Michael P. Maslanka, assistant professor of law, UNT Dallas College of Law. (Danny Hurley)
It’s easier to comply with the law than to circumvent it. This summer I am teaching this simple yet profound lesson to the students in our Professional Responsibility class.
A rule in point, Model Rule of Professional Conduct 5.6: “A lawyer shall not participate in offering or making … an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.” So, a defense lawyer is prohibited from offering to pay X amount to a plaintiff’s lawyer if she agrees not to sue the defendant in the future. Conversely, a plaintiff’s lawyer may not suggest to a defendant that he will not sue the defendant in the future if paid a certain sum of money. Why the rule? As one Judge aptly put it: “(to prohibit) a corporate buyout of plaintiff’s attorneys.”
Despite the rule’s clarity, lawyers continue to cha-cha around the rule. But as I tell my students, “If you can’t walk through the front door, then you can’t crawl through the back window.” What follows are some notable attempts.
Take the case of In re Conduct of Brandt from the Oregon Supreme Court. As part of a settlement, the lawyers for the plaintiffs (distributors of machine parts) would provide legal consulting services to the defendant, the manufacturer. The argument as to why no violation: we are not directly foreclosing our ability to represent future plaintiffs—oh no, we are merely indirectly doing so because we would be conflicted out of doing so.
The court rejected this dichotomy as a classic front door/back window tactic, noting that the rule does not make such a fine distinction. The result: one lawyer suspended for twelve months, another for thirteen months. (By the way, a 5.6 violation is usually—as in this case—coupled with other violations such as failure to adequately communicate with the clients).
Yet another law firm tried to waltz around the rule using The Chameleon Approach. In a products liability case, the defense lawyer made a settlement contingent on the plaintiff’s lawyer’s acceptance of $50,000 to be allocated to reimbursement of costs but which was to be paid back if the plaintiff’s lawyer ever sued the company again, either directly or indirectly, on similar claims. In considering the ethics of this proposal, the Philadelphia Bar Association (in an opinion letter) acknowledged that there was a very sizeable settlement proposal on the table, but that the client’s right pursuant to Model Rule 1.2 to decide on whether to settle must give way to the policy considerations behind Rule 5.6. Oh, and here is the bonus round: the Bar Association noted that the plaintiff’s lawyer must consider reporting the defense lawyer to the Bar pursuant to Model Rule 8.2 involving reporting professional misconduct. And, if you do not report, you may be in violation of the rules of professional conduct as well.
And finally, rounding out this trifecta is Johnson et al v. Nextel Communications et al, a 2011 case from the Second Circuit reversing the granting of a Rule 12 (b) (6) motion in which the allegations were not of clever distinctions of direct/indirect or of fancy word play but of an out and out client sell out. A law firm signs up 587 potential plaintiffs who sought to bring discrimination claims against Nextel. But Nextel and the law firm for the plaintiffs reach an agreement: we will pay you to convince your clients to agree to ultimately submit all their claims to binding arbitration thereby waiving their right to a jury trial. But wait, as they say on late night infomercials, there’s more! Once all the claims are processed, Nextel will hire the law firm as a consultant for a period of two years. Total to be paid to the law firm: $ 7.5 million. And Nextel would pay claimants attorney fees and expenses in consideration for entering into the arbitration agreements.
Well, it all came undone (all it takes is one person of the 587 to get upset) and the law firm was sued for malpractice and breach of fiduciary duty and Nextel for a variety of claims. This story is not so much as someone crawling through the back window as it is one of breaking down the front door. Another example is one in which in-house counsel got embroiled in an offer to buy out plaintiff’s lawyers to not represent other employees in future litigation, Adams v. BellSouth Telecommunications Inc. Yet another plaintiff’s lawyer who entered into a restrictive agreement changed her mind and successfully sued to set it aside. Cardillo v. Bloomfield 206 Corp.
It really is both that easy and I guess that hard (as Oscar Wilde remarked, he could resist everything except temptation). But there is a more important point undergirding Model Rule 5.6. To paraphrase Justice Cardozo: The public deserves something to protect them, something much stricter than the morals of the marketplace.