In the Matter of: Karl N. Truman , 7 N.E.3d 260 ( 2014 )

ATTORNEY FOR THE RESPONDENT ATTORNEYS FOR THE INDIANA SUPREME COURT
Ronald E. Elberger DISCIPLINARY COMMISSION
Indianapolis, Indiana G. Michael Witte, Executive Secretary
Dennis K. McKinney, Staff Attorney
Indianapolis, Indiana
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In the
Indiana Supreme Court
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Apr 29 2014, 10:50 am
No. 10S00-1401-DI-55
IN THE MATTER OF:
KARL N. TRUMAN,
Respondent.
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Attorney Discipline Action
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April 29, 2014
Per Curiam.
We find that Respondent, Karl N. Truman, engaged in attorney misconduct by making an
employment agreement that restricted the rights of a lawyer to practice after termination of the
employment relationship. For this misconduct, we conclude that Respondent should receive a
public reprimand.
Pursuant to Indiana Admission and Discipline Rule 23(11), the Indiana Supreme Court
Disciplinary Commission and Respondent have submitted for approval a "Statement of
Circumstances and Conditional Agreement for Discipline" stipulating agreed facts and proposed
discipline. The Respondent's 1987 admission to this state's bar subjects him to this Court's
disciplinary jurisdiction. See IND. CONST. art. 7, § 4. The Court approves the agreement and
proposed discipline.
Background
In October 2006, Respondent hired an associate ("Associate") to work in his law firm. As
a condition of employment, Associate signed a Confidentiality/Non-Disclosure/Separation
Agreement ("the Separation Agreement"). If Associate left the firm, the Separation Agreement
provided that only Respondent could notify clients that Associate was leaving, prohibited
Associate from soliciting and notifying clients that he was leaving, and prohibited Associate
from soliciting and contacting clients after he left. The Separation Agreement also included
provisions for dividing fees if Associate left the firm that were structured to create a strong
financial disincentive to prevent Associate from continuing to represent clients he had
represented while employed by the firm.
In October 2012, Associate informed Respondent that he was leaving the firm. At the
time, Associate had substantial responsibility in representing more than a dozen clients
("Associate's Clients"). Respondent insisted on enforcing the terms of the Separation Agreement
regarding these clients. Respondent sent notices to Associate's Clients announcing Associate's
departure. Not all of the notices explained that these clients could continue to be represented by
Associate if they so chose, and the notices did not provide clients with Associate's contact
information. The Separation Agreement provided that Respondent would provide Associate's
Clients with his contact information only if they requested it, and Respondent provided the
information to any such clients who specifically requested it.
Despite the provisions of the Separation Agreement, Associate sent out notices to
Associate's Clients that explained that the client could choose to be represented by Respondent
or by Associate, and that included Associate's contact information. In response, Respondent filed
a complaint against Associate seeking to enforce the Separation Agreement. A settlement was
reached through mediation.
Immediately after the Commission began its investigation in this matter, Respondent
discontinued his use of the Separation Agreement, and he has not enforced any similar
provisions against any other former associates.
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The parties agree that Respondent violated these Indiana Professional Conduct Rules
prohibiting the following misconduct:
1.4(b): Failure to explain a matter to the extent reasonably necessary to permit a client to
make informed decisions regarding the representation. 1
5.6(a): Making an employment agreement that restricts the rights of a lawyer to practice
after termination of the relationship, except an agreement concerning benefits upon
retirement.
The parties cite no facts in aggravation. The parties cite the following facts in mitigation:
(1) Respondent has no disciplinary history; (2) Respondent has cooperated with the
Commission's investigation and prosecution of this matter.
Discussion
Indiana Professional Conduct Rule 5.6(a) is for the protection of both lawyers and clients.
Comment [1] to this rule states: "An agreement restricting the right of lawyers to practice after
leaving a firm not only limits their professional autonomy but also limits the freedom of clients
to choose a lawyer." The Separation Agreement hampered both Associate's right to practice law
and Associate's Clients' freedom to choose a lawyer by restricting Associate's ability to
communicate with the clients and creating an unwarranted financial disincentive for Associate to
continue representing them.
The Ohio Supreme Court recently addressed a similar situation. In that case, an attorney's
employment agreement with his associates restrained them from taking clients with them when
the associates left the attorney's firm by requiring a departing associate to remit to the attorney
95% of the fees generated in a case involving a former firm client, regardless of the proportion of
the work that the attorney and the associate performed on the client's case. The Ohio Supreme
Court found that the attorney violated Ohio's Professional Conduct Rules 5.6 and 1.5 (prohibiting
excess fees) and approved an agreed public reprimand. See Cincinnati Bar Assn. v. Hackett, 950
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Rule 1.4(b) is aimed primarily at giving a client "sufficient information to participate intelligently in
decisions concerning the objectives of the representation and the means by which they are to be pursued .
. . ." See Comment [5]. Without addressing the exact parameters of this rule, the Court accepts the parties'
stipulation that Respondent violated this rule for the purposes of resolving this case.
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N.E.2d 969 (Ohio 2011). A client's "absolute right to discharge an attorney or law firm at any
time, with or without cause, subject to the obligation to compensate the attorney or firm for
services rendered prior to the discharge[,] . . . would be hollow if the discharged attorney could
prevent other attorneys from assuming the client's representation." Id. at 970 (internal quotation
and citation omitted).
In the current case, Respondent and the Commission propose that Respondent receive a
public reprimand for his admitted misconduct. Concluding that this is appropriate discipline
under the circumstances, the Court approves the proposed discipline.
Conclusion
The Court concludes that Respondent violated Indiana Professional Conduct Rule 5.6(a)
by making an employment agreement that restricted the rights of a lawyer to practice after
termination of the employment relationship. For Respondent's professional misconduct, the
Court imposes a public reprimand.
The costs of this proceeding are assessed against Respondent.
The Clerk of this Court is directed to give notice of this opinion to the parties or their
respective attorneys and to all other entities entitled to notice under Admission and Discipline
Rule 23(3)(d). The Clerk is further directed to post this opinion to the Court's website, and
Thomson Reuters is directed to publish a copy of this opinion in the bound volumes of this
Court's decisions.
All Justices concur.
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