Reprinted from Bench & Bar of Minnesota – August 2026
Did you know that noncompetition agreements for lawyers are unethical? The ethics rules prohibit agreements that restrict the right of a lawyer to practice after termination of employment or as part of a client settlement. There are of course nuances, and a couple of exceptions. Public discipline this year provides a reminder, primarily to legal employers relating to employment agreements, of this important but perhaps little-discussed ethical prohibition.
The rules
Rule 5.6, Minnesota Rules of Professional Conduct, provides:
A lawyer shall not participate in offering or making:
- a partnership, shareholder, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or
- an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.
Minnesota’s rule is identical to the American Bar Association (ABA) model rule. Most states have adopted some version of the model rule prohibiting such restrictions. The rationale for the ethical prohibition is to encourage professional autonomy and client choice. “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.”Ftn1 The public policy does allow for some restrictions.
One notable exception to the broad prohibition is if a lawyer is selling their entire law practice. In that case, Rule 1.17(f), MRPC, permits an agreement that “the selling lawyer will not engage in the practice of law for a reasonable period of time within a reasonable geographic area and will not advertise for or solicit clients within that area for that time.” Similarly, Rule 5.6(a), MRPC, contains an exception that allows a restrictive covenant in an employment agreement for a retiring lawyer in exchange for retirement benefits.
In 2006, the ABA issued Formal Opinion 06-444, entitled Permissibility of Restrictive Covenants in Lawyer Agreements Concerning Benefits Upon Retirement. This opinion holds that to be a permissible retirement benefit restriction, the benefits should be available only to a lawyer who is in fact retiring from the practice of law and cannot impose a forfeiture of income already earned by the lawyer. “Beyond that, law firms and employers have significant latitude in shaping the nature and scope of the restrictions on practice and the penalties for noncompliance.” The opinion cautions agreement drafters that just calling something a retirement benefit, however, is not dispositive, and as an exception, must be construed strictly and narrowly. If you are drafting such a provision, ABA 06-444 provides guidance for how to do so consistently with the exception in Rule 5.6(a), MRPC.
Another ABA opinion from 1994 provides guidance on restrictions for corporate counsel. Formal Opinion 94-381, entitled “Restrictions on Right to Practice,” opines that “[a] prohibition in a retainer or employment agreement on counsel for a corporation representing anyone against the corporation in the future is an impermissible restriction on the right to practice which may not be demanded or accepted by a lawyer without violating Model Rule 5.6(a).” This opinion is not limited to in-house counsel but would apply to outside counsel as well. Conflicts analysis might well prohibit future adverse representation; Rule 5.6(a) prevents expanding such prohibitions to unrelated representations, according to this ABA opinion.
A Minnesota Court of Appeals decision, Barna, Guzy & Steffen, Ltd. v. Beens, 541 N.W.2d 354 (Minn. Ct. App. 1995), considered Rule 5.6(a), when addressing a shareholder agreement that required a 50/50 split of collected contingency fees between the departing lawyer and his former firm on cases handled by the departing lawyer while at the firm. In Barna, the court recognized that explicit limits on attorney’s right to practice post-employment have been struck down, as had provisions that implicitly restricted attorney’s right to practice through financial disincentives, although in Barna, the court concluded the fee-sharing provision in issue was not in actuality a financial disincentive.
Until recently, beyond the above, there has not been a lot of guidance for Minnesota lawyers on this topic.
Discipline cases
In 2026, the Minnesota Supreme Court publicly reprimanded two lawyers at the Fields Law Firm (the firm founder and majority owner, Steven Fields, and the firm’s minority owner and president, Zachary Schmoll) for violations of Rule 5.6(a), MRPC. The cases are procedurally and substantively interesting and represent the first time that lawyers in Minnesota have received public discipline for restrictive language in employment agreements.
