New Jersey’s Advisory Committee on Professional Ethics severely restricted a corporation’s ability to prevent its New Jersey in-house counsel from providing post-employment legal services to its competitors. In its July 10 opinion examining an employment agreement for in-house counsel that contained a restrictive covenant, the committee reinforced prior rulings that require in-house counsel practicing in New Jersey to observe the Rules of Professional Conduct and, in particular, the prohibition in RPC 5.6 regarding post-employment restrictions. See Op. 708, 15 N.J.L.J. 1446 (July 10, 2006).
The New Jersey Chapter of the Association of Corporate Counsel reports that there are over 700 in-house counsel in over 350 corporations in New Jersey. Despite the number of in-house counsel practicing in New Jersey, the Advisory Committee had never addressed the implications of restrictive covenants on in-house counsel. In fact, the committee had not opined on any restrictive covenants since 1969. Surprisingly, New Jersey courts had also not examined this issue. Thus, the July 10 opinion potentially has broad implications for restrictions contained in employment agreements between corporations and in-house counsel.
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