Ethics Committee Advisory Opinion #2009-10/06
By the NHBA Ethics Committee
ABSTRACT:
Settlement agreements afford individuals the opportunity to resolve disputes quickly and with finality in order to avoid the uncertainty and expense of litigation. Settlements typically are private arrangements among disputing parties and, consequently, specific terms often are not public to avoid disclosure of confidential information or facts that would negatively impact a party. During the course of representation and, in particular, during settlement negotiations, an attorney is obligated pursuant to Rule 1.2 to abide by the client’s objectives and decisions, subject at all times to the Rules of Professional Conduct. One such rule is Rule 5.6(b), which prohibits an attorney from “offering or making” a settlement agreement that restricts the attorney’s “right to practice.”
ANNOTATIONS:
An attorney’s duties to a client during the settlement process are no different than those generally imposed by the Rules of Professional Conduct throughout the attorney-client relationship.
Rule 5.6(b) precludes an attorney from offering or agreeing to a settlement agreement that restricts an attorney’s right to practice.
A settlement agreement that seeks to impose a ban on an attorney’s ability to represent other clients against the same settling defendant violates Rule 5.6(b).
Settlement agreements that impose restrictions on an attorney’s right to practice other than a ban on the representation of other current or future clients still may violate Rule 5.6(b). For instance, a settlement agreement that prohibits plaintiff’s counsel from using any information learned during a current controversy, especially against the same defendant, may prevent the attorney from representing future claimants in similar controversies, and an attorney who agrees to refrain from using information gained during the representation may create a conflict of interest between the interests of the current client and those of future clients with similar claims.
Rule 5.6(b) is intended to prohibit both direct and indirect restrictions in settlement agreements on an attorney’s right to practice because that interpretation of the Rule serves the important policy consideration of protecting the rights of non-settling clients to identify and hire qualified counsel whose judgment and expertise remains free from restrictive, private settlement arrangements.
Provisions in a settlement agreement that require an attorney to refrain from disclosing specific settlement terms, such as the amount and existence of a settlement, are sufficiently narrow in scope and arguably serve to protect otherwise private information from public disclosure, and in most cases such provisions will not be an impermissible restriction on the right to practice under Rule 5.6(b).
A settlement agreement that precludes an attorney from disclosing publicly available information about a case violates Rule 5.6(b) if it would have the effect of restricting an attorney’s right to practice or of limiting the public’s ability to identify qualified legal counsel.