Where the Rule Stops

Rule 5.6(a) lists a partnership, shareholders, operating, employment, or "other similar type of agreement" that restricts a lawyer's right to practice after the relationship ends, and every item on that list is a term of the lawyer's own relationship with a firm or similar association.¹ The rule targets the covenant that would keep a departing lawyer out of the geographic area or bar her from accepting retention by the firm's former clients. Its reasons are the lawyer's professional autonomy and the client's freedom to choose counsel.² Two other settings produce restrictions that look like noncompetes but fall outside subsection (a): the sale of a law practice and the settlement of a client's controversy.

The sale of a law practice comes first. The comment to Rule 5.6 says the rule does not prohibit "restrictions that may be included in the terms of the sale of a law practice pursuant to Rule 1.17." A buyer pays for a practice's clients and goodwill, and a seller who reopened down the street would take back what she sold. A sale under Rule 1.17 also presupposes that the seller stops practicing in the area or field sold, so a covenant in the sale contract largely confirms what the sale already requires.

Two scenes with nearly identical wording show how the setting, not the clause, decides the result.

The exclusion covers restrictions in the terms of a sale made pursuant to Rule 1.17. A firm cannot rescue a departure covenant by calling it part of a sale when no practice is being sold and no goodwill is changing hands. The exclusion exists for a real transaction, and a stretched label would let it swallow the prohibition.

The second boundary concerns settlements. Subsection (b) forbids a lawyer to participate in offering or making "an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy." A party facing a lawyer who has learned its business and its claims may offer to resolve the pending dispute on one condition: the lawyer must never take similar claims against it again. The deal would remove the lawyer from every later case and deny later claimants the chance to hire her, which is the same loss of client choice that drives subsection (a). As under subsection (a), the lawyer who merely offers such a term is subject to discipline, even if opposing counsel properly refuses.

Subsection (a) therefore governs agreements between a lawyer and the firm or employer whose relationship is ending. Subsection (b) comes into play when the restriction rides along with a deal that settles a client's dispute with the other side. Classifying the fact pattern is the first move, and it comes before any question about reasonableness, penalties, or retirement benefits.

Exam Analysis Steps

A restriction on practice can appear in three settings, and each calls for a different rule, so the clause's wording cannot decide which applies. Work through the setting:

Identify where the restriction was written. Ask whether it is a term of the lawyer's relationship with a firm or employer, a term of a sale of a law practice, or part of a deal settling a client's controversy.
If it is a term of the lawyer's relationship with a firm or employer, ask whether it restricts practice after the relationship ends. If it does, apply subsection (a) with its single exception for benefits upon retirement.
If it is a term of a genuine sale of a law practice under Rule 1.17, treat it as outside subsection (a). Whether the sale itself satisfies Rule 1.17 is a separate question under that rule.
If it is part of settling a client's controversy, apply subsection (b), which also reaches the lawyer who only offers the restriction.

Students most often err by applying subsection (a) to any clause that looks like a noncompete. The wording of the clause does not decide the rule; the setting does.

Where the Rule Stops

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