Leave it to the Lawyers: Noncompetes at “Retirement”

Rule 5.6 of the Rules of Professional Conduct (the rule prohibiting lawyers from being bound by noncompetes) and its analogue in the Canons of Ethics (DR 2-108(A)) have a noble purpose:  the protection of client choice –not protection of the lawyer.

The dirty little secret, however, is that lawyers can be bound by a noncompete if the noncompete is part of a bona fide retirement plan. Of course, one might quite reasonably ask, “If you’re retired, why should this be an issue?” An excellent question.

The answer is that the need for an exception to allow noncompetes in retirement makes no sense. To make sense of it, courts have interpreted the exception to apply to lawyers who “semi-retire,” i.e., lawyers who aren’t quite ready to retire, but want to scale back and continue to help a small pool of clients. In that case, the semiretired lawyer can be prohibited from practicing law entirely or face losing their retirement benefits (worth millions of dollars in some cases).

Okay, but, if the rule is based on protecting client choice, then does this suggest that client choice matters only until a lawyer reaches a certain age? Stated another way, doesn’t this interpretation of the rule seem to suggest that as a lawyer ages and therefore the remaining time available for the lawyer-client relationship diminishes, the benefit to the client diminishes correspondingly until some point (i.e., semiretirement) when the client’s choice is so marginal that it doesn’t deserve the same protection as when the lawyer was younger?

Well, whatever the intent, young lawyers beware – and clients, start looking for replacements for your older lawyers.