Feroleto Law, Buffalo NY

OHIO COURT FINDS EMPLOYMENT AGREEMENT UNENFORCABLE THAT REQUIRES ATTORNEY TO RETURN 95% OF FEES

As an attorney that handles attorney employment agreement cases I am always interested in cases which impinge upon the clients’ right to counsel.

In Hackett v. Moore,  160 Ohio Misc.2d 107, 2010-Ohio-6298, the court held unenforcable an employment agreement between a law firm and its attorney employee that limited the amount of the fees the attorney would receive from clietns who followed him after he left to 5%.   The agreement held:”If a client should choose to leave Hackett Law Offices to be represented by Gregory Moore after his termination, Gregory Moore agrees to pay Hackett  Law Offices 95% of the attorney’s fee generated based on a thirty-three percent 33% contingent fee agreement.” The Court held that the agreement violate Rule of Professional Ocnduct 5.6 and 1.5.

The court held that “While such a provision might not completely preclude a client from continuing legal representation with the departing attorney, the effect of the 95 percent fee-sharing requirement is to make it economically impractical for the lawyer to continue the representation.” The court also held “An employment agreement with a financial disincentive to serving clients improperly places a burden on the departing attorney and impairs clients’ freedom to choose counsel. The financial burden placed on the attorney results from a client’s valid choice to choose counsel. The client’s freedom is impaired because the financial disincentive to the attorney may interfere with the attorney-client relationship by discouraging or preventing the departing associate from serving clients who wish to continue being represented by him. Although such agreements may not facially appear to limit professional autonomy or a client’s freedom to choose, the practical effect may limit both. Such payment provisions which penalize the attorney and ultimately his clients for exercising valid choices are prohibited by DR2-108(A). Under the rule, professional autonomy and a client’s freedom to choose are not outweighed by a law firm’s interest in protecting itself from competition.”

As a side note, there were disciplinary matters that were also pursued by the bar for having the employees sign this contract.