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plaintifflawyerwillpartnership

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Pettingell v. Morrison, Mahoney & Miller, 426 Mass. 253, 687 N.E.2d 1237

Facts

On August 13, 1993, plaintiffs Richard H. Pettingell and Joseph A. Regan withdrew as partners from the Boston law firm Morrison, Mahoney & Miller to form their own partnership. They sought payment of funds they believed were due under the firm's partnership agreement, which included a provision stating that withdrawing partners would forfeit their rights to cash profits and annual partnership interest credits if they competed with the firm. The firm contested the payment, citing this forfeiture provision, while the plaintiffs argued it violated public policy.

On August 13, 1993, the plaintiffs, Richard H. Pettingell and Joseph A. Regan, withdrew as partners in the Boston law firm of Morrison, Mahoney & Miller (firm) and formed their own law partnership. In this action they seek the payment of funds that they assert are due to them as partners voluntarily withdrawing pursuant to the firm's partnership agreement.

Issue

Whether the forfeiture provision in the partnership agreement, which penalized withdrawing partners for competing with the firm, was enforceable under public policy.

Whether the forfeiture provision in the partnership agreement, which penalized withdrawing partners for competing with the firm, was enforceable under public policy.

Rule

The court applied the principle that a forfeiture provision in a partnership agreement that restricts a lawyer's right to practice law after withdrawal is generally unenforceable, particularly when it violates ethical rules such as DR 2–108(A).

The rule applicable to this case is DR 2–108(A) which states that '[a] lawyer shall not be party to or participate in a partnership or employment agreement with another lawyer that restricts the right of a lawyer to practice law after the termination of a relationship created by the agreement, except as a condition to payment of retirement benefits.'

Analysis

The court found that the forfeiture provision in the partnership agreement was against public policy, as it discouraged competition and restricted client choice. The court noted that the firm failed to provide evidence that the plaintiffs' withdrawal caused harm to the firm, which further supported the unenforceability of the forfeiture clause. The court emphasized the importance of allowing lawyers the freedom to practice and clients the freedom to choose their counsel.

The strong majority rule in this country is that a court will not give effect to an agreement that greatly penalizes a lawyer for competing with a former law firm, at least where the benefits that would be forfeited accrued before the lawyer left the firm.

Conclusion

The court vacated the judgment and remanded the case to determine the amounts owed to the plaintiffs, declaring that the non-competition provisions of the partnership agreement were unenforceable.

The judgment is vacated. A new judgment shall be entered providing for the payment of amounts determined according to this opinion. The judgment shall also declare that the non-competition provisions of the Morrison, Mahoney & Miller partnership agreement are not enforceable, in whole or in part, in the circumstances of this case.

Who won?

The prevailing party was the withdrawing partners, Pettingell and Regan, as the court ruled in their favor regarding the unenforceability of the forfeiture provision.

The plaintiffs respond that the forfeiture provision of the partnership agreement violates S.J.C. Rule 3:07, Canon 2, DR 2–108(A), 382 Mass. 773 (1981), and is void as against public policy.

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