## Facts

- Former partners of a Massachusetts law firm sued the firm challenging provisions in a 1989 partnership agreement and later amendments.
- The agreement permitted amendment by partner vote and governed allocation of firm finances, including income tracked on cash and accrual bases.
- The disputed provisions imposed financial consequences on partners who “voluntarily withdrew” before specified age and/or service thresholds.
- The provisions applied the same financial consequences to all voluntarily withdrawing partners, without regard to whether a departing partner later competed with the firm or represented firm clients.
- The actions were filed in Massachusetts Superior Court, consolidated, and decided on summary judgment/statement of agreed facts.
- Plaintiffs argued (1) the provisions violated public policy reflected in Massachusetts Rule of Professional Conduct 5.6, and (2) an earlier arbitration involving the firm and a different former partner barred the firm from relitigating the agreement’s enforceability.

## Issues

1. Whether a partnership agreement that imposes identical financial consequences on all partners who voluntarily withdraw before specified age/service thresholds, regardless of post-withdrawal competition, violates Mass. R. Prof. C. 5.6 and public policy favoring client choice of counsel.
2. Whether a prior arbitration decision involving the firm and another former partner collaterally estops the firm (traditional or offensive collateral estoppel) from contesting the legality of the provisions.

## Decision

- The Supreme Judicial Court affirmed judgment for the firm.
- The Court held the uniform withdrawal financial-consequence provisions did not violate Mass. R. Prof. C. 5.6.
- The Court held the prior arbitration did not impose traditional collateral estoppel because the plaintiffs were not adversaries of the firm in the earlier proceeding.
- The Court further held the trial judge acted within discretion in refusing to apply offensive collateral estoppel, particularly because the controlling question was primarily legal.

## Legal Principles

- Mass. R. Prof. C. 5.6 prohibits agreements that restrict a lawyer’s right to practice after leaving a firm or that improperly limit client choice of counsel.
- A partnership agreement may create a financial disincentive to withdrawal without violating Rule 5.6 when the financial consequences are not conditioned on post-departure competition and do not operate as a practice restriction.
- A withdrawal provision that imposes the same financial consequences on all voluntarily withdrawing partners, irrespective of later competition, is not treated as a noncompete penalty for purposes of Rule 5.6.
- Traditional collateral estoppel generally requires that the party to be estopped litigated the issue in a prior proceeding against the same adversary (or one in privity); alignment as co-defendants is insufficient.
- Offensive collateral estoppel is discretionary and may be denied where the issue is essentially legal and applying estoppel would improperly prevent judicial reconsideration of the governing legal rule.

## Conclusion

The court upheld law-firm partnership provisions imposing uniform financial consequences for early voluntary withdrawal, finding no violation of Rule 5.6 absent competition-based penalties or practice restrictions, and it declined to bind the firm to a prior arbitration under either traditional or offensive collateral estoppel.


Pierce v. Morrison Mahoney LLP, 452 Mass. 718, 897 N.E.2d 562 (Mass. 2008)