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Pro Res Restrictions on Rights to Practice
Terms in this set (16)
Big Bank hires outside counsel to handle its mortgage foreclosure cases against borrowers who are in default. An attorney agrees to handle a matter for Big Bank, but the engagement contract between the attorney and Big Bank specifies that the attorney may not represent clients in the future who have adversarial claims against Big Bank, and that the attorney agrees to disqualification in any case in which Big Bank would be the opposing party in litigation. The attorney recognized that this term would be unenforceable in court, and he accepted the appointment as outside counsel. Were the attorney's actions improper, under the Model Rules of Professional Conduct?
Yes, because the attorney has entered into an employment agreement that restricts his right to represent future clients who sue Big Bank or whom Big Bank sues.
An attorney specializes in helping his business clients obtain business loans from commercial lenders. While assisting one client in obtaining an unusually large commercial loan from Big Bank, the attorney noticed a clause in the loan contract by which the borrower promised that its attorney would not seek to obtain similar loans for other parties from Big Bank's primary market competitor in that state. The clause required evidence of a contractual agreement by the attorney - whether with Big Bank or with the client - to this effect. The client desperately needed the loan to survive a temporary downturn in its own industry, and the attorney could easily direct future clients to this same lender, Big Bank, to obtain loans on comparable terms to what the competitor bank offered. In fact, most of the attorney's clients ended up getting their financing through Big Bank, and only rarely had the attorney succeeded in securing loans for clients through the competitor. The contract provision seemed harmless to the attorney, thought it would be enforceable. Is it proper for the attorney to sign off on these loan documents for this client, including this clause in the contract?
No, because an attorney must not make an agreement restricting the attorney's right to practice.
Big Bank routinely hired lawyers as outside counsel on various matters, and it required each one to sign an Outside Counsel Agreement (OCG) as part of its contract of engagement for legal representation. Big Bank's OCG included the following provision: Notwithstanding the rules and opinions set forth in ABA or state ethical opinions, regulations, or cases applicable to outside counsel, outside counsel agrees to treat Big Bank and all its subsidiaries as one entity for analyzing conflicts of interest. Big Bank will ordinarily give informed consent, confirmed in writing, to waive conflicts in transactional matters, whenever the bank's interest will not be impaired. For conflicts of interest, Big Bank shall include all organizations and entities delineated in the attached APPENDIX, which Big Bank may amend at any time. An attorney has the opportunity to work as outside counsel for Big Bank on a specific matter, but she is concerned about this provision. Would it be proper for the attorney to accept this OCG by contractual agreement?
No, because this agreement impermissibly restrains the attorney's right to practice.
Conglomerate Corporation routinely hires outside counsel for representation on legal matters, and it requires the lawyers to sign an Outside Counsel Agreement (OCG) that contains the following provision: ATTORNEY agrees not to represent any party adverse to CONGLOMERATE CORP., or any entitled in the APPENDIX, without prior written consent. In no event may ATTORNEY represent an adverse party against CONGLOMERATE in litigation. The APPENDIX contains a confidential list of entities ATTORNEY must use in screening for conflicts. The APPENDIX includes some entities that may be affiliated with CONGLOMERATE's parent companies, as well as entities that may not be controlled by CONGLOMERATE or its parent companies, but in which they may have an ownership interest. Would it be improper for an attorney to enter into this agreement?
Yes, because the OCG provision creates an impermissible restraint on the attorney's right to practice law.
Conglomerate Corporation offered to hire an attorney as outside counsel for a specific legal matter. Conglomerate's OCG with all outside lawyers it hires includes the following provision: ATTORNEY agrees that it would constitute an impermissible conflict of interest exists to represent a significant competitor of CONGLOMERATE CORP. or its subsidiaries. Before ATTORNEY's representation begins, ATTORNEY must disclose in writing the names of any national or regional retailers or any significant competitors of CONGLOMERATE CORP. or its subisidiaries or affiliates that ATTORNEY represents, as well as a general description of the type of representation that ATTORNEY's firm provides to such client(s). Is it proper for Conglomerate's in-house counsel to require outside cousnel to agree to this provision in the OCG?
No, because this agreement impermissibly restrains the attorney's right to practice.
