Why Texas lawyers aren’t subject to non-competes.

Originally published by Rob Radcliff.

 

Quite often I have lawyer friends ask me why Texas lawyers (and lawyers from other states) aren’t the subject of non-competes?  There aren’t really any cases that I’ve run across on the subject, which sometimes is an indicator that law firms aren’t trying to enforce them.  The answer is not that complicated. Queue Texas Rule of Disciplinary Procedure 5.06:

Restrictions on Right to Practice

A lawyer shall not participate in offering or making: (a) a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or

(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a suit or controversy, except that as part of the settlement of a disciplinary proceedings against a lawyer an agreement may be made placing restrictions on the right of that lawyer to practice.

The comments to the rule provide that the purpose of the rule is not only to prevent restrictions on lawyers post-employment moves but also to prevent restrictions on clients from selecting their lawyer of choice. Put another way, it’s not fair to keep a client from engaging their attorney of choice because they left their previous firm.  This is no different than non-lawyer cases where the argument is made that a customer should be able to pick whom they want do business with even if a non-solicitation agreement is in play.  This rule is found in similar form in other states.

Beyond post-employment issues, the comments also make clear that settlement agreements cannot prevent lawyers from agreeing not to represent other clients in lawsuits against defendants.

In Texas we really don’t have any particular statutes/rules/regulations directed towards particular professions other than doctors.  Those particular agreements require that the doctor have a buy out provision for their non-compete.

 

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

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