Amanda DeMatteis: Hi, Josh.
Josh Goodbaum: Hi, Amanda, what are we talking about today?
DeMatteis: I thought we would talk about non-competes – or restrictive covenants, as we sometimes call them. If you’ve watched our videos before, you’ll see a number of videos about this topic, but I thought we would take it from a little bit of a different angle.
There are some professions where non-competes are not always allowed. We see it with physicians, and we see it with some other industries, and Josh, I take it you’re gonna tell us about one of those today.
Goodbaum: With physicians, Amanda, non-competes are allowed, but they’re limited by statute in Connecticut to 1 year and a 15-mile radius. But there is one profession where non-competes basically don’t exist, and that is the profession of lawyers. It is remarkable that we see so many top-flight lawyers leaving their firms, going to another firm, never sitting out for any period of time, and taking their clients with them. And I have represented many lawyers who are moving between firms over the years.
The reason for this different – indeed, unique – status in the law is Rule of Professional Conduct 5.6. It’s a model rule from the ABA, and it has been enacted in Connecticut as Connecticut Rule of Professional Responsibility 5.6. It says that a lawyer is not allowed to enter into an agreement that restricts their right to practice law.
The idea here is that the attorney-client relationship is special, and that clients should be able to continue to work with whatever lawyer they want without any obstacle to that relationship. It applies not just to outside lawyers – that is, lawyers who appear in court. It also applies to in-house lawyers – that is, lawyers who are employees of corporations and who are counseling within the scope of that employment.
The only real exception to this rule is for lawyers who are retiring. In that case, firms or companies can condition the receipt of certain retirement benefits on the lawyer’s agreement that they are not going to practice for a certain amount of time.
Remarkably, this prohibition against restrictive covenants applies not just to non-competes, which would keep a lawyer from working entirely, but also to non-solicitation of clients. So lawyers, by and large, cannot be prohibited from reaching out to their clients and saying, “Hey, here’s the new law firm where I’m going, follow me.” There is some mix of authority on this, but the weight of authority says that covenants not to solicit clients are also prohibited for lawyers.
I will say, Amanda: anytime I look at a rule in the law that says lawyers get treated one way and everybody else gets treated the other way, I am very skeptical. So this leads me to think that, if non-competes aren’t necessary for the legal market to function effectively, then perhaps they aren’t necessary for other industries either. After all, there are lots of other professional relationships – the physician-patient relationship, the psychotherapist-patient relationship, all kinds of other important relationships – that I think are just as important as the attorney-client relationship. And nonetheless, we see the law privileging itself, privileging lawyers, particularly in this area of not having non-competes apply to lawyers.
DeMatteis: It’s so interesting, Josh, because this is where we’d like to see non-compete and restrictive covenant law go for all industries, not just lawyers. There’s a lot of clients that reach out to us that think, “Oh well, non-competes aren’t really a thing anymore, right? And not competes aren’t enforceable? I signed this thing 3 or 4 years ago when I got a job, but that’s not enforceable now, right?” And that is wrong.
So, if you have questions about non-competes – whether you are a lawyer, a physician, or in any other industry – reach out to an employment lawyer. We’re here to help.
Thank you so much for watching, and we’ll see you next time. Take care.