization. The temporary agency may seek legal recourse against an organization that breaches its contractual obligation with the agency, but the agency may not use lawyers as bargaining chips to secure enforcement of these agreements.
Notice of Subsequent Employment
A contract between a lawyer placement agency and a temporary lawyer may require the lawyer to give the agency notice of an offer of employment from a firm to which the lawyer was temporarily assigned. If the purpose of such a clause is to allow the placement agency to collect a fee from the firm that has offered a non-temporary position to the lawyer, the clause would not restrict the lawyer’s right to practice or the client’s right to choose counsel. A temporary lawyer may sign such a contract without violating rule 5.6.
Restriction of Employment of the Temporary Lawyer by Third Parties
Where a temporary lawyer is employed by a law firm, a corporate client of the firm might decide to offer the temporary lawyer a permanent position in the corporation. The corporate client of the law firm has undertaken no contractual obligations toward the placement agency. The corporation may not even be aware that the law firm is employing the lawyer on a temporary basis.5 The first of the two contract provisions presented by the inquirer would restrict the temporary lawyer from seeking or accepting a position with a client of the firm where he was placed. This contract would hamper the lawyer’s autonomy and interfere with the client’s freedom in choice of counsel. A lawyer would violate Rule 5.6 by signing an agreement that barred the temporary lawyer’s employment by a third party.6
Restriction on Communication by Former Temporary Lawyer
While a temporary lawyer may agree to give notice of an offer of subsequent employment, a temporary lawyer would violate Rule 5.6 by signing a contract that prohibited him or her from seeking subsequent employment with the firm to which he was assigned or with a client of the firm. Likewise, the lawyer would violate Rule 5.6 by agreeing not to respond to inquiries about the possibility of representation by a former or prospective client.
In D.C. Bar Op. No. 221, the Committee found that Rule 5.6 would be violated by an agreement that prohibited a lawyer from sending an announcement notifying clients of his intended departure from the firm, or from responding to inquiries initiated by clients about his impending departure from the firm. Contractual restrictions on direct (in-person or telephonic) solicitation of firm clients by departing lawyers have been found not to violate Rule 5.6 (or its predecessor, 2-108) as long as the lawyer, without financial disincentive, can inform potential clients of his availability to represent them, and as long as clients’ right to choose counsel freely is fully protected. Ops. 221 and 97.
Payment of a Placement Fee
A lawyer employing a temporary lawyer may agree to pay a placement fee to a temporary agency if his firm offers permanent employment to a temporary lawyer.7 A lawyer who agreed to pay a reasonable placement fee charged by the agency would no more violate Rule 5.6 than would a lawyer who agreed to pay a similar fee to a lawyer placement agency that identifies candidates for permanent positions as lawyers.
Lawyers seeking the assistance of temporary lawyers and lawyers seeking temporary assignment must read their contracts carefully and decline to agree to contractual provisions that would violate Rule 5.6. A temporary lawyer may agree to provide notice to an agency if the lawyer accepts permanent employment with a client of the agency where the lawyer had been placed as a temporary employee. A temporary lawyer may not agree to a contract with a temporary lawyer placement agency that imposes other geographic or temporal restrictions on his subsequent employment or that restricts his former clients’ opportunity to communicate with him.
Inquiry No. 28-2-5
Adopted: June 15, 1999
1. One agency contract with temporary lawyers notes that its contracts with client employers: restrict our clients from directly or indirectly employing or retaining a practitioner whom we procure other than through [the agency], unless and until either an agreed-upon fee is paid . . . or a period of time of up to 30 months has passed since such practitioner last worked for the client.
Another agency contract provides that:
Clients of [the agency] may offer [agency] employees permanent jobs only in accordance with the terms of the clients’ agreements with [the agency], providing [the agency] with a payment in certain situations to compensate [the agency] for recruiting and developing temporary lawyers. . . . [The temporary lawyer] agrees not to accept direct employment or additional assignments from any client of [the agency] to whom [the lawyer] is assigned both during any assignment and for a period of 180 days after [the lawyer’s] last day of work on behalf of that client without first notifying [the agency].
2. The term “subsequent employment” is used here to refer to any full-time, part-time or other employment that follows the fulfillment of an assignment from a placement agency.
3. The reference in the comment following rule 5.6 to “partners or associates” raises a question whether the rule applies to a lawyer employed in a law firm neither as an associate nor as a partner. We find that the rule is intended to apply to lawyers generally. The language of the comment was taken from the comment to DR-2-108(A), the predecessor of Rule 5.6, which was drafted when lawyers in firms generally had only two statuses. Different statuses for lawyers in law firms (temporary lawyers, contract associates, non-equity partners, staff attorneys, etc.) have proliferated since the 1980s. See Vincent R. Johnson and Virginia Coyle, On the Transformation of the Legal Profession: The Advent of Temporary Lawyering, 66 Notre Dame L. Rev. 359, 370, notes 36 and 37 and accompanying text (1990), quoting Gilson and Mnookin, Coming of Age in a Corporate Law Firm: The Economics of Associate Career Patterns, 41 Stan. L. Rev. 567 (1989).
In Opinion 284 on “Advising and Billing Clients for Temporary Lawyers,” this committee concluded that “a temporary lawyer has the same ethical obligations as any other lawyer to be competent to handle the matter tendered, to exercise independent professional judgment, to devote undivided loyalty to the client, and to preserve the client’s confidences and secrets.” It is but a small step to conclude that Rule 5.6 should be interpreted to apply to temporary lawyers despite the somewhat narrow language of the comment.
4. Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering, § 5.6:201 at 824 (2d ed. Supp. 1997), quoted in Neuman v. Akman, 715 A.2d 127, 130-131 (DC 1998) (partnership agreement allowing departing partner to recover his capital account and his share of the profits for a pro rata portion of his departing year but denying a partner who joins another firm an “additional amount” that would be paid over the remaining lifetime of a retiring partner found not to violate Rule 5.6 because the clause is a permissible restriction of payment of benefits upon retirement).
5. In D.C. Bar Op. No. 284, this committee recently noted that some clients prefer to employ lawyers who will be available to them for an indefinite period of time. In such cases, a lawyer must “advise and obtain consent from the client whenever the proposed use of a temporary lawyer to perform work on the client’s matter appears reasonably likely to be material to the representation or to affect the client’s reasonable expectations.” A client should be informed of the temporary status of a lawyer to be assigned to a client’s matter if the client has “stated or manifested a desire that it have available to it a regular cadre of lawyers who will develop expertise and be available to work on a series of expected matters.” Under Opinion No. 284, then, there are some situations in which a firm must inform its clients of the use of temporary lawyers, and some situations in which a firm need not do so.
6. A lawyer would violated Rule 5.6 by signing such an agreement whether he was a temporary lawyer or a lawyer at a firm employing a temporary lawyer.
7. See Vincent R. Johnson and Virginia Coyle, On the Transformation of the Legal Profession: The Advent of Temporary Lawyering, 66 Notre Dame L. Rev. 359, 389 (1990) (noting that “an employer who is impressed with the quality of a temporary’s work may extend an offer of permanent employment to that attorney. In such instances, the agreement between the employer and the agency may provide for the agency to receive a placement fee from the employer.”)