The Fields Law Firm handles plaintiff-side personal injury litigation, including worker’s compensation, disability, and consumer rights cases, primarily on a contingency fee basis. At issue was an employment agreement used by the firm for associate attorneys drafted by outside counsel of the firm. Specifically, the agreement contained a provision, triggered at separation of employment, where the departing lawyer was obligated to pay to the firm within five days (1) all costs advanced by the firm and (2) a $1,500 marketing fee for each file the departing lawyer requests be transferred to the departing lawyer or the departing lawyer’s new firm.
An associate attorney, E.S, worked at the firm for 1.5 years before departing to join another firm. E.S. asked Fields to send choice of counsel letters to a portion of his case list (about 1/3), and the firm did so. E.S. did not recall or review the terms of his employment agreement upon his departure and was surprised—to say the least—to receive a demand letter from the firm that he owed the firm, per their calculation, more than $100,000, post haste. Litigation ensued, was resolved for a much lower sum, and E.S. filed an ethics complaint against Mr. Schmoll.
The firm was represented by counsel in the ethics matter, who, apparently along with outside counsel who drafted the employment agreement, believed that Rule 5.6(a), MRPC, was not violated because the departing lawyer was allowed to compete with the firm; there were just significant financial consequences to doing so. Although this article colloquially uses the term restrictive covenants to discuss the prohibition, the prohibition in the rule is not against covenants not to compete only, but rather prohibits agreements that “restrict” the right to practice after termination. As noted in Barna, restrictions need not be express (thou shall not take firm clients) to violate the rule, and the Director had no problem arguing significant financial disincentives of this type restricted the post-termination lawyer’s right to practice in violation of the language of the rule.
The Director chose to issue an admonition—private discipline reserved for misconduct that is isolated and nonserious. This choice for level of discipline was debatable, and the Director recognized that when made. Sometimes lawyers, however, do not. Mr. Schmoll appealed, and the matter went to an evidentiary hearing before a three-member panel of the Lawyers Professional Responsibility Board. The panel agreed with the Director that there was clear and convincing evidence of a violation of Rule 5.6(a), MRPC, but did not agree the misconduct was nonserious, and because E.S. was not the only attorney who signed the agreement, the misconduct was not isolated. Accordingly, the panel directed the Director to issue a petition for public discipline and to investigate the firm majority owner. New defense counsel was retained and Mr. Schmoll and Mr. Fields eventually stipulated to public reprimands. The Minnesota Supreme Court agreed.Ftn2
Post-employment restrictions are very common in nonlegal fields and experienced employment counsel retained to draft employment agreements may miss the fact that there are ethical considerations relating to lawyers that must also be considered. Law firms and corporations that employ lawyers are encouraged to review their employment agreements, including shareholder, operating, and other like agreements, with Rule 5.6(a), MRPC, in mind. While the Director understands the inclination and incentive to be creative to prevent lawyers from leaving and taking clients or going to a competitor, careful consideration is important because unethical agreements are likely unenforceable as contrary to public policy and can lead to professional discipline.
While not covered in this article, do not forget the prohibition in Rule 5.6(b), MRPC, against attempting to restrict a lawyer from bringing future claims as part of a client settlement agreement, a popular discussion topic in the 1990s and 2000s when I was practicing product liability litigation. Lawyers in Minnesota have been privately disciplined for violations of Rule 5.6(b), MRPC, albeit not recently.
Conclusion
Keep Rule 5.6 in mind when crafting or being presented with agreements that expressly or implicitly restrict a lawyer’s post-relationship options. Periodically on our ethics hotline we get questions on employment terms that make it apparent no one has considered the applicable ethics rules. As always, if you have questions about your own compliance with the rules, call us at 651-296-3952 for an advisory opinion.
NOTES
- Comment [1] to Rule 5.6, MRPC.
- In re Disciplinary Action Against Schmoll, 29 N.W.3rd 727 (Minn. 2026); In re Disciplinary Action Against Fields, 29 N.W.3rd 726 (Minn. 2026).