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Tuesday, April 29, 2014

Ind. Decisions - Supreme Court reprimands attorney for restricting the rights of an associate to practice after termination of the employment relationship

In In the Matter of: Karl N. Truman, a 5-0 attorney disciplinary action, the Court writes:

We find that Respondent, Karl N. Truman, engaged in attorney misconduct by making an employment agreement that restricted the rights of a lawyer to practice after termination of the employment relationship. For this misconduct, we conclude that Respondent should receive a public reprimand. * * *

In October 2006, Respondent hired an associate ("Associate") to work in his law firm. As a condition of employment, Associate signed a Confidentiality/Non-Disclosure/Separation Agreement ("the Separation Agreement"). If Associate left the firm, the Separation Agreement provided that only Respondent could notify clients that Associate was leaving, prohibited Associate from soliciting and notifying clients that he was leaving, and prohibited Associate from soliciting and contacting clients after he left. The Separation Agreement also included provisions for dividing fees if Associate left the firm that were structured to create a strong financial disincentive to prevent Associate from continuing to represent clients he had represented while employed by the firm.

In October 2012, Associate informed Respondent that he was leaving the firm. At the time, Associate had substantial responsibility in representing more than a dozen clients ("Associate's Clients"). Respondent insisted on enforcing the terms of the Separation Agreement regarding these clients. Respondent sent notices to Associate's Clients announcing Associate's departure. Not all of the notices explained that these clients could continue to be represented by Associate if they so chose, and the notices did not provide clients with Associate's contact information. The Separation Agreement provided that Respondent would provide Associate's Clients with his contact information only if they requested it, and Respondent provided the information to any such clients who specifically requested it.

Despite the provisions of the Separation Agreement, Associate sent out notices to Associate's Clients that explained that the client could choose to be represented by Respondent or by Associate, and that included Associate's contact information. In response, Respondent filed a complaint against Associate seeking to enforce the Separation Agreement. A settlement was reached through mediation. * * *

Indiana Professional Conduct Rule 5.6(a) is for the protection of both lawyers and clients. Comment [1] to this rule states: "An agreement restricting the right of lawyers to practice after leaving a firm not only limits their professional autonomy but also limits the freedom of clients to choose a lawyer." The Separation Agreement hampered both Associate's right to practice law and Associate's Clients' freedom to choose a lawyer by restricting Associate's ability to communicate with the clients and creating an unwarranted financial disincentive for Associate to continue representing them.

Posted by Marcia Oddi on April 29, 2014 12:06 PM
Posted to Ind. Sup.Ct. Decisions