Kentucky Supreme Court Declares That Lawyer Ethical Rules Constitute Public Policy

Kentucky Supreme Court Declares That Lawyer Ethical Rules Constitute Public Policy

      In the decision rendered the week before last,, the Kentucky Supreme Court held that the ethical rules of binding attorneys, to the extent they benefit the public generally, constitute public policy for purposes of employment. To that end, any agreement that would violate that public policy would be unenforceable against attorneys, but more importantly it would be unethical to either on-site to enter into that agreement. Greissman v. Rawlings and Associates, PLLC, ___ S.W.3d ___, 2019 WL 1747057, 2017-SC-000518-DG (Ky. April 18, 2019).

      This dispute arose out of Greissman’s employment with Rawlings and Associates PLLC, a law firm. In 2011, Greissman, an attorney, was presented with an agreement pursuant to which Greissman would agree, for a period of three years after the termination of her employment, “not to solicit, contract, interfere with, or attempt to divert any of Rawlings & Associates’ customers or potential customers after ceasing employment with Rawlings & Associates.” - this is the summary of the provision provided by the Supreme Court; the opinion as well recited the provision in full. The provision as well contained a “savings clause,” limiting its application “Except to the extent necessary to comply with the rules of professional responsibility applicable to attorneys.”

      Rule 5.6 of the Kentucky Supreme Court, governing attorneys licensed in Kentucky, provides that attorneys may not enter into any agreement that restricts the right of an attorney to practice after termination of a partnership or similar relationship (there is a carve-out for retirement benefits) or an agreement restricting the lawyer’s right to practice. Greissman, being of the view that the contract that the tendered agreement violated Rule 5.6, refused to sign it. In turn, Rawlings terminated her employment. Greissman then brought suit, alleging that her termination was improper in that it was premised upon her refusal to violate Kentucky public policy as set forth in Supreme Court Rule 5.6.

      Kentucky law is generally that all employment is at-will (absent a contract to the contrary), but even when it is at-will an employee may not be terminated for refusing to violate an express constitutional or statutory provision.

      The trial court found in favor of Rawlings on the basis that the Savings Clause of the agreement precluded violation of Rule 5.6. On that basis, summary judgment was granted to Rawlings. At the Court of Appeals, the decision of the trial court was upheld, but it is well held that Rule 5.6 not provide public policy in it is not either a statute or part of the Kentucky Constitution. Previously I reviewed that decision of the Court of Appeals; HERE IS A LINK to that review. There then followed this appeal to the Kentucky Supreme Court.

      The Supreme Court rejected the determination by the Court of Appeals below that the ethical rules binding attorneys, to the extent “designed to serve the interests of the public at large, rather than the sole interest of the profession”, do not constitute public policy. 2019 WL 1747057, *4. This determination is based upon the fact the legal profession is exclusively regulated by the Supreme Court. Therefore, “For purposes of wrongful termination actions, we believe that an obligatory Rule of Professional Conduct for attorneys carries equal public policy weight as any public policy set forth in our Constitution or in a statute enacted by the General Assembly.” Id.

      On that basis, all else being equal, if a firm terminated an employee for refusing to sign an agreement that would violate Rule 5.6, there would arise the basis of a legitimate wrongful termination claim.

      However, the Court would go on to determine that Greissman’s claim ultimately failed. That determination was based upon the Savings Clause language, the Court holding that it effectively limited the application of the nonsolicitation agreement to matters not contemplated by Rule 5.6, to wit:

On its face, the savings clause applies only to restrict Greissman’s ability to solicit non-legal business; it exempts the solicitation of legal work from coverage under the non-solicitation clause, expressly noting that the signor does not agree to those terms to the “ accent necessary to comply with the rules of professional responsibility applicable to attorneys.” Unambiguously, the signor agrees not to solicit Rawlings’ non-legal business; the savings clause does not apply to the solicitation of legal work since that would violate the Rules of Professional Conduct. Indeed, the savings clause expressly recognizes that the Rules of Professional Conduct govern if any conflict exists between them in the agreement. Since the plain wording of the savings clause excludes any interpretation of the agreement that conflicts with the Rules of Professional Conduct, the agreement did not violate SCR 3.130, Rule 5.6. Id. (citation omitted).

      In closing, the Court noted that Greissman could have sought direction from the Ethics Hotline of the Kentucky Bar Association, which would have protected her from any potential disciplinary action had she signed the agreement.