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Indiana Supreme Court imposes public reprimand on lawyer who required non-compete provision in associate’s employment agreement

Hello everyone and welcome to this Ethics Alert which will discuss the recent Indiana Supreme Court opinion which imposed a public reprimand on lawyer who required an associate to agree to a non-compete provision in an employment agreement and sent letters to the associate’s clients stating that he would be taking over the representation; however, he did not attempt to enforce the provision. The disciplinary opinion is In the Matter of: J. Frank Hanley II, Case No. 49S00-1410-DI-616 (Ind. SC 11/6/14). The opinion here:

According to the opinion, the lawyer’s law practice was primarily in social security disability law. He hired an associate in 2006 to work in his law office pursuant to an employment agreement which included a non-compete provision prohibiting the associate from practicing Social Security disability law for two years if his employment was terminated.

The lawyer terminated the associate in 2013 and sent letters to the clients whose matters the associate was handling advising the clients that the associate was no longer working at the firm and that he would be taking over their representation. The lawyer also enclosed Appointment of Representative forms for the clients to complete to permit him to replace the associate as the clients’ representative before the Social Security Administration.

Notwithstanding the letters, the associate continued to practice social security disability law after leaving the law firm, and at least two of the associate’s existing clients chose to keep him as their lawyer. The lawyer did not attempt to enforce the non-compete provision and, after the Bar complaints were filed against him, the lawyer provided the associate with the client files.

Bottom line: This lawyer violated Indiana Bar Rule 5.6(a) by requiring the associate to agree to limit his practice after he was no longer with the firm as a condition of his employment agreement. This type of agreement limiting a lawyer’s practice is prohibited in most, if not all states and other jurisdictions.

Florida Bar Rule 4-5.6(a) states:

A lawyer shall not participate in offering or making:

(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement…

Lawyers should be aware of this Bar rule when hiring associates and should not include a non-compete clause.

Disclaimer: this e-mail is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
[email protected]

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