An Unreasonable Ban on Reasonable Competition: The Legal Profession’s Protectionist Stance Against Noncompete Agreements Binding In-House Counsel

In the vast majority of jurisdictions in the United States, a business may protect its confidential information and customer goodwill by conditioning employment on an employee’s acceptance of a covenant not to compete. These covenants are beneficial to the marketplace because they allow employers to provide employees with necessary skills, knowledge, and proprietary information without any fear of misappropriation. Accordingly, noncompete agreements are upheld by courts so long as they pass a fact-specific “reasonableness” test. Notwithstanding the widespread acceptance of reasonable noncompete agreements for all other professionals—including doctors and corporate executives—forty-eight states, following the American Bar Association’s lead, prohibit all noncompete agreements among lawyers. This prohibition is purportedly designed to protect both an attorney’s professional autonomy and a client’s right to choose his counsel. Despite legal commentators’ criticism of the prohibition, several state bar associations have recently extended it beyond the traditional law-firm context to agreements between companies and their in-house counsel. This expansion has transformed a questionable policy of professional self-regulation into an unjustifiable infringement on the legitimate interests of corporate employers. In addition to providing an analysis of the history and ethical norms that justify rejection of the ban’s application to in-house counsel, this Note argues that bar committees that issue opinions supporting the ban’s extension may be susceptible to antitrust liability under the Supreme Court’s new Dental Board standard pertaining to state-action immunity