By Charles Berwanger
The reader is asked to picture a fictional settlement conference of a lawsuit. Present is the client representative, defendant Ajax Corporation’s General Counsel, and Ajax’s Defense Counsel. They are in a breakout room while the mediator talks with Plaintiff’s Counsel and plaintiff in another breakout room.
Ajax’s GC and Defense Counsel are strategizing on Ajax’s goals and their attainment:
Ajax GC: “Management is really tired of the many ADA-based lawsuits brought by Plaintiff’s Counsel against Ajax and wants future litigation to be stopped. It is imperative to eliminate Plaintiff’s Counsel as the instigator of ADA-related litigation against Ajax. I am authorized to pay the dollars needed to bring this lawsuit to an end, and whatever additional amount is needed to obtain Plaintiff’s Counsel’s agreement to discontinue her bringing frivolous ADA lawsuits against Ajax. Such an agreement is an imperative to settle the litigation.”
Defense Counsel: “Certainly settling the pending litigation is a good idea. However, Rule of Professional Conduct 5.6, entitled Restrictions on a Lawyer’s Right to Practice, presents a substantial barrier to attaining Ajax’s goal of marginalizing Plaintiff’s Counsel. Anticipating this issue, I brought with me Rule 5.6. In pertinent part, it states as follows: ‘(a) unless authorized by law, a lawyer shall not participate in offering or making: (1) a partnership, shareholder, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement that concerns benefits upon retirement; or (2) an agreement that imposes a restriction on a lawyer’s right to practice in connection with a settlement of a client controversy, or otherwise.’”
Defense Counsel continues: “The primary purpose of Rule 5.6 is to allow potential clients to hire a lawyer of their choice; and a secondary purpose is to preserve a lawyer’s right to practice law.”
Ajax GC: “So the message of Rule 5.6 is that Ajax cannot structure a settlement to bar Plaintiff’s Counsel from her continuous commencement of unmeritorious ADA litigation against Ajax. Is that what I’m hearing?”
Defense Counsel: “That, unfortunately, is the message of Rule 5.6.”
Ajax GC: “Am I correct that Rule 5.6 would apply not only to Plaintiff’s Counsel, should she agree to enter into the deal I propose, but you and I would also be violating Rule 5.6 by participating ‘in offering or making’ the offending proposal?”
Defense Counsel: “I’m afraid so.”
Ajax GC: “I have an idea. Why don’t we propose a nominal retainer for Plaintiff’s Counsel to provide lawyer services generally as needed, thereby disqualifying her from undertaking additional ADA litigation against Ajax?”
Defense Counsel: “I happen to have done some research on this very question in anticipation of the issue arising today. One of the very well-reputed treatises on California ethics in a ‘practice pointer’ suggests that the good faith retention of an opposing attorney who may have provided exemplary service as an adversary may be structured to avoid Rule 5.6’s prohibition. It opines that Rule 5.6 does not bar a defendant from later hiring the plaintiff’s lawyer on unrelated matters, even if the later representation results in a conflict of interest that could disqualify the lawyer from representing other claimants.”
Ajax GC: “I do not see how this exception, which is premised on a retention for ‘unrelated matters,’ helps Ajax ethically escape the continuing onslaught of ADA litigation.”
Defense Counsel: “On the one hand, if Ajax in good faith has determined that Defense Counsel’s services are actually desired, it would seem that Ajax should have the right to hire her if that is not done to disqualify her from commencing ADA actions against Ajax, but rather to provide bona fide legal services to Ajax. After all, Ajax has a right as well, to choose its counsel. However, given that Ajax’s apparent purpose is to effectively muzzle Defense Counsel from bringing ADA-based actions, Rule 5.6 most probably applies.”
The end result of the conference was a settlement. There was no attempt to condition it upon precluding Defense Counsel from continuing her ADA litigation crusade against Ajax. The net result was that Ajax’s C Suite was not at all happy with the outcome; but its GC and Defense Counsel avoided violating Rule 5.6.