Law Firms, Competition Penalties, and the Values of Professionalism

Abstract

Virtually all courts that have considered the issue have held that law firms cannot enforce agreements that impose reasonable financial penalties on lawyers who leave the firm and take clients with them. This is the case despite the fact that practice organizations in all other professions, such as medicine, accounting, and engineering, are able to enforce such provisions. The Article uses this resistance as the vehicle for exploring broader issues relating to concerns about the loss of professionalism in modern law practice. The first is the common tendency to dichotomize between law practice as a business and as a profession. This distinction ignores the complex ways in which these two dimensions of practice are intertwined. In particular, the use of business measures that make a law firm more efficient may create a competitive advantage that affords an opportunity for the firm to further non-economic values. The second issue is the failure to appreciate that the concept of professionalism involves multiple values: (1) devotion to the client's interest (2) the control over work exercised by the practitioner of a craft and (3) the exercise of independent judgment as a steward of the legal system. These values have the potential to be either conflicting or complementary. An assessment of developments in law practice thus must examine the extent to which the realization of specific values in particular settings may be furthered or hindered by such developments. A final point is the potential importance of law firms in providing an opportunity for lawyers to reconcile these values in daily practice.

The Article argues that enforcing reasonable penalties can provide law firms with the economic stability that enables them to sustain a distinct institutional culture that is not wholly market-driven. This perspective underscores that allegiance to professional values is not simply a matter of individual character, but is dependent in important ways on larger organizational structures of law practice. In short, realizing the values of professionalism may be more of a collective, rather than individual, achievement in the dynamic and tumultuous world of contemporary practice.