By Gallagher Sharp LLPWhen seeking to settle a civil dispute parties naturally attempt to obtain the most advantages settlement terms possible. Apart from monetary considerations, a party may demand that the opposing side keep the terms of settlement confidential, forego making disparaging statements, or otherwise waive or assume rights and obligations. But when settlement terms seek to bind not only the parties, but also their counsel, they can go too far if they restrict a lawyer’s right to practice. Ohio lawyers must remain cognizant that they are ethically precluded from demanding or agreeing to such terms.
The General Rule and Rationale for Lawyer-Related Settlement Terms
Ohio Rule of Professional 5.6(b) bars Ohio lawyers from participating in the offering or making of an agreement “in which a restriction on the lawyer’s right to practice is part of the settlement of a claim or controversy.” Lawyers thus cannot agree (even voluntarily) to terms restricting their own practice, nor propose terms that would restrict opposing counsel’s practice. The Rule prevents both outright restrictions and more subtle terms that have the same practical effect (e.g., a demand that opposing counsel not make public comment about the case). See ABA Formal Op. 417. When considering a particular term, the general rule of thumb is: does the term provide significantly less discretion for the lawyer in the pursuit of future claims? If so, it should be considered impermissible. See Ohio Adv. Op. 2019-4.
The Rule serves several interests. It protects lawyers’ ability to advertise and market their services, and protects the public’s ability to choose lawyers who have the desired background and expertise. It further prevents the public policy concerns associated with settlements being used to “buy off” opposing counsel via a higher settlement amount in exchange for counsel’s agreement to forego future litigation involving that party. The prohibition also minimizes potential conflicts between the interests of current clients and those of potential future clients. See Ohio Adv. Op. 2018-3.
It is important to note, however, that Rule 5.6’s prohibition does not affect a lawyer’s duty of confidentiality to their client—specifically the duty to “not reveal information relating to the representation of a client . . . unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation,” or the disclosure is otherwise permitted by the exceptions to Prof.Cond.R. 1.6. Thus, absent informed consent or other exception, lawyers are obligated to their clients to maintain the confidentiality of a settlement agreement and other information related to the representation regardless of any restrictive provision therein. Prof.Cond.R. 1.6, Comment 3.
Practical Application
A settlement term merely requiring counsel to keep the terms of settlement confidential does not in itself implicate Rule 5.6 as it does not limit a lawyer’s future practice. Ohio Adv. Op. 2019-4 at p. 4. But the Board of Professional Conduct has provided guidance on the types of settlement terms that cross the line.
- A term prohibiting opposing counsel from disclosing information contained in a court record: the Board found such a term would unduly restrict counsel’s ability to attract new clients based on past experience. Ohio Adv. Op. 2018-3
- A term requiring opposing counsel to keep information learned in discovery confidential: the Board found such a term would unduly restrict a lawyer’s pursuit of future claims. Ohio Adv. Op. 2019-4.
- A term requiring a lawyer to affirm they do not represent any other person that has the same or similar claim against the opposing party: among other things, the Board found the term would potentially require the lawyer to violate duties of confidentiality to other clients, and could create a material limitation conflict of interest. See Id.
In an opposing party proposes an impermissible term, remind them of the Rule. If your own client is seeking an impermissible term, and cannot be dissuaded through a frank conversation, withdrawing from the representation may be required. Prof.Cond.R. 1.16(a)(1) (a lawyer must withdraw when representation will result in violation of ethical rules); Ohio Adv. Op. 2019-4.
While we are conditioned as lawyers to help facilitate and not hinder our client’s settlement goals, attorneys must remember there are certain counsel-related restrictions that they cannot propose or agree to.
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