Howard v. Babcock, the Business of Law Versus the Ethics of Lawyers: Are Noncompetition Covenants among Law Partners against Public Policy
![handle is hein.journals/geolr28 and id is 817 raw text is: HOWARD V. BABCOCK, THE BUSINESS OF
LAW VERSUS THE ETHICS OF LAWYERS:
ARE NONCOMPETITION COVENANTS AMONG
LAW PARTNERS AGAINST PUBLIC POLICY?
INTRODUCTION
Several years ago, Chief Justice William Rehnquist said, It is
only natural ... that as the practice of law ... has become
organized on more and more of a business basis, ... this practice
should on occasion push towards the margins of ethical propriety.1
Indeed, ethical considerations often conflict with profit-making.
Moreover, the increased propensity of even large, established law
firms to break up has intensified the tension between ethics and
profits.2 As the business of law becomes increasingly more
competitive, private practice is undergoing dramatic changes.'
Given this climate, law partners understandably want to protect
their business interests. Lawyers in firms of all sizes have
responded by including noncompetition clauses in their partnership
agreements. These provisions, routinely used by other profession-
als, preclude a departing partner from opening a competing practice
and representing former clients of the firm. If a partner violates a
noncompetition clause, the agreement typically calls for restitution
to the firm.5
The problem is that, over the past thirty years, courts and ethics
committees have adopted a per se rule that lawyer noncompetition
1 William H. Rehnquist, The Legal Profession Today, 62 IND. L. J. 151, 154 (1987).
2 See ROBM W. HLIMAN, LAW FIRM BREAKUPS 1 (1990) (The traditional view of the
law firm as a stable institution with an assured future is now challenged by an awareness
that even the largest and most prestigious firms are fragile economic units .... ').
3 See id. at 2 (-Law firms, in short, are in turmoil, and many of their problems arise from
within the firms themselves.').
' See Laurel S. Terry, Ethical Pitfalls and Malpractice Consequences of Law Firm
Breakups, 61 Tzu. L. REv. 1055,1075 (1988) ( Noncompetition agreements] have been used
in two-person firms, mid-size firms, and even legal clinics.*).
&See Kirstan Penasack, Note,Abandoning the Per Se RuleAgainst Law Firm Agreements
Anticipating Competition: Comment on Haight, Brown & Bonesteel v. Superior Court of Los
Angeles County, 5 GE O. J. LEGAL ETMCS 889, 891 (1992) (describing covenants not to
compete in law firm partnership agreements).
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