## **Learning Outcomes**

After reading this article, you will be able to identify and apply the rules governing restrictions on a lawyer’s right to practice law. You will understand the limits on non-compete agreements, restrictions in settlement agreements, and requirements for selling a law practice. You will be able to answer MPRE-style questions on these topics with confidence.

## **MPRE Syllabus**

For the MPRE, you are required to understand the boundaries imposed on a lawyer’s right to practice law. This includes recognizing improper restrictions in employment, partnership, and settlement agreements, as well as the rules for selling a law practice. You should be able to:

- Distinguish between permissible and impermissible restrictions on a lawyer’s right to practice after leaving a firm.
- Identify when a non-compete or similar agreement is prohibited.
- Recognize restrictions on practice included in settlement agreements.
- Understand the requirements for the sale of a law practice or area of practice.
- Apply these principles to fact patterns involving employment, partnership, and client agreements.

## **Test Your Knowledge**

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision._

1. Which of the following is generally prohibited by the Model Rules?
   a) A retirement benefit agreement restricting post-employment practice
   b) A non-compete clause in an associate’s employment contract
   c) An agreement to cease practicing in a sold area of law after selling a practice
   d) A temporary restriction on practice due to illness

2. A law firm offers to settle a client’s case if the client’s lawyer agrees not to represent similar clients in the future. Is this restriction:
   a) Permitted if the client consents
   b) Permitted if the restriction is limited in time
   c) Prohibited under the Model Rules
   d) Permitted if the settlement is in writing

3. Which is a required condition for the sale of a law practice?
   a) The seller must cease all practice of law in every jurisdiction
   b) The seller must provide written notice to clients
   c) The seller may increase client fees to finance the sale
   d) The seller must sell only to a non-lawyer

4. A lawyer’s employment contract includes a provision that restricts the lawyer from practicing law in the same city for one year after leaving the firm. Is this provision:
   a) Always enforceable
   b) Permissible only if the lawyer agrees in writing
   c) Prohibited except in connection with retirement benefits
   d) Required by the Model Rules

## **Introduction**

Lawyers are subject to specific rules limiting restrictions on their right to practice law. These rules protect client choice and access to legal services. The Model Rules prohibit most non-compete agreements and restrictions on practice, except in narrow circumstances such as retirement benefits or the bona fide sale of a law practice. Restrictions in settlement agreements are also generally forbidden. Understanding these boundaries is essential for MPRE success.

> **Key Term: Restriction on Right to Practice**
> Any contractual or other agreement that limits a lawyer’s ability to practice law after leaving a firm, ending employment, or settling a client matter.

### Restrictions in Employment and Partnership Agreements

The Model Rules prohibit lawyers from entering into or offering agreements that restrict the right to practice after termination of an employment, partnership, or similar relationship, except for agreements concerning retirement benefits.

> **Key Term: Non-Compete Agreement**
> A contract provision that limits a lawyer’s ability to practice law in a certain area, for a certain time, or within a certain geographic region after leaving a firm.

A lawyer cannot be required to sign a non-compete clause as a condition of employment or partnership, unless the restriction is part of a bona fide retirement plan. This ensures that clients retain the freedom to choose their lawyer and that lawyers are not unfairly prevented from practicing their profession.

### Restrictions in Settlement Agreements

It is also improper for a lawyer to agree to a restriction on the right to practice as part of settling a client’s case. For example, a settlement that requires a plaintiff’s lawyer not to represent similar clients in the future is prohibited, even if the client consents.

> **Key Term: Settlement Restriction**
> A provision in a settlement agreement that limits a lawyer’s ability to represent other clients in similar matters as a condition of settlement.

Such restrictions are considered contrary to public policy because they limit client access to legal representation and may prevent lawyers from taking on future cases against the same opposing party.

### Sale of a Law Practice

The Model Rules permit the sale of a law practice or an area of practice, but impose strict requirements. The seller must cease practicing in the sold area (or entirely, if the whole practice is sold), provide written notice to clients, and ensure that client fees are not increased due to the sale. The entire practice or area must be sold to one or more lawyers or law firms.

> **Key Term: Sale of Law Practice**
> The transfer of all or part of a lawyer’s practice, including goodwill, to another lawyer or law firm, subject to specific ethical requirements.

The seller may continue to practice law in other areas or return to practice under certain circumstances, such as unanticipated changes or employment with a public agency.

### Permissible Restrictions

The only generally permitted restriction on a lawyer’s right to practice is in connection with retirement benefits. For example, a law firm may require a retiring partner not to compete as a condition of receiving retirement payments.

> **Key Term: Retirement Benefit Exception**
> An exception allowing restrictions on practice after leaving a firm if the restriction is part of a bona fide retirement benefit agreement.

### **Worked Example 1.1**

A law firm requires all new associates to sign an agreement stating they will not practice law within 50 miles of the firm for two years after leaving. Is this agreement enforceable under the Model Rules?

> **Answer:** No. The Model Rules prohibit agreements that restrict a lawyer’s right to practice after leaving a firm, except for retirement benefits. This non-compete clause is not connected to retirement and is therefore improper.

### **Worked Example 1.2**

A defendant offers to settle a class action lawsuit if the plaintiff’s lawyer agrees not to represent any future plaintiffs against the defendant. The lawyer accepts the settlement and the restriction. Is this restriction valid?

> **Answer:** No. Settlement agreements cannot include restrictions on a lawyer’s right to practice. Such provisions are void and subject the lawyer to discipline.

### **Worked Example 1.3**

A solo practitioner sells her estate planning practice to another lawyer. She notifies all clients in writing, ceases to accept new estate planning matters, and does not increase client fees. Is this sale proper?

> **Answer:** Yes. The sale meets the Model Rules’ requirements: written notice to clients, cessation of practice in the area sold, and no fee increase due to the sale.

### **Exam Warning**

> Be alert for questions where a restriction is disguised as a “client protection” or “firm policy.” Unless it is a bona fide retirement benefit or part of a proper sale of practice, the restriction is likely prohibited.

### **Revision Tip**

> When reviewing practice restrictions, always ask: Is the restriction tied to retirement benefits or a bona fide sale of practice? If not, it is probably improper.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- Restrictions on a lawyer’s right to practice are generally prohibited.
- Non-compete agreements in employment or partnership contracts are not allowed, except for retirement benefits.
- Settlement agreements cannot restrict a lawyer’s future practice.
- Sale of a law practice is permitted if the seller ceases practice in the area sold, gives written notice to clients, and does not increase fees.
- Only retirement benefit agreements and proper sales of practice allow restrictions on future practice.

## **Key Terms and Concepts**

- Restriction on Right to Practice
- Non-Compete Agreement
- Settlement Restriction
- Sale of Law Practice
- Retirement Benefit Exception

Practice boundaries and structure - Restrictions on right to practice