Down To Serfdom

The ABA Journal has the story about a law firm suing  an associate who signed a employment contract providing for three year term. The associate left after just one year. The contract includes a stipulated damages clause that requires the payment of $10,000 if the associate leaves before the end of the three years. A law firm had made a loan to the associate of $2,500 dollars for bar exam expenses. It deducted the loan and then liquidated damages from her last paycheck, but the associate came up $7,400 dollars short.  The law firm claims that it spends considerable resources on the training of new associates.

Would parties to such a contract in California violate Rule of Professional Conduct 5.6(a)(1)?

(a) Unless authorized by law, a lawyer shall not participate in offering or making:.. a partnership, shareholders, operating, employment, or other  similar  type of agreement  that  restricts  the  right  of  a  lawyer  to  practice  after  termination  of the   relationship…

Unknown.  But the words of a legal recruiter quoted in the story ring true: this can’t be good for firm recuiting.

 

 

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