An attorney worked as in-house counsel at Conglomerate Corporation. Her employment agreement with CC that she would not, following her employment there, represent any client in litigation against Conglomerate. General counsel for CC maintained that this was necessary to prevent lawyers who left there from using confidential information they learned during their time at conglomerate against the company in litigation thereafter. In other words, the contractual provision merely mirrored the duties a lawyer in that situtation would have under the conflicts of interest rules. Would this agreement be enforceable, if the attorney left CC and then represented a client who had a contract claim against the company?
No, the agreement places an impermissible restricition on the attorney's ability to practice law, and it goes beyond the constraints of the conflict of interest rules.
An attorney worked as in-house counsel at CC. Conglomerate had a problem with lawyers who left its legal department to work for its suppliers - the lawyers would contact their friends who still worked for CC to solicit additional supply contracts, or to negotiate more favorable terms on existing contracts. Worse, the lawyers could also make strategic use of their knowledge of Conglomerate's internal procurement practices (such as the time of year when certain major supplier contracts were up for renewal). General Counsel for CC started including in its contracts with all new in-house counsel a prohibition on departing lawyers who work for CC's vendors, either as in-house counsel or with a law firm representing the vendor, from contacting any of CC's employees. Is this agreement proper under the Model Rules?
No, the agreement imposes an impermissible restriction on lawyer's ability to practice law.
An attorney represented a plaintiff in a claim against CC and was remarkably effective in her efforts, mostly because she hired Professor Stevenson as an expert witness. After the deposition of Stevenson, Conglomerate realized they needed to settle the case before trial. Conglomerate offered a very generous settlement to the plaintiff, including the full amount the plaintiff sought as recovery in its pleadings, plus reasonable attorney's fees, and even some additional stock options in CC. Conditions of the settlement included a waiver and release of all the plaintiff's claims, including potential claims not part of this lawsuit, and an agreement by the attorney never to use Professor Stevenson again as an expert witness in a case against CC. The settlement imposed no other restraints on the attorney, and it did not restrain Professor Stevenson from serving as a fact witness (as opposed to expert) in the future. Assume for this question that Professor Stevenson is not a licensed attorney in this jurisidiction. Is this agreement proper, under the Model Rules?
No, because even limiting the attorney's ability to use a specific expert witness against this defendant would be an impermissible restriction on the attorney's ability to practice law.
An attorney made a lateral move to Small Firm. The managing partner had the attorney sign an employment contact on his first day, which included a provision under which the attorney agreed that upon leaving employment, he would pay his former employer ninety-five percent of any attorney fees earned in a contingent-fee settlement from any Small Firm clients who might follow the attorney when he left. The attorney worked for Small Firm for seven years, then left to start his own practice. Before the attorney left Small Firm, however, he had begun representation of a client who was an accident victim, and the client chose to follow the attorney to his new firm, to continue the representation. The attorney eventually obtained a generous settlement for the client; the attorney's contingent fee was one-third of the award, after deducting fees and expenses. The managing partner immediately notified the attorney that he had a contractual obligation to pay Small Firm ninety-five percent of the fee from the settlement, and notified the defendant's insurer, that it should send its check to Small Firm as the loss payee rather than the attorney's new firm. What is the proper result in this case?
The insurer should send the check to the attorney's new firm as loss payee, and the attorney should send no money at all to Small Firm.
An attorney brought a class action lawsuit against CC and was remarkably effective in her efforts, mostly because she was brilliant about forum shopping. After discovery, Conglomerate realized they needed to settle the case before trial. CC offered a very generous settlement to the plaintiff class, including the full amount sought as recovery in the pleadings, plus reasonable attorney's fees. Conditions of the settlement included a nondisclosure agreement about the terms of the settlement, and an agreement with this attorney limiting venue and forum options in future cases against CC brought by non-settling plaintiffs. The settlement imposed no other restraints on the attorney. Assume that the attorney did not care anymore about forum and venue, because she had learned enough about CC's activities that she thought she could easily win future cases in any court. Is this agreement proper, under the Model Rules?
No, because even limiting the attorney's ability to shop for forum or venue in future cases for other plaintiffs would be an impermissible restriction on the attorney's ability to practice law.
CC was a defendant in multi-district litigation and a plaintiff's attorney represented many different plaintiffs in these related cases against CC. The attorney and CC reached a settlement agreement for one group of claimants. The settlement was generous toward those plaintiffs, but included an agreement by the attorney to withdraw as counsel from representing the other plaintiffs in related cases who had not yet settled their claims. Is the attorney correct in believing it would be improper to sign this agreement with this group of plaintiffs?
