Agreement’s Savings Clause Keeps Possible Ethics Violation at Bay
After her dismissal, the attorney filed suit alleging that she had been wrongfully terminated in violation of public policy. The law firm filed a motion to dismiss on the grounds that Rule 5.6 was not a public policy and that, therefore, the attorney’s complaint failed to state a claim upon which relief could be granted. The circuit court denied the law firm’s motion to dismiss and concluded that the attorney’s case could proceed because a rule of professional conduct, which the Kentucky Supreme Court established, falls within the public policy exception. Subsequently, the parties filed cross-summary judgment motions. The circuit court ruled that the attorney’s claim was cognizable but now dismissed her complaint, concluding that the agreement did not violate the Rules of Professional Conduct since the savings clause would have protected the attorney from any violation if she had signed it.
The attorney appealed. The Kentucky Court of Appeals upheld the circuit court’s decision to dismiss the attorney’s complaint but concluded that the circuit court should have granted the law firm’s motion to dismiss because Rule 5.6 did not provide the public policy to support the attorney’s wrongful termination claim. The attorney petitioned the Supreme Court of Kentucky for review.
Kentucky’s highest court held that the court of appeals erred in holding that the attorney’s complaint should have been dismissed for failure to state a claim but affirmed the dismissal on other grounds. The court explained that Section 116 of the Kentucky Constitution vests the Kentucky Supreme Court with the exclusive rulemaking power over attorney discipline and that the Rules of Professional Conduct qualify as public policy for purposes of a wrongful discharge claim. However, the court concluded that the attorney had failed to establish a genuine issue of material fact about her reasonable belief that signing the agreement would result in a rule violation because the plain language of the agreement’s savings clause was unambiguous and excluded any interpretation of the agreement conflicting with ethics rules.
Uncertainty about Rule 5.6 Yields Caution
ABA Section of Litigation leaders caution that the Greissman opinion highlights the importance of lawyers understanding the implications of non-solicitation agreements. The purpose of these agreements is to protect “confidential information about clients, trade secrets, and other proprietary information,” explains Janice V. Arellano, Bridgewater, NJ, cochair of the Section of Litigation’s Minority Trial Lawyer Committee. However, “it is generally understood that noncompete provisions for attorneys in private law firms conflict with ABA Model Rule of Professional Conduct 5.6 and many state corollaries,” states David E. Gevertz, Atlanta, GA, cochair of the Section’s Employment & Labor Relations Committee.
Because Model Rule 5.6 prohibits restrictions on the right of the lawyer to practice, the rule can “cause concern for lawyers who sign restrictive covenants that may, in reality, be unenforceable and burdensome to the practitioner and their livelihood,” Arellano says. Practitioners that are “presented with such provisions should be extremely cautious about signing them, as doing so may expose all lawyer signatories to charges that they have violated their state’s ethics rules,” advises Gevertz.