Labor & Employment / 03.04.2020

In-House Counsel and Non-Competition Agreements

By: Rob Gilmore & Lyndsay RossIn-House Lawyer Contract

The Ohio Board of Professional Conduct issued an advisory opinion last month stating that attorneys working as in-house counsel may not be restricted by non-competition agreements.

The Board confronted the issue of whether an in-house lawyer may execute an employment contract with a covenant not to compete for a term of one to two years after leaving that position. Following a brief discussion, the Board matter-of-factly answered in the negative.

The Board grounded its opinion in Ohio Rule of Professional Conduct 5.6(a): A lawyer shall not participate in the offering or making of an agreement that restricts the right of a lawyer to practice upon termination of the relationship. While acknowledging a business’s interest preventing former employees from working for a competitor, the Board found that this interest was outweighed. Far more compelling interests exist in encouraging a lawyer’s personal autonomy and allowing individuals to be represented by a lawyer of their choosing.

The opinion did contain a caveat: where a lawyer working in-house is performing both legal and business services for an employer, the lawyer may enter a non-competition agreement specifically for the business aspect. Therefore, while businesses may not prevent a lawyer from working as a lawyer elsewhere, they may impose reasonable restrictions on the lawyer working in a business capacity for a competitor to protect their proprietary information.

While non-competition agreements in Ohio are generally enforceable so long as they are for a reasonable length of time and do not extend across a greater area than necessary, lawyers have been exempted from these restrictions. This opinion is in line with those from other states, such as Pennsylvania and more recently New York, which have similarly found that in-house counsel attorneys cannot enter into non-competition agreements.

Going forward, in-house lawyers in Ohio cannot ethically enter into non-competition agreements that attempt to limit their rights to practice as they change jobs. While employers may face some resulting hardship, they can take comfort in knowing: (1) the employer can reasonably restrict the lawyer from performing business services for a competitor, at least for a reasonable amount of time; and (2) lawyers who were formerly in-house elsewhere similarly cannot enter into non-competition agreement, widening the employer’s candidate pool.

For more information on the Board’s recent opinion, please contact Rob Gilmore at rsg@kjk.com or 216.736.7240, Lyndsay Ross at lmr@kjk.com or 216.736.7201, or reach out to any of our Labor & Employment professionals.

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