Yes, because the agreement would be an impermissible restriction on the right to practice law.
An attorney represented a plaintiff in a wrongful death case arising out of a prison riot, which included many claims and cross-claims. The case ended in settlement. The defendant's settlement offer included two conditions: first, the commonplace requirement that the attorney and client not disclose the amount of the settlement; and second, that the attorney give defendant counsel her entire file to keep under seal, meaning the attorney could not keep copies of her own work product in the case. She would have to turn over her own personal notes and internal memoranda in the file from her interns and associates. Would it be proper for the attorney to agree to this as a condition of a large monetary settlement for her client?
No, because forfeiting the nown work product in the case could restrict her future practice of law in similar cases.
An attorney represents a large corporate defendant in a tort action over a defective product line. The current action in the first of what may be many such lawsuits, but the problems with its product line have not received any media attention yet, so the company decides to settle the matter quietly. Recognizing that he has a duty to protect the legal interests of his client, the attorney asks for three conditions in the settlement. First the plaintiff agrees to a wavier and release of this and any other claims arising out of the use of this product, at least up to that time. Second, the plaintiff and the attorney must agree not to disclose the settlement amount to anyone. Third, the plaintiff's lawyer must agree not to use any information learned int he current representation in any future representation against the corporate defendant, whether in litigation or transactional matters. The attorney recognizes that there can be no restrictions placed on the lawyers right to practice law, so he does not ask the lawyer to refrain from representing other plaintiffs against the corporation, but only that the information from this case not carry over into other unrelated cases. The attorney also points out to opposing counsel that the conflict of interest rules would already prohibit the attorney from using any information learned in a representation against the client. Simialarly, the confidentiality rule forbids the disclosure (without the client's consent) of confidential information learned form any source during the representation. Thus, the condition in the settlement overlaps with other disclosure restraints that the Model Rules impose on the other lawyer. Opposing counsel is a notorious plaintiff's lawyer in that region, receiving frequent reprimand for ethical violations from the state bar. The lawyer has a reputation for bringing up irrelevant but inflammatory evidence from other cases in his trials, telling the jury, "You wouldn't believe what this same company did to my other client!" It seemed appropriate, therefore, to the attorney for this defendant to ask for settlement conditions that recognize this lawyer's previous bad behavior. Is the attorney correct?
No, prohibiting the lawyer from using any information learned in the representation is an impermissible restriction on the lawyer's right to practice.
An attorney in a small partnership decided it was time to retire. The partnership agreement had clear provisions for the retirement of partners, in which the partnership would buy out the retirement partner's share, including an hourly prorated amount for work on matters that were still pending and had not yet generated divisible fees. The retirement provisions also provided a substantial pension for the retiring partner, purchase of a single-term life insurance policy, and separate payments from an annuity. A condition of these retirement benefits was that the partner permanently leave the practice of law. Is this condition proper?
Ye,s because restrictions on the right to practice law are permissible as a condition of retirement benefits.
CC has a rule for in its legal department against "side hustles," that is, its lawyers working cases for private clients on the side, even on a pro bono basis. The rule, which it embodied in its employment contract with all the in-house attorneys who work there, became a policy there when General Counsel was targeting a certain employee in the legal department, for purely personal reasons, and needed to create an excuse to fire the lawyer. Is this rule proper?
Yes, it is a universally recognized exception to the rule against restrictions on lawyer's right to practice law that corporate legal departments can require that in-house counsel confine their entire practice of law to the organization's legal affairs.
A criminal defendant was convicted of murder and sentenced to death. The defendant's attorney, a court-appointed lawyer representing the defendant at state expense, had already been representing the defendant in an earlier manslaughter (noncaptial) case, which he was handling on a pro bono basis. In this other manslaughter case,the attorney filed a motion alleging newly discovered evidence of innocence, with a view toward eliminating one of the aggravating factors that was also a justification for the death sentence in the capital case. The state then moved to disqualify the attorney from representing defendant in the capital case, on the rationale that state-appointed capital counsel could not represent a capital defendant in any proceeding except the capital proceeding for which the counsel had been appointed to represent the defendant. A state statute prohibited state-appointed capital counsel from representing a capital defendant in a noncapital proceeding at state expense. Can the attorney avoid disqualification because he is handling the noncapital case pro bono?
Yes, because extending the statute to pro bono representation of the capital defendant in other cases would constitute an impermissible restriction on the right to practice law.
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